GIVEN Hong Kong's penchant for things new and banks' policy of rarely providing mortgages for homes older than 20 years, it would seem that old flats are destined for a date with the wrecker's ball. But, with the current cost of owning a home requiring a cash down payment of between $1.5 million and $3 million, older homes may be seen as a cost-effective alternative to today's high prices. There is a feeling in some quarters that the banks should change their lending policies and give people a chance to own one of these older homes. But there are others who agree with the lending policy and say that setting this arbitrary standard allows for faster redevelopment of older areas. Just how many flats are we talking about? In a report studying the territory's old residential property stock, chartered surveyor Brooke Hillier Parker gives some idea of the magnitude of the issue. It says there are more than 290,000 homes built at least 20 years ago. This represents about 33 per cent of the current housing stock of 861,255 units in the territory. It estimated that by 1997, 35 per cent of the existing 970,000 units would be more than 20 years old. About 55 per cent of the existing stock in Kowloon is more than 20 years old, and 80 per cent is more than 10 years old. Most of these units built 20 years ago or longer are in Cheung Sha Wan, Hunghom, Mongkok and Yau Ma Tei. On Hong Kong Island, 34 per cent of the stock is more than 20 years old and 66 per cent is more than 10 years old. Most of the old stock is in North Point, Wan Chai, Causeway Bay and Western. The Peak, with 62 per cent, and Wan Chai and Causeway Bay, with 55 per cent each, have the highest percentages. In the New Territories, only 13 per cent of homes are more than 20 years old, while 37 per cent are more than 10. The older properties tend to be concentrated in Tsuen Wan, Yuen Long and the outlying islands, whereas in Sha Tin and Tuen Mun they account for less than five per cent of the stock, according to the report. Despite the correction in the residential market, the price of an average flat is still too much for many sectors of the community. A number of people have been pushed to buy new flats in the New Territories, where land and property prices are lower, while in the urban areas more buyers are looking at older properties - which are available at prices significantly lower than the market average. Hong Kong banks maintain a restrictive policy, or virtually reject applications for mortgage lending for properties more than 20 years old because they consider that old properties present higher risk. But property analysts said the risk for old properties was basically the same as that for new properties. Wong Kim-bong, associate partner of Knight Frank Kan and Bailieu, said: 'The risk for old properties has been considered higher because of their low marketability, which is actually caused by banks' tight lending policies. 'Comparing a new flat held by a speculator with an old flat owned by a genuine buyer or an end-user, the potential risk for the new flat may be higher.' Now that banks are reluctant to over-expose in mortgage lending for new properties, the chance for any relaxation for old properties is slim. According to projections, by 1997 the proportion of units more than 20 years old will increase from 33.8 per cent to 35.2 per cent of the total stock. Brooke Hillier Parker said this change would be most noticeable for units larger than 1,720 sq ft, where the proportion was expected to rise from 32 to 38 per cent, and for units below 450 sq ft, where the proportion would rise from 32 to 36 per cent. It said: 'While the rising population of the New Territories and improving transport links to the new towns are major factors in the narrowing of the price differentials between the New Territories and the urban areas, it is clear that the ageing of the stock in the traditional residential area is an increasingly important factor in determining price.'