Sandwich class housing scheme axed
A housing loan scheme has been scrapped and the income limit for another cut in an overhaul to take account of plunging property prices.
The six-year-old sandwich class plan, put on hold in October, has been abolished, while applicants for the home starter package must now earn $60,000 or less a month, down from $70,000.
A third scheme, the Housing Authority's Home Purchase Loan Scheme, remains unchanged. It aims to help low-income public tenants buy flats.
Secretary for Housing Dominic Wong Shing-wah said the overhaul would provide clearly distinguished streams for subsidised home loan applicants.
The revised Home Starter Loan Scheme would have duplicated the now obsolete sandwich-class plan, which had loaned $2.7 billion to 5,700 families, he said.
'Owing to the significant adjustment in property prices during the past year and the need to adhere to the principle of affordability, we have decided to reduce the upper income limit of the Home Starter Loan Scheme,' he said.
'Under present market conditions, and given that many potential Sandwich Class Housing Loan Scheme applicants can apply under the Home Starter Loan Scheme, a separate scheme for the sandwich class no longer serves a useful purpose.' Members of the property sector welcomed the decision but thought more changes should have been made, particularly to the annual quotas of 4,500 home purchase and 6,000 home starter loans.
The managing director of Centaline Property Agency, Shih Wing-ching, said one scheme would be enough and the income ceiling should have been cut more. Property prices have fallen 45 per cent since their peak in 1997.
'A family earning $30,000 a month can buy very good flats now,' he said.
Mr Shih believed the property market would receive only a short-term benefit from the changes.
'They create new demand, but once the quota is used up, no one will buy new flats,' he said.
Hong Kong Property Services (Agency) managing director Michael Choi Ngai-min argued the Government should increase the quotas to counter the effect of abolishing the sandwich class scheme.
He said there should be 12,000 home starter and between 8,000 and 10,000 home purchase loans available every year.
Democratic Party housing spokesman Lee Wing-tat said: 'It was necessary to simplify the very confusing loan schemes.' But the $900 million left in the sandwich class scheme kitty should be transferred to the home starter plan rather than going back to the Treasury, he said.