The second “starter homes” project in Hong Kong targeting the middle class will be sold at 20 per cent less than the market price, a smaller discount rate than the first.
Critics said the reduced discount would not make the flats affordable to most, while a government adviser pointed out that the pricing ran against an established valuation mechanism for subsidised housing.
The 1,000 homes will be delivered by the private developer that wins the bid for the site on Anderson Road in Kwun Tong, Kowloon. The tender began on Friday and runs until mid-May.
The project will be a mixed development, containing both subsidised homes and others to be sold at market value.
“The government wishes to test out the arrangements of enlisting developers to build and sell starter homes units through inviting tender for the site on Anderson Road,” the Transport and Housing Bureau said in a press release. “[It] will make reference to relevant experience in considering the way forward for the pilot project.”
The scheme was one of six housing initiatives announced by Chief Executive Carrie Lam Cheng Yuet-ngor in her maiden policy address in 2017. It was aimed at benefiting people with too much money to be eligible for the government’s subsidised flats, but who do not earn enough to buy a home on the private market.
According to the land sale conditions of the Anderson Road site, all flats to be built should range between 23 sq m and 46 sq m (about 250 sq ft to 500 sq ft), including studios and units with one and two bedrooms.
When construction is completed, the government will randomly select no less than 1,000 units to be sold as starter homes to eligible people at 80 per cent of the market price, including 200 studios, 250 one-bedroom units and 550 two-bedroom units.
The random selection was to ensure quality would be consistent in all the flats, preventing the possibility that cheaper flats would be built at a lower standard.
People’s purchasing power has been weakened by the social movement and the coronavirus epidemic. A 20 per cent discount will not look attractive to buyers
Francis Lam, chairman, Institute of Surveyors’ housing policy panel
The discount is smaller than that for the first project, delivered by the Urban Renewal Authority, where the flats in To Kwa Wan were sold at a 38 per cent off-market price.
Francis Lam Ka-fai, chairman of the Institute of Surveyors’ housing policy panel, said the reduction of the discount for the new project was not justified.
“People’s purchasing power has been weakened by the social movement and the coronavirus epidemic,” he said. “A 20 per cent discount will not look attractive to buyers. I’m afraid this will defeat the policy objective of the scheme.”
Stanley Wong Yuen-fai, a government housing adviser, also said the small discount would still leave the flats “way beyond people’s affordability”.
It seems strange they are overturning policy
Stanley Wong, government housing adviser
He also questioned the early decision on the discount. He cited a new valuation mechanism announced by the chief executive in 2018, under which pricing would be linked to people’s income and affordability. The discounts for starter homes should be 10 to 20 per cent less than that set for the preceding sale exercise of the Home Ownership Scheme flats – another type of subsidised housing for a lower income group.
“The mechanism was meant to maintain relativity among different rungs along the housing ladder,” Wong noted. “It seems strange they are overturning policy.”
Wong said the government should price the flats closer to the completion date and with reference to other subsidised housing projects, in accordance with the mechanism.
The eligibility criteria for the flats will be the same as it was in the first project. Only permanent residents without a property in Hong Kong can purchase the flats if they meet income and asset limits.
Eligible applicants’ income should fall between the income limit for Home Ownership Scheme and 30 per cent above it. The limit for singles is now HK$29,000 (US$3,735) and HK$58,000 for family applicants.
They cannot let or sell their units within five years of purchase. If they resell the property five years later, they will have to pay a premium to the government.
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This article Hong Kong’s second starter homes for the middle class will be sold at 20 per cent less than market price first appeared on South China Morning Post