What could break Hong Kong’s property market?

PLANES NO LONGER land in Kai Tak, Hong Kong’s old airport. But nostalgists can stroll along the new “sky garden”, an elevated walkway lined with frangipani, myrtle and acacia, that passes above the old runway. By scanning a QR code along the route, visitors can “augment reality” by superimposing an image of a landing plane on their selfies. The park is part of a redevelopment plan that will eventually yield a hospital, tax office and new homes for tens of thousands of people. On either side of the walkway, cranes, diggers and welders labour busily to augment the reality of Hong Kong’s cramped and pricey housing.

They have their work cut out for them. Property in Hong Kong remains horribly expensive, despite two years of protests and pandemic. House prices in April were only 1.5% below their peak in 2019. In one tower block being built in Kai Tak, a flat of 889 square feet sold last month for over HK$30m ($3.9m).

The property market has resisted the pandemic better than it did the SARS outbreak of 2003, when prices fell by almost 8%. Indeed, the market has remained tight this time partly because of decisions made back then. When SARS struck, house prices had already fallen by more than 60% since 1997. To curtail supply the government resolved to “withdraw from its role of property developer”, vowed not to “sell land at a...