The HK$1 million first-home question

Would selling discounted flats to young buyers undermine subsidised housing for others?

PUBLISHED : Tuesday, 30 April, 2013, 12:00am
UPDATED : Tuesday, 30 April, 2013, 4:29am

When Lee Shau-kee, the chairman of Henderson Land Development, said in January he would consider building homes and selling them for HK$1 million each to young buyers, my friends were ecstatic and thought hard about how they could qualify to buy one of them.

"Just HK$1 million for a 300-square-foot flat - although it may be in a rural area in the New Territories - is a good deal for poor people like me," a 27-year-old friend, who earns about HK$15,000 a month but is still repaying government loans for his university degree, said then.

As Hong Kong's home prices have soared to a level where one can barely find a 20-year-old flat for HK$2 million, a brand new private flat at HK$1 million is really attractive.

But the proposal seems to have changed as discussions between Henderson, or Lee, and the government continue.

At first, Lee suggested he would sell the flats at their construction price, about HK$1 million per unit, as long as the government would exempt the developer from the land premium. The government countered suggesting that Lee donate his farmland, on which the government would build the flats. It reportedly selected seven sites, most in the northeastern New Territories, where it could build 10,000 homes for first-time buyers.

Last week, Lee reportedly told a Chinese-language magazine the government believed selling the flats only to young people would be unfair to others.

The report said that although Lee wanted to charge the buyers just for the construction costs, the government thought that was not feasible and might challenge its subsidised housing policies.

It would prefer to sell those flats at 60 per cent to 70 per cent of the market price, the report said.

Although the concrete details are yet to be finalised and announced, those of my friends who were interested in the original scheme said that the new proposals were a blow to them.

"I think they are moving away from the original idea," the friend I mentioned earlier said. "The scheme may no longer be just for young people like us.

"New flats in the New Territories are selling at about HK$2.5 million, so after discounts, it will be more than HK$1.5 million to HK$1.75 million. HK$500,000 may sound a small amount to some people, but it will take me more than a decade to save that amount," he said in despair.

Another friend said: "I knew it was too good to be true! I bet there will be more stringent requirements on buyers in future, and it may even be more difficult to apply for it than other schemes subsidised by the government."

Of course, the Hong Kong government must ensure that the public resources be used fairly and properly. At the same time, I advised my friends to adjust their expectations, although they may have done so already.

So how do you think the scheme should be structured so that Lee's idea of helping young first-time buyers and the government's wish to keep its policies fair to all can be fulfilled at the same time?

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