• Wed
  • Nov 19, 2014
  • Updated: 8:58pm
NewsHong Kong

‘Housing for Hongkongers’ scheme may be wound down, says CY Leung

CY Leung says scheme to provide locals with affordable homes could be put on hold as other measures have cooled the property market

PUBLISHED : Tuesday, 01 April, 2014, 2:27pm
UPDATED : Wednesday, 02 April, 2014, 11:39am

A scheme to build homes exclusively for Hong Kong people in an effort to provide middle-class buyers with affordable flats may be shelved.

Chief Executive Leung Chun-ying suggested yesterday that the Hong Kong Property for Hong Kong Residents scheme could be suspended as the number of outside buyers in the market had dropped to a "very low level".

But real-estate analysts said the scheme, under which flats built on selected sites can be sold only to Hong Kong permanent residents, should be scrapped altogether as it had been ineffective in providing cheaper flats.

"When we launched the programme, we said it was a pilot scheme and would be used only when the market was getting too hot," Leung said yesterday. "But after we launched two stamp duty measures, the market has cooled down."

He did not give a direct answer to questions about whether the scheme had already been shelved.

Under the scheme, announced in Leung's 2012 election manifesto, the flats are restricted to Hong Kong permanent residents for at least 30 years and can be rented to non-Hong Kong tenants for only five years.

It was aimed at shielding middle-class buyers who did not qualify for any government subsidy from the effect of mainland speculators who were blamed for heating up the market.

But other anti-speculation measures have since been imposed, including a 15 per cent stamp duty on sales of flats to non-local buyers.

Apart from incorporating the sales conditions into land leases, the Development Bureau said earlier that it would draft a new law to back up the scheme. It declined to say yesterday whether it had stopped drafting the law.

Leung's comments came as he addressed a news report claiming the scheme had been shelved. "We are still monitoring the development of the property market. The demand from overseas buyers has dropped to a very low level," he said.

"The scheme has been accepted by the market and is feasible. [If shelved,] we can reintroduce it in a short period of time when necessary."

Centaline senior associate research director Wong Leung-sing said it was the spectre of rising interest rates that had dampened interest in the property market. He believed that the scheme should be scrapped.

"Mainland buyers are the scapegoat. The heated market was actually caused by a long period of low interest [rates]," he said. "The scheme will not provide cheaper flats. On the contrary, the Kai Tak sites sold under the scheme were the priciest in the district so far."

The Kai Tak sites are among four sold under the scheme so far. The others are Housing Society projects in Sham Shui Po and Shau Kei Wan.

Purchases by non-local buyers and firms fell to an average of 96 a month or 2 per cent of total transactions last year, much lower than the monthly average of 365 purchases or 4.5 per cent of transactions from January to October 2012.

Chau Kwong-wing, chair professor of the department of real estate and construction at the University of Hong Kong, said the scheme did not lower overall flat prices. "Unless it is applied to all sites, non-local buyers can always get a flat on other sites," he said, adding that the scheme only reinforced conflict between Hong Kong and the mainland and "hurt the city's image".



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This article is now closed to comments

Dai Muff
More mainland developers get into the Hong Kong market. CY removes the promise of “Hong Kong property for Hong Kong residents” claiming the market has cooled. And yet prices have not gone down at all in the estate agents near me. In fact, my rent has just gone up 15%. Wonder why.
The market has cooled????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
Homes are more affordable for HK residents now too???? What kind of stuff is this CE on???
The market has cooled? What figures support this or this merely a gloomy picture painted by developers and agents. Housing prices may not have fallen by much though there is a marked decrease in the number of transactions. I hope CY comes up with other measures if he decides to withdraw the present plan.
Cooled...? Like as cool as Donald Tsangs bow tie? Me thinks not.
Home price will fall 30% tomorrow seeing that CY usually achieves the opposite of what he says.
Prices have definitely fallen according to the lady copy of square foot that I looked at / they show 4 year charts and all were showing falls however the data comparisons are impacted by the big fall in volumes. Noble objective by the govt but they still haven't addressed the fundamental issues driving Proprty market investment in Hk.
That's the problem. Its a mixed bag. Some say prices have fallen some say they havent. Cant CY simply appoint an economist or someone to provide figures showing the market has cooled before making a formal announcement to stall the plan. If this continues and more measures are withdrawn it may undo the good work in the housing area that CY has done over the past year. Show us you wont buckle under pressure from the land developers CY. Most of HK's population is rooting for you.


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