Hong Kong property

New World weighs ‘super low’ down payment scheme to help university grads get on housing ladder

PUBLISHED : Thursday, 21 September, 2017, 10:09pm
UPDATED : Thursday, 21 September, 2017, 11:21pm

New World Development is considering a special financing scheme to help local university graduates gain a foothold on the housing ladder at “super low” initial down payments.

The scheme is intended for first time buyers.

Adrian Cheng Chi-kong, executive vice-chairman of New World Development, said the proposal would be structured with a “super-low initial down payment” and a longer repayment period at an interest rate close to the market rate.

“Graduates from the eight universities in Hong Kong who earn a stable income after two to three years working experience are eligible for the proposed scheme,” he said.

Cheng said the down payments could be as low as “several hundred thousand dollars” for flats costing HK$5 million and will include other incentives such as the developer absorbing the stamp duty.

At present, home buyers can get an 80 per cent mortgage loan under the Hong Kong Mortgage Insurance scheme for flats priced between HK$4 million to HK$6 million.

That means buyers are required to put down an initial deposit of HK$1 million for homes costing HK$5 million.

Cheng said the proposal would include restrictions to prevent speculation, such that buyers must be end users, in addition to restrictions that prevent reselling for a period of years.

“The plan is still under study. Our new project 100-unit Parkville, with units of two to four-bedrooms, in Tuen Mun can serve as a test case either this year or next year,” he said.

About 10 per cent of the units will be allocated for the proposed scheme, he said, adding that it may be extended to other projects where there is strong demand from young people, if the plan receives a positive response.

“We have heard university graduates have difficulties in saving enough down payment to buy property. So we have this idea to help those who have earned stable income after working for two or three years,” he said.

The proposal was unveiled after the company reported core earnings rose 26.5 per cent to HK$7.13 billion (US$914.15 million), beating a HK$7.12 billion estimate from a Bloomberg survey of analysts.

During the year under review, the group’s attributable contracted sales in Hong Kong amounted to HK$15.6 billion, which exceeded the sales target of HK$10 billion, according to a company statement filed to the Hong Kong stock exchange on Thursday.

The company declared a final dividend of 33 HK cents per share, up 6.45 per cent from last year’s 31 HK cents.

Sales turnover for the year fell 4.95 per cent to HK$56.62 billion. Net profit, including revaluation gains on investment properties, declined 11.4 per cent to HK$7.67 billion.

Cheng said the company has converted agricultural land in Yuen Long into residential use after paying a government land premium of HK$460 million last month.

The Yuen Long site, with a total gross floor area of 121,100 sq ft, will be developed into the third phase of Lung Tin Tsuen.

Shares of New World Development eased 3.49 per cent to close at HK$11.04 on Thursday.