Downturn could become a dream

PROSPECTIVE flat buyers could consider saving up their year-end bonus to take advantage of the property downturn to achieve the dream of home ownership.

The bonus amount may be a small sum relative to the SAR's high residential property values.

However, the Government's plans to extend preferential loans to first-time buyers will make it easier for the less wealthy to purchase a modest home.

From next year, first-time buyers can secure a maximum loan of $600,000, or 30 per cent of the price of the property, whichever is lower, from the Government under the Home Starter Loan Scheme.

Households earning $70,000 or less a month will be qualified to apply for the loan, if they have not owned property in the past five years and have net assets of no more than $1.2 million.

For instance, a household earning $70,000 a month is given a two- month year-end bonus amounting to $140,000.

By saving up the bonus, it will have at least $740,000 at its disposal, assuming it successfully secures the government loan.

Estate agents said the household could use that amount as a down- payment to purchase a flat worth about $2 million. If the household had other savings, it would be financially stronger to choose properties of higher value and quality.

Louis Ng, senior district sales manager for Tuen Mun at Centaline Property Agency, said a household could afford a second-hand flat of 500 to 700 square feet in the New Territories, depending on location and age.

The household could go to the primary market to buy a higher-priced and bigger flat and secure extra mortgage finance from the developer in addition to the normal 70 per cent bank loan, he said.

Most developers also provide a staggered payment alternative for unfinished residential properties put on pre-sale. Under the scheme, buyers can pay the down-payment in phases and complete the purchase upon the occupation of the flat. That may ease a buyer's initial financial burden.

As property prices had dropped by 20 per cent or so recently, some analysts said prospective buyers could try to look for bargains in both the primary and secondary markets.

Anticipating an increasing number of properties available for sale, developers are keen to unload their properties at discount prices and offer sweeteners and preferential payment terms to buyers.

Agents said second-hand flats in Kingswood Villas in Tin Shui Wai and housing estates in Tuen Mun were some of the more affordable second-hand properties available for first-time buyers.

Peter Wong, district sales manager for Kwun Tong at Hong Kong Property Services (Agency), said first-time buyers interested in properties in urban areas would most likely purchase smaller and older units.

Those with more cash assets could choose bigger and new properties. New projects coming on the market in the next few months included Henderson Land Development's Metro City phase two in Tseung Kwan O and Wheelock Properties' Galaxia in Diamond Hill.

Under the Government's scheme, 6,000 loans for first-time home buyers will be offered each year.