In a bid to curb the rising prices of the residential property market and to avoid further damage caused by the asset bubble, the SAR government has taken two new cooling measures, described by Financial Secretary John Tsang Chun-wah in his blog as "extraordinary measures in extraordinary times".

The first day after the latest measures were imposed, the market saw a huge decline in the transaction volume of first and second-hand properties, reflecting that the red-hot real estate market has been cooled to some degree. Hopefully, with a surge in the investment cost, speculators will now hesitate to join the buying spree.

However, every coin has two sides. Residents with real housing needs will inevitably be affected by the new measures. Although the government has repeatedly emphasized that the continuous cooling measures are taken under extraordinary circumstances when property market prices are unsustainably high, the residents might still misinterpret the signals and incorrectly think that the government will impose more cooling measures with tougher restrictions and their purchasing cost will be much higher as a result. In that case, misguided by their own judgment, anxious buyers with real housing needs but insufficient capital take a leap of faith by accepting mortgage loans that they cannot afford, regardless of the dire consequences.

Just like the macro-economy, the property market is sure to experience a period of fluctuation. It is only a matter of time before a U-turn occurs and property prices drop like dead leaves in the fall. The cooling measures, aiming to reduce the risk of a market reversal, are designed to protect local residents' interests. Hence, buyers are strongly advised to exercise prudence in view of the potential risks so as to avoid unnecessary loss.

This is an excerpted translation of a Wen Wei Po editorial published on Monday.

(HK Edition 02/26/2013 page1)