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SCMP Reporter

Since its launch at the end of 1994, the sandwich-class housing scheme has come under criticism.

 Beneficiaries of the scheme have thrown their weight behind the project, which was introduced to help middle-class households achieve home ownership.

 The idea of subsidising people having difficulty in buying flats in the private sector because of spiralling prices is not bad.

 However, the problem is how to define the so-called sandwich class and whether the Government is over-subsidising.

 Under the existing Government definition, those earning a monthly household income of $30,001 to $60,000 are classified as sandwich class.

 These families also can choose to use the sandwich-class housing loan, with a maximum of $550,000, to purchase private-sector flats.

 Critics questioned the need to subsidise families with a monthly income of up to $60,000.

 The question of taxpayers over-subsidising these families was raised again during the launch of two new sandwich-class housing projects - the 712-unit Cascades in Ho Man Tin and the 1,465-unit Highland Park in Kwai Chung.

 The HKHS said the selling price for Cascades averaged $3,800 per square foot while that for Highland Park was $3,600 per sq ft. The prices represent a 40 per cent discount on full-market prices, as estimated by HKHS.

 Based on this discount ratio, full-market prices estimated by the HKHS would be about $6,300 per sq ft for Cascades and $6,000 per sq ft for Highland Park.

 Whether the pricing has been fixed reasonably also is open to criticism.

 Estate agents said units in the 17-year-old Home Ownership Scheme project Chun Man Court, neighbouring Cascades, were traded at more than $5,000 per sq ft.

 Not too far away lies a private development being built by China Overseas Land & Investment, which agents expect to be priced about $9,000 per sq ft when it goes on sale later this year or early next year.

 The Ho Man Tin area generally is regarded as a prestige living area, with many high-end residential properties developed there, although it is partly occupied by public housing blocks.

 The units in Highland Park, located on a hill near the Lai King MTR station, command good and open views. Are their prices too low?  Estate agents said transacted prices of units in the nearby 14-year-old Wah Yuen Chuen were about $6,500 per sq ft.

 Critics also cited the latest launch of Home Ownership Scheme (HOS) projects for comparison.

 The most expensive units available in the projects are those in Charming Garden phase two, at Mongkok, selling for an average of $3,325 per sq ft, which is only several hundred dollars cheaper than Cascades and Highland Park.

 However, HOS flats are offered to households earning a monthly income of $30,000 or less.

 One may argue that Charming Garden is located near the new airport railway's Olympic Station so its units attract a higher price, and that the target buyers of the Housing Authority, which takes care of HOS schemes, are those 'wealthy' households living in public housing estates.

 This may not allay criticism as analysts reckoned that the discount pricing of Cascades and Highland Park would enable the buyers to take significant capital gains on re-sale of the units on the open market after the five-year restriction.

 Since 1994, the HKHS has sold seven sandwich-class housing developments involving 6,000 units.

 The last sale took place in April, involving 2,352 flats at The Pinnacle in Tseung Kwan O, Sunshine Grove in Sha Tin and Hibiscus Park in Kwai Chung.

 The HKHS aims to build 30,000 units under the scheme by 2003.

 Some people might say it is unfair to compare the sandwich-class projects with private-sector developments which are usually of a higher quality.

 Yet, the HKHS always has emphasised that its projects are of a design and quality comparable to the private sector.

 Centaline managing director Shih Wing-ching said the sandwich-class housing scheme was overdone as it was unreasonable to subsidise families with a monthly income of up to $60,000.

 He said those families earning between $30,000 and $60,000 a month had the ability to buy properties in the private sector.

 'The question is they may have to buy a smaller flat,' he said.

 Units in Cascades measure 539-962 sq ft. Those in Highland Park are 593-820 sq ft.

 Mr Shih questioned whether the Government needed to provide bigger units to the middle-income families.

 'Many people in Hong Kong are still living in 400-sq ft private units. The poorer stay in 200 sq ft or 300 sq ft public housing units,' he said.

 The unit prices of Cascades range from $1.87 million to $3.65 million. Those of Highland Park vary between 1.74 million and $3.36 million.

 A qualified sandwich-class household can buy a 700 sq ft unit in Cascades for about $2.8 million.

 After paying a 20 per cent, or $560,000, down payment, the buyer will pay a monthly mortgage instalment of about $20,000 on a 20-year repayment period.

 That household also could buy a 582 sq ft unit in neighbouring Chun Man Court in the open market.

 The only difference would be an extra 10 per cent down payment, but monthly mortgage instalments would be down to about $17,600.

 Families that could afford the $3.65 million and $3.36 million prices for the most expensive units in Cascades and Highland Park were even more financially capable of purchasing smaller units in the open market, analysts said.

 Mr Shih said: 'The sandwich-class scheme is subsidising those families who are better off than the poor.'  The Government should do more to resolve the problem of the poor before helping those better off, he said.

 An overall review should be conducted on the scheme, restricting the units to be built to smaller size, especially when the Government was trying to increase the ratio of home ownership in the SAR, he said.



Is the middle class being made too comfortable?