A concerned friend e-mailed me a Hong Kong report which quoted a bank survey predicting a possible 20 percent fall in property prices. She asked me if she should sell her apartment now.

I suppose many Hong Kong homeowners are asking the same question. But they also know the answer. It makes no sense for my friend and other homeowners to worry about the occasional fluctuations in property prices.

There are reasons to worry when the market value of a homeowner's apartment falls below the outstanding mortgage loan. With the mandatory down-payment required to secure a mortgage loan, prices will have to fall more than 30 percent to threaten most Hong Kong homeowners with the negative-equity dilemma.

Even that is nothing new to many Hong Kong homeowners. Most of them experienced this painful dilemma in the aftermath of the outbreak of the 1997 Asian financial crisis which pushed local property prices down more than 60 percent from the pre-97 peak. But most homeowners pulled through despite the accompanying drop in personal incomes as businesses were cutting costs to survive the hard times.

These resilient homeowners are probably congratulating themselves for their fortitude as average property prices in Hong Kong have since surpassed those 1997 levels. Indeed, few people doubt the long-term up-trend of the local property market.

Fluctuations may unnerve speculators who borrow heavily to hoard properties for short-term gains. But, to an average homeowner, who lives with his family, price fluctuations are mere gains and losses on paper.

Property prices may have a psychological bearing on a homeowner's spending habits. In a property downturn, consumer expenditure, as a component of GDP, tends to be lower than during an upswing. But a decline in the value of the property a person lives in has little direct relationship to their spending power.

Most Hong Kong people know that a decent life can be had even with a meager income if a person owns the roof above their head. Having worked and lived in various cities, I can say with some authority that the cost of living in Hong Kong is reasonable if you don't have to pay rent. Other than housing, almost everything else is cheaper in Hong Kong than in Shanghai.

Of course, you can argue that transportation costs in Hong Kong are high. But I seldom find the need to take a taxi in the city because public transport is so efficient and convenient. The bus service in Shanghai is haphazard at best and the subway is overcrowded and inconvenient when you have to change trains to get to your destination.

My advice to my friend is to just hang on to her apartment even if the price falls below the negative equity level. As shown in the previous price meltdown, many Hong Kong homeowners will survive.

For that reason, there is always hope that any price fall, whether triggered by government policies or an economic downturn, will be temporary. The demand for homes will eventually push prices up to even higher levels than previously.

The author is a current affairs commentator.

(HK Edition 04/09/2013 page1)