ST : HK to study subsidies for home buyers

May 8, 2010

HK to study subsidies for home buyers

HONG KONG: Under pressure to address rising property prices while not alienating existing home-owners, the government has turned to an age-old solution - a public consultation.

Chief Executive Donald Tsang announced on Thursday that housing minister Eva Cheng would contact various stakeholders and the public over the next five months to gauge their views on using taxpayers' money to help people buy homes, the South China Morning Post reported yesterday.

The move comes eight years after the government shelved the Home Ownership Scheme (HOS) - which allows people to buy subsidised flats - to reverse a slump in the market.

Amid mounting calls for Mr Tsang to resume the scheme as property prices rise, he said the government was aware that some people who did not qualify for public rental flats could not afford to buy private ones.

'We appreciate the need to forge a consensus on provision of subsidies for people to buy property,' he said during a question-and-answer session in the Legislative Council.

He added that he would give an account in his policy address in October if the government had further ideas on the issue after the consultation.

A political scientist at City University of Hong Kong, Dr James Sung, said the government was trying to buy time, the Post reported.

'It needs some time to reach a consensus within the government and monitor the situation in the global economy,' he said.

Thursday's announcement came two days after housing minister Cheng said HOS flats were not the only option for home-starters, and questioned whether taxpayers' money should be used to help people buy flats.

Mr Tsang said he recognised that property prices had surged by one third between January last year and March this year. But he wondered whether public money should be used to subsidise people to buy private property.

He reminded the public of the painful lessons of the property bubble in the 1990s. 'After the property bubble burst in the wake of the Asian financial crisis, many home buyers suffering from negative equity blamed the government for encouraging them to buy homes.'

His remarks underlined the predicament facing the administration in trying to satisfy people who want to buy homes as well as existing home-owners who fear any change in policy will hit prices.

'The government has great power to ruin the property market but there is little it can do to stabilise property prices during a slump,' the Post quoted Mr Tsang as saying.