Applications open for first batch of Hong Kong’s discount ‘starter flats’ but the size of the units leaves some buyers unenthused
- Subsidised flats are offered at a 38 per cent discount and are open to people who earn too much for public housing but not enough to buy on the open market
- Buyers are scrambling for 450 flats in Hung Hom, ranging from 261 to 507 sq ft in size, in the pilot test of the starter home scheme
Small as it might be, a 300 sq ft one-bedroom flat in a new development in Kowloon going for HK$3.9 million (US$497,762) would be considered a bargain in Hong Kong’s red-hot property market, and for aspiring homeowner Stephy Ma it is her only shot of ever affording a new flat.
“It’s not a reasonable price at all for such a small flat, but we don’t really have much choice here, do we?” Ma said.
Ma was one of more than 700 people who took a tour of show flats for the city’s first batch of subsidised “starter homes” on Thursday morning when the scheme opened for applications – and was one of those unhappy with the small space they encountered.
The 450 flats in Hung Hom are part of a new government initiative aimed at helping eligible middle class families and single, young professionals get onto the property ladder by offering them at a 38 per cent discount.
The flats, which range from 261 to 507 sq feet in size, will go on the market from HK$3.14 million to HK$6.6 million.
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.
Ma, who works in sales, said the studio flats were too small and criticised the government for not considering the well-being of buyers.
“Isn’t the government supposed to be helping us taxpayers raise our living standards? The place doesn’t even have enough room for a proper bed,” Ma said.
In the show flat, a studio flat doubles as bedroom and living room, with the bed giving way to desk space when folded away against the wall.
Visitors to the showroom on Thursday said the estate was in a convenient location, but some complained the studio flats did not have enough space for a washing machine and that the toilets did not have any windows.
The smaller flats do not come with washing machines but prospective residents may use a shared laundry inside the building.
Those who wish to install a washing machine may also do so, as the required plumbing is in place.
Aside from collapsible furniture to help maximise space, the project includes a number of “smart building” features. All flats are equipped with a digital tablet, which includes functions such as allowing residents to book club house facilities, check real-time air quality and the availability of lifts. The estate also includes a wide range of communal facilities such as a gym, a yoga studio, a storage room and a children’s playroom.
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 earn too much to be eligible for the government’s subsidised flats, but who are not wealthy enough to buy a home on the open market.
A five-year resale ban is in place, long enough to ensure that the flats are not flipped for a quick profit, but also short enough to allow upward mobility for buyers to swap for bigger flats in the private market.
Only permanent residents without 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 the discounted amount – will the buyers be able to resell the flats or lease them out.
The URA expect households to move in around mid-2020.
Some of the prospective homebuyers are hoping to be lucky to be among the chosen few.
A Mr Tang said that paying the mortgage of the flat would be less of a burden as buyers for this project can borrow up to 90 per cent from the bank on a mortgage of the flat.
“That’s the only way my nephew can afford the down payment, it’s too difficult on the open market,” Tang said.
Buyers can normally only borrow up to 60 per cent for small flats priced under HK$7 million in private development projects.
Another buyer, August Tam Wai-lam, 33, who works in engineering, hopes to buy the flat so he and his wife and four-year-old daughter can all live in the same place.
The public housing flat where he and his parents live is too small to accommodate five people, so his daughter is taken care of by a relative in a 70 sq ft subdivided flat, while his wife travels back and forth between the city and the mainland.
“Flats on the open market are just too expensive now. Even though I know the chances of getting one here are really slim I might as well give it a go,” Tam said.