More than 10,000 applications for 450 discounted Hong Kong ‘starter homes’ in just 10 days

There have been more than 10,000 applications, mostly from youngsters, in just 10 days for a subsidised home purchase scheme for first-time Hong Kong buyers, underlining massive demand amid signs the property market is starting to cool, according to an initial analysis by the Urban Renewal Authority. The authority, which was tasked by the government to manage the Starter Homes pilot scheme, said that close to two-thirds of the applicants were single, and 80 per cent aged between 18 and 38. In a piece uploaded on Sunday on his official blog, authority managing director Wai Chi-sing also noted that about half of the applicants had assets valued under HK$640,000 (US$82,050). He said the response so far had been good, showing the scheme was particularly attractive to “unmarried young people as well as young couples”. But he was quick to add the analysis also showed that although many of the applicants were relatively well off, they still could not afford to buy homes on the private market. Hong Kong’s first launch of new homes in 2019 off to a good start There have been debates recently on whether the government should relax current mortgage caps to allow easier down payment arrangements for first-time buyers. Authority non-executive director Wu Chi-wai, also a lawmaker, opposed the idea. “The current government help for first-time buyers is suitable. A buyer will only face a higher risk if he is allowed easier down payment arrangements. One won’t need too much imagination to know what it will be like if the market cools further,” said Wu, a member of the Legislative Council’s housing panel. However, Professor Terence Chong Tai-leung, executive director of Chinese University’s Lau Chor Tak Institute of Global Economics and Finance, argued that a higher mortgage loan-to-value ratio could be of more help to buyers than offering further Starter Homes flats. “We understand that a lower mortgage ratio can, of course, help banks control their risk better. But it comes with a social cost. That is, many young people cannot afford the down payment and thus they cannot afford to buy,” Chong said. “Some young people may have to delay their plan to get married until they can save enough money for a down payment to buy a home. It is not good for easing the city’s ageing population problem.” The authority also found some 40 per cent of the applicants lived in the New Territories. Wai hoped the analysis could help “the government to have better planning in identifying sites for various subsidised housing schemes, including exploring the feasibility of developing more subsidised housing in the New Territories or new development areas”. With saleable areas ranging from 261 sq ft to 507 sq ft, the 450 flats at eResidence in To Kwa Wan sold under the Starter Homes project comprise 114 studio, 254 one-bedroom and 82 two-bedroom units. Discount Hong Kong starter homes go on sale, at 38 per cent off The flats are sold at 62 per cent of their assessed market value, with discounted selling prices ranging from HK$3.14 million to HK$6.61 million. The unit prices are from HK$11,692 per square foot to HK$13,969 per square foot in saleable area. One-person applicants are only allowed to buy a studio or one-bedroom flat, while families can buy any of the three types. The monthly income of single applicants must be between HK$28,501 and HK$37,050, with net assets not exceeding HK$1.28 million. For family applicants, the income limit is between HK$57,001 and HK$74,100, and assets of under HK$2.55 million. Applications opened on January 3 and close at 7pm on January 23. Successful applicants are to be drawn through a ballot expected to be conducted in March. The Starter Homes scheme is one of the core initiatives of Chief Executive Carrie Lam Cheng Yuet-ngor to help Hongkongers buy a flat. The scheme, announced in her 2017 policy address, targets the “sandwich class”, those who cannot afford private housing but earn too much to be eligible for government low-rental housing. Why brownfield sites are not a quick fix for Hong Kong’s land crisis Home prices in the secondary market have fallen 7.2 per cent in the past four months, according to data from the government’s Rating and Valuation Department. A 28-month rally ended in August. Developers have also offered steep discounts at recent project launches to boost sales.