Loans for private sector to rise with cut in subsidised flats
More loans will be provided to allow families to buy flats from the private market as the Housing Authority cuts back on supplies of government-subsidised apartments over the next six years.
The number of loans issued annually under the Home Purchase Loan Scheme will be increased to 5,000 in 2003-05 and 6,000 in 2005-07. During the same period, the supply of home ownership flats will be slashed by at least 21,000. The scheme now offers 4,500 loans of up to $660,000 a year.
'The authority approved the policy last year to slash home-ownership flats and replace them with loans,' a government source said.
The move is seen as an attempt to bolster the sluggish property market as the authority builds fewer subsidised flats over the next five years. It is hoped the number of loans offered each year will compensate for an equal reduction in the number of subsidised flats.
The Government has come under increasing pressure from property developers to replace the sale of subsided flats with direct loans to buy private flats.
'It would be a lie to say the authority pays no attention at all to the property market,' the source said. 'It is not the first time the authority has tried to help the property market with its policies.'
He stressed the Home Ownership Scheme would not be scrapped altogether, repeating authority chairman Cheng Hon-kwan's point that they were needed for low-income families.
But he would not rule out further cuts on flat supplies and more loans, saying it would depend on 'their relative popularity in the future'.
However, the authority's home ownership committee member Wong Kwun said the move amounted to direct subsidies to private developers.
'This is to prop up the property market. Coupling the effects of cutting production with increasing loans will definitely push up flat prices,' Mr Wong said. 'The Government has been looking for excuses to prop up the market.
'I'm not surprised it has given in to developers' pressure as this will likely favour the Chief Executive gaining their support when he is up for re-election.'
Mr Wong said the committee had not yet formally approved the new loan quotas, despite its approval of the reduction in subsidised flats last year.
