Housing plan homes in on an unwanted sector
Jake van der Kamp
Today some more interesting figures on Hong Kong housing, which have fallen into my lap and contradict some widely held perceptions of the housing market.
The figures come from a survey commissioned by the Government's Planning Department last year on the housing aspirations of households.
They show that for all the Government's proposals to build 30,000-35,000 Home Ownership Scheme (HOS) units a year, the public does not favour this particular form of housing.
Only 18 per cent of the respondents rated HOS as their preferred type of housing.
The figure was 21 per cent for those living in public rental housing or already in HOS units but only 14 per cent for those in private housing.
Despite the lower cost of HOS units, fully 48 per cent of respondents said they preferred private housing. This figure went to 66 per cent for those in HOS housing at the time.
It is also worth noting that 33 per cent of all households preferred public rental housing, that more than half of all respondents living in public rental housing rated it as their preferred type and that even 22 per cent of respondents in private housing rated public rental housing as their preference.
The survey did not give reasons for these preferences, but they can be deduced. If you buy an HOS flat, you can sell it on the open market only after 10 years and even then subject to the payment of a premium.
Within the first three years of ownership, you can sell it to no entity but the Housing Authority and then at your purchase price. From four to 10 years, you can sell it at prevailing HOS prices or at a negotiated price to a public housing tenant, but he will have to surrender his existing public housing rights and assume your premium.
These rules, by the way, constitute a relaxation of previous rules.
Far better to buy the flat outright in the private sector and get a title to it clean of such encumbrances, or pay low rents in public rental housing and have the freedom to jump when you want. This, the survey's figures suggest, is certainly the way most households seem to think about housing. The Government does not appear to have paid much attention to them.
The other figures of interest the survey reveals are that 48 per cent of all owner-occupiers are free of mortgages (52 per cent in private housing) and among those who do carry mortgages the median ratio of mortgage to income is only 30 per cent.
These figures go a long way to contradicting the perception that mortgage burdens are too high in Hong Kong. Even for private housing bought less than two years earlier, the ratio was only 40 per cent. This is squarely in line with mortgage-to-income ratios elsewhere in the world and with the normal prudence one would expect of the banks.
As previously pointed out in this column, there is something odd with the widely quoted estimates of affordability which set much higher mortgage to income ratios in Hong Kong. They probably have their income figures seriously wrong.
But the facts are now in. The mortgage burden isn't so heavy at all.