As expected, Chief Executive Carrie Lam Cheng Yuet-ngor’s maiden policy address was overwhelmingly focused on livelihood issues – housing, in particular.
But those who were looking forward to some “outside-the-box” approach to our housing woes in her policy blueprint might have felt rather disappointed.
Her much-anticipated housing scheme for first-time homebuyers turned out to be a damp squib; it would only provide 1,000 new flats in Kwun Tong, and once approved by Legislative Council next year, they would take at least three years to build, which means they won’t be available until 2021 at the earliest.
As we have said before, we believe the government is headed in the right direction by creating two “separate” property markets, i.e., the existing private market that freely allows sales and purchases of properties, and the Starter Homes scheme, in which flats are off-limits to investors, available exclusively to first-time homebuyers, and priced below market levels.
However, this plan is not going to work unless the government is able to provide a substantial number of new homes in the market for first-time homebuyers in a sustainable fashion. We just don’t see how a mere 1,000 units can make a difference.
Despite our doubts, we believe we should still give our chief executive some credit for deciding to regularize the Green Form Subsidized Home Ownership Scheme, and the Interim Scheme of Extending the Home Ownership Scheme Secondary Market to White Form Buyers.
The former provides current public rental housing (PRH) tenants with an instant pathway to home ownership at below market prices, while the latter allows “sandwich-class” families who aren’t eligible for PRH flats to buy Home Ownership Scheme (HOS) units in the secondary market without having to pay land premium.
The HOS flats with no land premium would mean 380,000 homes, which, together with more than 4,000 in Sha Tin in the pipeline, would alleviate our housing shortage at least in the short run.
We do applaud the chief executive’s decision to make the two schemes permanent, and we believe that by doing so the administration can encourage more current PRH tenants to vacate their flats so as to shorten the average waiting time for PRH flat applicants and facilitate home ownership among middle-income families.
This article appeared in the Hong Kong Economic Journal on Oct. 12
Translation by Alan Lee
[Chinese version 中文版]
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