The Housing Authority policy of building public rental flats with the proceeds of subsidised homes built for sale is "no longer applicable", the housing minister said yesterday.
Professor Anthony Cheung Bing-leung was speaking after an analysis by a housing policy scholar and authority member showed that sales of new Home Ownership Scheme flats between 2017 and 2019 would yield little more than the cost of their construction.
The figures, collated by Dr Lau Kwok-yu, of City University's department of public policy, were revealed at an open meeting of the authority yesterday.
They showed that three out of the seven HOS projects endorsed by the authority in the past year will see financial deficits.
The seven estates, to be completed between 2017 and 2019, will together provide a total of 8,728 flats. The construction cost of each flat is estimated at between HK$1.03 million and HK$1.67 million.
After deducting deficits for building and operating non-profitable car parks for residents, the net surplus generated from the sale of each of these flats will be only HK$5,300 on average - nowhere near enough to subsidise public rental flats.
Cheung said after the meeting that the cost of constructing a public rental flat was between HK$700,000 and HK$1 million.
Stopping short of commenting on Lau's numbers, the minister acknowledged that the model of financing public housing would need to be changed.
"I will not comment on the figures of individual projects. But because of rising construction costs … the past experience of supporting two public rental flats with the sales revenue of one HOS flat is no longer applicable," Cheung said.
For the previous six HOS projects endorsed by the authority in June 2012, each of the 2,266 flats will bring a net surplus of about HK$70,000 after deficits from car parks are deducted, according to Lau's analysis.
The self-financing authority had already been put on notice that its policies would have to change. In March, the government-appointed working group on long-term fiscal planning published a report which urged the authority to review its business model because its financing was unsustainable.
The authority is due to submit a report on its review to the financial secretary by March next year.