Hong Kong housing

Discount Hong Kong starter homes go on the market, at 38 per cent below the going rate

  • The 450 units in the ‘eResidence’ project in Hung Hom, are aimed at people too wealthy to qualify for public housing and not rich enough to buy at market rates
  • Applicants must be first-time buyers in Hong Kong and are barred from reselling the property on for the first five years
PUBLISHED : Monday, 31 December, 2018, 3:25pm
UPDATED : Monday, 31 December, 2018, 10:46pm

The first batch of “starter homes” for Hongkongers will go on the market from HK$3.14 to HK$6.6 million after a 38 per cent discount.

A five-year resale ban will be slapped on the flats; the project’s builder said the relatively short restriction period was aimed at ensuring upward mobility for buyers.

Applications to purchase the 450 units, which range from 261 to 507 sq feet in size, will open on January 3.

The Urban Renewal Authority (URA), which was invited by the government in July to pilot test the “starter home” scheme, said 82 per cent of the flats at the “eResidence” project in Hung Hom, Kowloon are studio and one-bedroom flats.

The rest are two-bedroom flats.

URA managing director Wai Chi-sing said the project was aimed at people with high incomes, and that the five-year ban was reasonable.

“We think these people will have a higher chance to trade it in for a better flat [in the future],” Wai said.

“If the resell ban is too long it might cause them inconvenience.”

Wai also said the URA would have made “over a billion dollars” more had they sold all the flats at market price. Under the current discount, the projected revenue would be “very close” to the project cost, he added.

For bargain price of HK$3 million, young can get 260 sq ft starter home

“Smart building” concepts were introduced in the project, Wai said. All flats are equipped with a digital hub, which allows residents to book club house facilities and check availability of lifts.

Sensors will also be installed in electricity and water meters for more efficient management.

The addition of electronic components in estate management will not increase management fees paid by residents, he added.

The smaller flats, however, do not come with washing machines but prospective residents may use a shared laundry inside the building, Wai said.

Those who wish to install a washing machine may also do so, as the required piping is in place.

The “starter home” scheme was one of six housing initiatives announced by Chief Executive Carrie Lam Cheng Yuet-ngor in her 2017 policy address.

The project was said to benefit people who are too rich to be eligible for the government’s subsidised flats, but do not earn enough to own a home in the private market.

Why savvy homebuyers should wait until the second half of 2019

Only permanent residents without a property in Hong Kong can purchase the flats, so long as they meet income and asset limits. Owning property elsewhere does not disbar candidates from the scheme.

For single people, the monthly income limit is set between HK$28,501 and HK$37,050.

Family applicants must have a household income of between HK$57,001 and HK$74,100 a month to apply.

Asset limits of HK$1.28 million and HK$2.55 million are also set for single and family applicants.

Only after paying the land premium – to make up for the discounted amount – will the buyers be able to resell the flats or lease them out.

Apart from the 450 “starter homes”, the project also has 43 other flats that could be sold at market value. Wai said the sale of these flats would help the URA recover the cost of building the project.

He also said 15 people who were living at the site before an old tenement building collapsed in 2010 and killed four people had expressed interest in purchasing flats in the project.

Application to buy the “starter homes” will be open until 23 January. The authority will carry out a draw in March to determine the sequence for applicants to pick the flats in June, giving priority to family applicants.

The URA expected households to move in mid-2020.

Democratic Party lawmaker Andrew Wan Siu-kin, who is the deputy chairman of the Legislative Council’s housing panel, said the government may have made a mistake by letting those who own property overseas apply.

“It might work against the goal of the scheme,” Wan said.

He also said the resell ban should be longer to discourage buyers from speculating.

Wong Leung-sing, senior associate director of Centaline property agency’s research department, said it is uncertain if the discounted flats will be popular.

“My question would be: will people earning this level of income be interested in these flats?” Wong said.

He added most young workers would not meet the income limits, and those who were eligible might already have bought their first flat.

Wong also said the URA’s flats were more spacious than some “nano-flats” other developers were putting on the market.