In a display remarkable on many levels, estate agents in Hong Kong organized street demonstrations Sunday to again protest government efforts to slow the property market.
They have good reason to be upset. Property transactions have dropped to a two-decade low, by some estimates, in the wake of the latest government dampening measures. About a third of the 37,000 estate agents in Hong Kong may lose their jobs, estate agents warn.
But there are several mind-boggling elements to the protest.
First off, when did Hong Kong become Paris? The image of 20,000 people taking to the streets to criticize government policy is far-removed from the Western view of China politics, even in Hong Kong.
"The estate agents apparently have very short memories."
Then there is the concept of estate agents organizing as a group to make a point--any point. Estate agents around the world are notorious mercenaries. They rarely can agree on a choice of appetizers, nevertheless important policy decisions.
But they have mobilized in Hong Kong, which would be inspiring if their cause wasn't so wrong-headed.
Even the most strident free-market supporter would acknowledge the Hong Kong government had to do something to cool the market. Prices were skyrocketing out of control. The price of an apartment had doubled since 2009. Many of the buyers were investors and speculators looking for a quick flip.
The estate agents apparently have very short memories. Asia property markets are known as the world's scariest rollercoaster, with huge increases often followed by frightening plunges. Any number of issues could spell disaster for an over-heated property. The 1997 collapse of the Asia economy was sparked by a crisis with the Thai baht. The U.S. depression was set off in 2008 by home valuations that were not backed by reality, a scenario that looks eerily familiar in Hong Kong.
It doesn't take a Wharton grad to recognize that Hong Kong's market was heading for a spectacular crash. Every aspect of the market--including the employment of 37,000 estate agents--was completely unsustainable. A classic bubble was forming.
The market needed a time-out.
Nobody likes the idea of the government trying to regulate the market, but a severe correction was coming, one way or another. Letting air out of the balloon, while giving developers a chance to bring more supply on to the market, only makes sense, a way to bring some sort of proper balance to the business. If the government didn't act, it's too easy for outside forces to prick the bubble.
Once the dust settles, Hong Kong will continue as a healthy market--there is always going to be a combination of high demand and limited supply.
At the same time, a pause may allow the industry to focus on larger issues affecting the market. How do they create more affordable projects? Can the government create policies to encourage developers to build more creative, livable projects?
In the short term, estate agents might suffer. But the entire industry benefits from a more balanced, sustainable market.