September 2008 will be remembered by the world as the most dramatic month in financial history. Lehman Brothers. the fourth largest investment bank in the US. collapsed amid the historical credit crisis; Merryll Lynch was sold to Bank of America as other salvation plans failed; AIG. one of the world's largest financial groups. went into deep trouble and was only saved of its immediate closure by US government's injection of US$85 billion; Wachovia Bank was in negotiation to be sold and more than a dozen US banks closed down since the subprime woes surfaced. Even the survivors Morgan Stanley and Goldman Sachs had to change its business model to the traditional commercial banking. In Europe. Fortis Group had to be saved by the Belgian government. Hypo Real Estate was calling for German government's bailout. and many other European governments had to dig deep into their reserve to salvage falling financial institutions. In UK. troubled mortgage lender Bradford & Bingley had to be nationalised to avoid closing down after UK government rushed to save Northern Rock a few month earlier.

Despite the successful sale of Soho 38 in Midlevels Central. the property sales market is still suffering from significant drop in transactions. The more pessimistic outlook of property market has prompted sliding of property stocks in the stock market. which is already long battered by the global credit crunch and slowing major economies.

The luxury property sales market continued its lull in the summer. There were sporadic transactions in the Southside. nothing significant in value. In Midlevels and Happy Valley. sales were just a fraction of the heyday; and again, nothing exciting. We don't expect to see any significant change in status quo for the remainder of the year.

Like it or not. the market is not moving in the direction most people would prefer it to. It's clich'again the market is plagued by the adverse affects of a tight monetary policy on the Mainland. declining stock market. high oil price and surging inflation. The property market is feeling the pain. with dwindled sales across the board and softened price in many upscale locations.

There are strong signals from the US that the interest rate reduction may be coming to a halt, as various indicators are showing a declining economy. It is too early to tell if the rate will reverse its direction immediately when inflation is gathering momentum. One thing is for sure. the US government is caught in a dilemma. The struggling economy needs low financial cost to bail itself out of recession, but inflation is feared to spin out of control if not reined in by higher interest rate and tighter credit control.