Concrete Analysis | Cash-for-flats model is superior to Home Ownership Scheme
Mainland will soon start giving low-income earners money towards buying a home. It's a model Hong Kong would do well to follow
The mainland currently provides subsidised rental housing as well as more upmarket housing for sale at subsidised prices - equivalent to the Home Ownership Scheme (HOS) in Hong Kong.
For almost a decade, Hong Kong provided subsidised public housing for rent only, but it recently revived the HOS in response to vocal demand for assisted home ownership.
Meanwhile, things move along on the mainland. Officials have indicated that, progressively from the end of the 12th Five Year Plan (2011-15), social security for housing will no longer be mainly by way of subsidised housing, but via cash subsidies. The current wave of public-housing construction will be transitional, to build up enough suitable housing stock for the introduction of monetary subsidies.
Thereafter, it can be inferred, the government will stop building subsidised housing. Instead it will sell more land-use rights to private developers, and pay income supplements to qualifying tenants or buyers who rent or buy homes at market rates. The former public-rental housing will also be available for sale.
The scheme will enable low-income families to buy their own homes - assets that will appreciate in value because of their land element, and constitute valuable savings' nest eggs for a rapidly ageing population.
China is fast becoming urbanised. In land-scarce cities, home values rise with nominal gross domestic product over time, outpacing inflation. Yet wage differentials are widening and housing is becoming less and less affordable for lower-income families.