XN000022-1996-12-19 — Page 3

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Mr Tsang reiterated the importance of the four vital ingredients; namely the rule of law, a level-playing field, lean and corruption-free civil service, and free flow of information for Hong Kong's continued economic advancement.

In dealing with current economic issues, the Financial Secretary said that the Government had to strike a balance to ensure that whatever actions the Government pursued would be adequate and not excessive.

added.

"And in all cases a thorough understanding of the situation is necessary," he

In the case of property speculation, Mr Tsang said excessive speculation caused concerns and there was evidence to suggest that speculation at the high end of the property market was now going on at a rampant pace.

He explained that one of the reasons for concern was excessive speculation induced spreading of upward price pressures across the property market.

"A short term price spiral could lead genuine home buyers in the mass market into haphazard purchase decision which strain their affordability.

"Second, should the situation develop into a speculative bubble, the risk of precipitating an abrupt downturn would be very much greater, with adverse implications not only for the property sector but also for the banks and the economy at large.

"Too much heat in the market is not a healthy development," he added.

Mr Tsang said that in the light of such a strong surge in demand, the best way to counter-balance the market was not to curb the demand artificially but to raise the volume of supply to the maximum extent possible.

"Given the enthusiastic response to sales of flats, developers should all be keen to get more projects going. If we can make more land available for development, the volume of housing supply in the pipeline would grow and prices would stabilise.

"Moreover, we can moderate land prices when more land is put out for disposal. The prospect of a lesser price increase would in turn help dampen speculation.

"We must work harder on larger supply across the whole spectrum of land sale, conversion of land use in form of residential development and streamlining of planning or approval procedures," he noted.