A family in Hong Kong, the world’s least affordable housing market, will need to save for 20.8 years to afford a home in the city, according to the annual Demographia International Housing Affordability Study. Moreover, the Hong Kong Monetary Authority, the city’s de facto central bank, said last month that the average mortgage repayment period had hit an all time high of 333 months, according to its residential mortgage survey conducted in October.

New World’s China unit to invest US$732 million in Guangzhou renewal project

Monday’s announcement also comes after Reuters reported a few months ago that Chinese officials had told major Hong Kong developers they should use their resources and influence to champion state interests. The developers were reportedly asked to help solve Hong Kong’s chronic housing shortage, which has previously been blamed on land hoarding by these developers.

“We hope this is a start and other industry players with land can join us,” said Eric Ma, director of New World Build for Good, the developer’s social enterprise unit. “This project is not for making profit. It is a us giving back to the society – a contribution.”

Pavilia Farm setback to cost New World US$154.4 million in redress

The flats under the scheme will range from 300 sq ft to 550 sq ft and will cost between HK$2.7 million and HK$4.95 million each.

The 300 sq ft flat at HK$2.7 million translates to HK$9,000 per square foot and is based on the discounted land premium under the current HOS scheme plus construction costs. “If sold at cost, a homebuyer will only be required to pay a down payment of HK$135,000, which equals 5 per cent of the HK$2.7 million unit price,” said New World Build for Good. It equates to seven times Hong Kong’s monthly median income of HK$18,400.

If sold normally, these units will require deposits of HK$270,000, or 10 per cent, which equates to 14.7 times Hong Kong’s monthly median income of HK$18,400.

NWD expects China investments to deliver double-digit growth: Adrian Cheng

Under NWD’s scheme, the mortgage will be split into two phases. In the first phase, after the down payment, the buyer of a HK$2.7 million flat will be allowed to draw a first loan of HK$1.215 million, or 45 per cent of the purchase price. This amount will be mortgaged at 2.5 percentage points below the prime rate, which currently stands at 5, so 5.25 per cent per year, for up to 30 years. This equates to a monthly instalment of HK$5,010.

The remaining HK$1.35 million, or 50 per cent of the price, can be paid in phases over a period of 10 years following the initial transaction. “That means homebuyers can have more time to save up for the HK$1.35 million loan, which can be drawn in one or a number of instalments after the completion of the purchase. This will give flexibility to the repayment process and ease housing debt,” said New World Build for Good.

Under existing mortgage plans, homebuyers can apply for mortgages of up to 90 per cent for flats worth HK$8 million or less. Under these rules, buyers would be required to put down a deposit of 10 per cent, or HK$270,000, while the remaining 90 per cent, or HK$2.43 million, would be financed by banks and amount to monthly instalments of HK$10,019.

10:08

Hong Kong has until 2049 to fix its housing crisis, but is it possible?

Hong Kong has until 2049 to fix its housing crisis, but is it possible?

New World Subsidised Housing buyers will be restricted from reselling the flats for 10 years after their purchase, and they will have to pay the land premium to the government before they can put these flats up for sale afterwards.

The developer has four transitional housing projects, which are expected to have about 2,000 units, in progress. These projects, in Tin Shui Wai, Sheung Shui, Yuen Long’s Ngau Tam Mei and Lau Fau Shan, are not under New World Build for Good.