ST : Lukewarm response to HK housing measures

Oct 15, 2010

Lukewarm response to HK housing measures

Move not enough to meet people's needs or curb prices, analysts say

HONG KONG: New measures outlined in Hong Kong chief executive Donald Tsang's policy blueprint will not satisfy the people's demand for government help to become home owners and will have no immediate impact on rising property prices, academics and market watchers said.

Mr Tsang announced on Wednesday measures aimed at cooling the housing market - which took up nearly a quarter of his policy address, the South China Morning Post reported yesterday.

Mr Nicholas Brooke, chairman of Professional Property Services, said the policies were medium-term measures which will not solve the immediate problems facing society, the Post reported. A new subsidised-housing scheme under which 5,000 rent-and-buy flats will be supplied is not enough to solve the problem, he said. The first batch of 1,000 such flats in Tsing Yi will be available only by 2014.

'Why can't we sell the sites this year, or next month?' said Mr Brooke. 'Home prices will continue to rise.'

Mr Tsang had announced the 'rent-and-buy' programme called My Home Purchase Plan for the sandwich class who are too affluent to get public rental housing, but who do not have enough savings to make a down payment on a home.

Under the new scheme, the government will provide land for the Housing Society to build about 5,000 'no-frills' flats for lease to individuals and families at prevailing market rent for up to five years. During that time, tenants can buy the flat they are renting or another flat under the plan at its market price, or they can buy a flat in the private market, within a specified time.

They will receive a subsidy equivalent to half the net rental they paid during the tenancy period, and use it for part of the down payment.

To qualify for the scheme, applicants with families should earn a household income of no more than HK$39,000 (S$6,500) a month and have assets of no more than HK$600,000, the Post reported.

Primary school teacher Brian Cheung, 29, said it would be a long time before the rent-and-buy scheme starts. He hoped the HK$39,000 cap under the scheme could be raised because his earnings, combined with his fiancee's, exceeded it, but they still found it difficult to buy with government help.

Mr Tsang admitted that the scheme could not answer the public's immediate need, but said land and flat supply would be sufficient in the coming years, the Post reported.

His housing plans include increasing land supply by launching a public consultation on the reclamation outside Victoria Harbour to generate more land in the long run. The authorities will also speed up internal procedures to make more residential sites available to the market.

He pledged that in the next decade, the government would offer enough sites to build an average of 20,000 private flats a year.

And from yesterday, applicants to the Capital Investment Entrant Scheme - which earlier allowed investors, such as those from the Chinese mainland, to invest in real estate or specified financial assets to obtain permanent residency in Hong Kong - are no longer able to use real estate as an investment category. The government also raised the minimum investment under the scheme from HK$6.5 million to HK$10 million.

Mr Louis Chan, real estate agency Centaline's managing director for residential sales, predicted just a 5 per cent drop in the number of mainlanders buying high-end property following Mr Tsang's announcement, Agence France-Presse reported.

Property prices here have risen 15 per cent since the beginning of the year, after rising by a third last year. The increase is fuelled mainly by low interest rates and purchases by wealthy mainland Chinese facing policy tightening at home.

Dr Lau Kwok Yu, associate professor at City University's public and social administration department, said he was disappointed that the government rejected public calls for the resumption of the subsidised Home Ownership Scheme.

Mr Stewart Leung, vice-president of the Real Estate Developers Association, believed the new measures would not dampen the market, saying the land supply target of 20,000 units a year would have a positive impact on prices, the Post said.