Chief Executive Tung Chee-hwa should use the occasion of his Policy Address to announce a cutback in government subsidies to home buyers because property has become more affordable, according to Morgan Stanley Dean Witter managing director Peter Churchouse.
He said the Private Sector Participation Scheme (PSPS) was no longer necessary.
Property prices had fallen 40-50 per cent from their peak in 1997, making private-sector flats more affordable for households targeted by the plan, he said.
The scheme subsidises private housing for families who cannot afford homes by themselves but are ineligible for public housing.
'There is not now an affordability gap between people who are eligible for public rental housing and people who can afford to go into the private sector.' Mr Churchouse said he did not expect Mr Tung to abandon the PSPS completely, but to cut down on the subsidy in the scheme.
'[The PSPS] may be reconfigured and reconstructed in a way that allowed more private sector participation in that class of housing,' Mr Churchouse said.
