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Hong Kong housing

Housing deal could benefit Hong Kong public housing buyers and sellers

Subsidised housing committee passed proposal on Thursday, but reduced the number of eligible flats after concerns were raised by members

PUBLISHED : Friday, 01 December, 2017, 8:32am
UPDATED : Friday, 01 December, 2017, 11:29am

From next year, a new scheme will give as many as 2,500 people looking to buy a second-hand government-built home and the owners who are selling their properties a better deal, according to a committee that advises Hong Kong’s Housing Authority.

Under the proposal, the 30 per cent discount the original owner of the home was given will also be applied to the white-form applicant looking to buy the home. Previously, the original owner would have to pay back the 30 per cent discount if selling the property within two years of its purchase, and this cost would then be applied to the buyer.

The authority’s subsidised housing committee on Thursday passed the proposal, aimed at boosting home ownership in the city, but revised the annual quota down from a range of 3,000 to 5,000 flats to a more conservative 2,500 due to concerns that it would drive up property prices in the resale market.

Under the Home Ownership Scheme (HOS), new government-built flats are sold to eligible applicants at a 30 per cent discount. White-form applicants – first-time buyers who meet eligibility criteria such as having a household income below HK$26,000 a month for singles or HK$52,000 for families of two or more – who want to buy flats in the second-hand market are required to pay the full price.

Under the new scheme, the discount applied to the first owner would be maintained for a quota of 2,500 eligible buyers in the second-hand market. The figure will be revised each year.

“We can see that the demand for white-form applicants to own a home has been considerably large, whether it is flats under the HOS, HOS flat resales, or even flats offered by the Housing Society,” committee chairman Stanley Wong Yuen-fai said.

There have been two trial runs in 2013 and 2015 to sell the subsidised flats to buyers by waiving the discount payback . Chief Executive Carrie Lam Cheng ­Yuet-ngor in her policy address last month proposed to make the scheme a regular one as it would help more middle-class Hongkongers become homeowners.

The plan would be launched in the first quarter of next year, at the same time when a batch of 4,400 new flats would go on sale.

For winners in Hong Kong’s Home Ownership Scheme, an affordable flat brings trade-offs

Some members were concerned that an annual quota of 3,000 to 5,000 flats would push up property prices in the second-hand market, while others doubted that there were enough subsidised flat owners willing to sell their flats in the second-hand market.

Lawmaker Andrew Wan Siu-kin, also a committee member, expressed concerns about making the scheme a regular one.

“When the demand is a lot higher than supply, and property prices have been on the rise, would this scheme give a wrong signal to the second-hand market and further drive up property prices?” Wan said.

Thousands of Hongkongers could be eligible for cheaper homes under Housing Authority proposal

According to the government, secondary market prices rose 64 per cent, compared with 47 per cent in the private market, between May 2013 and April 2015.

Although the government allowed for up to 7,500 flats to be sold during the two trial runs, there were only about 4,000 transactions eventually, indicating low supply.

But more than 66,000 buyers applied to buy up to 5,000 second-hand flats in the first trial run and more than 43,000 buyers applied to buy 2,500 flats in the second trial run, indicating high demand.

Wong however said that there was no conclusive evidence to show that the pilot schemes in 2013 and 2015 were the cause for the rise in property prices.

Each new ‘green form’ subsidised home in Hong Kong will benefit two families, not just one

“There could be a lot of factors. As we all know, property prices in Hong Kong tend to fluctuate a lot. But when we look at policies targeted at subsidised housing, we should not bring property price considerations into discussion. Subsidised housing policies should be decided based on the sole intention to help low to middle-income families solve housing needs,” Wong said.

Another member, Anthony Chiu Kwok-wai, said the annual quota was more similar to the actual transaction each year in the previous two trials, and thus it made more sense for the quota to be revised to a more conservative figure.

Among the annual quota of 2,500 flats, 2,250 flats will be reserved for family applicants while the remaining 250 will be reserved for single applicants.

A 383 sq ft HOS flat in Diamond Hill, Kowloon was sold in the second-hand market for HK$4.8 million, or HK$12,533 per sq ft, in November, according to real estate agency Centaline Property.