Home Ownership Scheme changes will hurt private sales
Now that people can afford to buy bigger flats for less under the My Home Purchase Plan, prices of small private flats will suffer
Prices of small flats on sale in the secondary market are likely to come under downward pressure as a result of increased competition for buyers.
That's because they will now be drawn to flats on offer at discounts of up to 30 per cent under revisions to the Home Ownership Scheme (HOS) and the My Home Purchase Plan, say analysts. (See panel explaining the changes.)
The fight for buyers begins this month when the Housing Authority releases its first My Home Purchase Plan project, Greenview Villa, in Tsing Yi, for applications on December 28. Prices of the 988 flats will range between HK$2.4 million and HK$5.1 million, or about 70 per cent of the prices of similar-sized flats in the private sector.
Under the My Home Purchase Plan, subsidised housing is provided for middle-income families. The flats will be sold to the public outright at a discount for eligible applicants whose household income is not more than HK$40,000 per month.
The changes to the HOS qualifications, meanwhile, will widen the number of qualifying buyers and are likely to see prices of smaller flats in the private sector fall as a result, predicted economist Kwan Cheuk-chiu.
Still, he thinks the impact may be limited. "I think property prices will fall only by some 10 per cent," he said. "I don't think the price will drop sharply as the supply of subsidised housing is limited - the government offered a quota of only 5,000 subsidised houses in the first stage, and the Tsing Yi project has fewer than 1,000 flats."
Property agents said changes to the qualifications for access to the government-subsidised Home Ownership Scheme would lure a wider audience of buyers who were looking for smaller flats in the New Territories or old single-block buildings away from the private housing market.
Patrick Chow Moon-kit, Ricacorp Properties' head of research, said people with a monthly income of HK$40,000 and total assets of HK$830,000 could afford to pay up to HK$4.15 million for a flat. With that budget they could buy a 500 square foot flat at City One Shatin, a 700 sq ft flat in housing estates in North district or an 814 sq ft flat at Kingswood Villa in Tin Shui Wai.
"As a result of the changes to HOS qualifications these buyers can now buy flats in HOS estates in urban areas with easy access to transport, such as Lung Poon Court in Diamond Hill," he said.
Kim Chan Shek-kam, sales manager at Fullmark Property Agency, said homebuyers in the expanded income and asset bracket might be able to buy a 400 sq ft flat for around HK$3 million in private housing estates such as Hsin Kuang Centre and Tropicana Gardens in Wong Tai Sin. "But now they can buy a 700- to 800 sq ft flat in HOS estates such as King Shan Court in the same area. This will affect demand for private sector homes priced at HK$3 million or less," he said.
Midland Realty director Sammy Po Siu-ming said private housing estates such as City One Shatin would suffer. "Many buyers in these estates have monthly incomes of HK$30,000 to HK$40,000 and did not qualify to buy HOS flats. But now, they have more choice," he said.
Kwan criticised the government for adopting new measures at the expense of lower-income home seekers. "The government is using public money to help people who could afford to buy private homes to buy subsidised housing," he said.
The new rules for subsidised housing explained
Changes announced last week by the Housing Authority to eligibility criteria for access to government-subsidised housing will increase the number of households and individuals who qualify to buy Home Ownership Scheme (HOS) flats and have a ripple effect through the private housing market.
The measures announced by the authority on Thursday raised the maximum allowable household income for qualification to buy a subsidised HOS flats from HK$27,000 a month to HK$40,000 a month; and maximum allowable assets to HK$830,000 (up from HK$530,000).
For individual applicants the income ceiling was raised from HK$11,500 a month to HK$20,000 a month and the asset ceiling was raised from HK$340,000 to HK$415,000.
In this package of stories we examine the implications of those changes on the existing housing market.