Hong Kong property

'White form' applicants push up flat prices of HOS and public housing

Expected demand from 5,000 'white form' applicants set to enter the market this month pushes up value of flats in housing scheme

PUBLISHED : Wednesday, 05 June, 2013, 12:00am
UPDATED : Wednesday, 05 June, 2013, 4:40am

Resale prices of Home Ownership Scheme (HOS) and public housing flats have risen sharply on expectations of strong new demand from "white form" applicants set to enter the market this month.

Chief Executive Leung Chun-ying announced in July last year that 5,000 "white form" applicants for HOS flats - prospective buyers of subsidised units currently living in private flats and who do not receive a housing subsidy - would be able to buy second-hand HOS flats without paying a land premium.

The application process is now completed and the successful applicants balloted for the new system now have six months to buy HOS flats on the resale market from this month.

The change to government policy was part of a package of measures aimed at helping people with lower incomes to own their home.

The announcement triggered a significant growth in the resale prices of HOS flats ahead of the policy taking effect. "Prices of second-hand HOS flats have surged 20 per cent since the policy was announced. They could grow a further 20 to 30 per cent by the end of this year," said Kim Chan Shek-kam, sales manager at Fullmark Property Agency.

According to Centaline Property Agency, a 419 sq ft HOS unit at Yue Fei Yuen in Aberdeen recently sold for HK$3.98 million or HK$9,489 per sq ft in terms of saleable area, including the cost of the land levy. Both the lump sum price and the price per sq ft hit new records for the estate.

Under present government policy, the customary land premium paid for property developments is waived, allowing prices of new HOS units to be waived to first-time buyers. If owners resell their units they must pay the land premium, unless the new buyer is one of the successful 5,000 "white form" applicants.

The rise in HOS flat prices is bad news for those looking for affordable accommodation, particularly "green form" applicants, or lower-income people living in public housing.

"The prices of the HOS flats are too expensive and out of our budget, even though we don't need to pay a land premium," said Ms Tse, who lives with her family in a public housing estate in Siu Sai Wan. She is eligible to buy a flat with a "green form". She said: "A flat in a 20-year-old HOS estate is selling for more than HK$3 million.

"That means we have to make a down-payment of HK$1 million and pay a monthly mortgage of about HK$9,000. I also need to take care of my parents. I just can't afford that." Fullmark's Chan said some "green form" applicants with a wait-and-see attitude to buying HOS flats had sped up purchasing plans.

"Previously, 'green form' applicants showed no urgency towards buying flats. But now they are worried that prices could rise significantly due to the influx of 'white form' applicants," he said.

Sales of second-hand HOS flats began to increase significantly in the middle of last month. From just two or three deals a month in HOS housing estates in Wong Tai Sin, the number of sales had now doubled, said Chan, who predicted that deals could jump to between 10 and 20 a month once the new applicants entered the market.