Relaxing cap in Hong Kong’s mortgage scheme could offer more choices to first-time buyers
Availability of apartments in the HK$4m price range has declined by nearly 90 per cent in the last five years, and those that are on the market, are in distant locations
First time homebuyers in Hong Kong have little choice under existing mortgage rules for mass flats unless they settle for old, tiny apartments in far off areas.
Under the current home financing scheme, first time buyers only can receive a loan-to-value ratio of 90 per cent for flats that cost HK$4 million (US$511,000) or less through the Hong Kong Mortgage Corporation insurance scheme.
But as prices break one record after another, the availability in this range has declined sharply. In Tuen Mun, for example, the number of flats, both private and government subsidised units, on the market plunged 88 per cent to 197 this January from 1,584 in February 2013, when the government’s lending curbs became effective.
“There are some old units still available in relatively remote locations,” said Derek Chan, head of research at Ricacorp Properties.
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According to Centaline Property Agency, at the 32-year-old Golden Lion Garden in Tai Wai, in New Territories, a 266 square feet flat was listed at HK$4 million, which translates to HK$15,037 per sq ft.