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Hong Kong property

Acceleration in affordable property sales expected ahead of Lam’s policy address

Around 3,900 flats have been scheduled for sale before Hong Kong chief executive’s maiden policy address in October

PUBLISHED : Tuesday, 12 September, 2017, 3:00pm
UPDATED : Tuesday, 12 September, 2017, 7:56pm

Some developers are expected to accelerate sales of projects offering affordable housing, ahead of the Chief Executive Carrie Lam Cheng Yuet-ngor’s maiden policy address next month, in anticipation of more government measures being announced to make properties more affordable to first-time young buyers.

The then-chief executive-elect pledged in April to address Hong Kong’s housing crisis by launching a “starter home” scheme to help young families unable to get on the city’s property ladder, and who also cannot afford private housing and earn too much to qualify for renting public flats.

Those who had previously bought a government-subsidised flat or owned any other property would not be eligible for the scheme, Lam said.

More details of the starter home scheme are expected in the policy address, such as site selections and timespan.

Former Chief Executive Leung Chun-ying also introduced a “Hong Kong Property for Hong Kong People” scheme for one housing project in Kai Tak, restricting flat sales in that development to Hongkongers for 30 years, but that scheme has been dormant since.

Philip Tse, an analyst at Bank of Communications International, said: “The bank believes the ‘starter homes’ scheme can help to ease the demand driven by ‘rush buys’, prioritise local resident demand, and curb property prices.

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“We also believe this may not be the only property measure, as Carrie Lam has repeatedly emphasised home ownership of local residents. Therefore, we believe developers will try to launch their projects ahead of the policy address,” said Tse.

“As the prices of starter homes are [expected to be] relatively low, they also will have more direct competition to flats under the Home Ownership Scheme, while the impact to private housing is indirect,” Tse said.

“The scheme will also ease demand for tiny flats priced between HK$3-4 million, which also targeted at young buyers.”

Strong sales at Parc City in Tsuen Wan have already encouraged developers such as Wheelock Properties and Sun Hung Kai Properties to accelerate their pace in marketing new projects, which include cheaper housing.

Joseph Tsang, managing director at JLL, called the strong sales at Parc City, has been “a great boost of confidence to the market and developers”.

But he shrugged off any direct association between the policy address and any acceleration in property sales.

“Every year it’s like that. Developers hope to boost sales after the low summer season and before the financial year end,” Tsang said.

Tsang also thinks the starter home scheme will not necessarily be good for competition in the private sector.

“Those starter homes cannot be used for investment purposes and re-sold to the private market. Their target customers are different from those of private flats,” he said.

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Around 3,900 flats, some small-sized and priced below HK$6 million, have now been scheduled for release before the Lam’s policy address, including 2,000 plus units at 1,040-unit Wings at Sea, built by Sun Hung Kai Properties (SHKP), at Lohas Park Station and 355-unit Victoria Harbour in North Point as well as 648 units at Wheelock Properties’ Oasis Kai Tak.

Wheelock announced its project’s price list just three days after it launched Oasis’ soft marketing, while SHKP has actively started promoting its projects, Lohas Park “Wings at Sea” and “IVB”, indicating developers’ keen interest in releasing their projects as soon as possible.

Stanley Wong Yuen-Fai, a Housing Authority member, told local radio recently that Hongkongers now widely expect schemes to include subsidised housing, based on affordability instead of market price.

He also agreed there would be limitations on the resale of these flats, such as the homes only being sold back to the government at original prices.

Anticipation of the chief executive’s new measures appeared to have had limited impact on the sale of The Amused in Cheung Sha Wan, which however, sold 97 per cent of its units last Wednesday night.

Of 204 flats at the “COO Residence”, a new project in Tuen Mun, 175 were sold by Saturday night, which was nearly 90 per cent. There were 2,200 prospective buyers registered in advance, for the flats which range in size from 217 sq ft to 372 sq ft.

Hong Kong’s private residential property prices have surged for the past 16 months in a row, making the city – already the world’s priciest home market – even more unaffordable.

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