Eligible buyers rushed to join a ballot for new subsidised flats in Tsing Yi yesterday even though the mortgage payments could eat up at least half their monthly income.
They were seeking homes in the Housing Authority's Greenview Villa Estate, in which flats are being offered at a 30 per cent discount. They range in size from 420 sq ft flats costing as little as HK$2.4 million to 700 sq ft flats for HK$5.1 million.
The society received 600 applications yesterday for the project, the first opened for sale under the government's My Home Purchase Plan, of which 350 were from single people. Many applicants were young couples; some parents returned forms for their children.
Monetary Authority guidelines for properties priced under HK$7 million say banks should not make a loan for which repayments exceed half the buyer's monthly income, or more than 60 per cent of income if interest rates were to rise two percentage points after purchase.
The plan was conceived as a rent-to-buy scheme but was turned into a direct- sales scheme after Leung Chun-ying was elected chief executive. The rent-to-buy element is under review.
The sales became more attractive when the society said it would provide guarantees for buyers to obtain mortgages of up to 90 per cent of the price from banks. Individuals with a monthly income of HK$25,000 or less and households with a monthly income of no more than HK$40,000 are eligible.
Applicant Fred Yeung Tsz-yin, a clerk in his early 30s who rents a private flat in an old building, said he and his wife, with an income of HK$20,000 a month, hoped to buy in Greenview Villa even though it meant they could no longer afford to have a baby.
"The rent keeps rising and we cannot continue to rent a flat in the long run," he said. The rent takes half their monthly income and he expects their expenses to rise by a third if they buy.
Prices at Greenview Villa, a three-block estate with 988 flats expected to be completed by 2015, work out to HK$5,841 to HK$7,402 per square foot of saleable area, which excludes shared space and facilities.
Yeung said the prices were similar to those for private second-hand flats. "This estate is new and the location is good, accessible by MTR."
He said buying the flat would pose a heavy financial burden.
"I hope the chief executive will reconsider the rent-to-buy scheme. I don't have much cash in hand and this requires a large sum of capital to start off."
Another applicant, Joey Lam, plans to move in with her husband and two children, aged one and three. She said the family had income of about HK$30,000 a month and might have to cut extra-curricular activities for their children to save money.
University student Roger Sung, 23, came with his father.
"It's about time to purchase a property," he said.
Applications are open until January 18 and ballot results will be announced in February.
Greenview Villa is the first residential property development in the city at which flats are being sold by saleable area only rather than by gross floor area.