New World Development Co. (NWD), one of Hong Kong’s largest property developers, is looking at launching a special scheme to help young people who want to buy their first homes.
The group is studying the feasibility of a financing scheme that will involve super-low down-payments for first-home buyers who are in the early stage of their careers, Executive Vice-Chairman Adrian Cheng Chi-kong said on Thursday.
The down-payments will be kept very low, keeping in view that people who have begun work life only recently can’t afford to put down huge deposits for apartment purchases, the executive said.
If the plan comes to fruition, the program will be targeted at youth who have graduated from local universities and have been working for two or three years and have stable income, he said.
Speaking at a post-results news conference, Cheng suggested that with the proposed special financing scheme, first-home buyers will be able to secure a flat worth HK$5 million by putting up just a few hundred thousand dollars as down-payment, the Hong Kong Economic Journal reports.
The executive said the special scheme should not be interpreted as a sign that that the group is pessimistic about the prospects of the local real estate market.
NWD is planning the program only because it wants to help meet a social demand, Cheng said. But he admitted that there will a benefit for the company in terms of an expanded customer base.
To prevent speculative investors from taking advantage of the special scheme, NWD will impose some conditions on the buyers. The homes must be for self-use only, and resale won’t be allowed for a certain number of years after the purchase, among the potential rules.
Cheng revealed that NWD intends to use new housing developments, such as The Parkville in Tuen Mun, as a pilot before allocating about 10 to 20 percent of the units in various other upcoming projects for the special financing scheme.
The executive stressed that none of the flats offered to young people in need will be the so-called nano flats that often measure no more than 200 square feet.
In other comments, Cheng said he doesn’t think the scheme will have a big impact on the property market in general.
He emphasized that the scheme is still in the research stage and that it won’t come about before the government announces some housing-related initiatives.
Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor, during her maiden policy address next month, is expected to announce a new scheme for first-time local homebuyers who do not qualify for subsidized housing but cannot afford private flats.
NWD and its peers, including Wheelock Properties, Henderson Land Development, Sun Hung Kai Properties and CK Asset Holdings, have all said that they would welcome the government’s plan.
Commenting on NWD’s planned special scheme for young university graduates, David Ng Ka-chun, head of China and Hong Kong property research at Macquarie Capital Securities, said the initiative could prove useful.
If NWD sets a good example and the scheme takes off, the government can encourage other developers to follow suit, he said.
But as of now we can only speculate as to how the market and the government will respond to NWD’s initiative, Ng said.
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