A Hong Kong government announcement that it is studying ways to pep up the territory's ailing property sector has sparked intense speculation on what measures will be introduced.
Economists and analysts believe few measures are available to authorities with most tipping a further reduction in residential sales under the Home Ownership Scheme (HOS) as the most likely method to be adopted.
"There's not too much the government can do to boost property prices," said Kenny Tang, associate director with Tung Tai Securities.
"I would guess that it will focus any measures on the HOS scheme."
The HOS was introduced for the "sandwich class" who earned too much to qualify for public housing but were also unable to afford private sector flats as property prices rocketed in the 1990s.
The government cautiously resumed sales of HOS flats in July ending a 10-month moratorium on sales of publicly built apartments in a failed bid to boost the private property market, a key pillar of the economy, which has plunged since the 1997-98 Asian financial crisis.
However, media reports that the government was considering the more radical measure of granting residency rights to mainland Chinese who purchase property in the territory to spark a revival, met with approval from some analysts.
"I totally agree with that move ... however I don't think it will help the property market much if they just buy flats for residential use," said Edmund Lee, a strategist with Sun Hung Kai Investment brokerage.
"However, if they come here to invest in stocks and securities and buy flats for investment purposes, then if the goverment has the policy in place to allow that, I think it will attract many Chinese businessmen and not just the big tycoons from China to buy here."
Such a proposal would require approval from the central government in Beijing.
However, the Chinese-language Apple Daily cited sources as saying that as a further plunge in property prices would hit Hong Kong-listed Bank of China (Hong Kong), which is heavily invoved in local home mortgages, this enhanced the chances of such a move gaining Beijing's approval.
Currently no restrictions are imposed on mainland Chinese wishing to buy property in Hong Kong although they must have residency status if they wish to live here.
The government said last month it was studying ways to boost property prices in a bid to help the vital sector recover from a slide which began during the Asian financial crisis but denied it was "manipulating" the real estate market.
Residential property prices have fallen 50-60 percent since the crisis, leaving homeowners and mortgagees with much depreciated assets.
The government's move came after ratings agency Standard and Poor's said in a review that Hong Kong's property market remained fragile and the ratings of companies in the key sector may be downgraded.
During a question session in the Legislative Council last week, Chief Executive Tung Chee-Hwa warned that the public should not expect government support measures to have an immediate impact.
"After the measures are announced, it does not mean that in the next couple of days or next couple of months there will be prominent effects to be seen. That may not be the case," said Tung.
However, the government, as the territory's biggest landlord, will certainly wield some influence on determining property prices, he said.
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