Hong Kong has witnessed the first batch of starter homes at the “eResidence” project in Hung Hom, Kowloon, being launched for sale at HK$11,692 and HK$13,969 per square foot.
The “starter home” scheme was one of the major housing initiatives announced by Hong Kong’s leader Carrie Lam Cheng Yuet-ngor in her 2017 policy address to help boost home ownership in the city.
Many middle-class families are too rich to be eligible for public rental housing or subsidized flats, while not rich enough to buy a flat from a private project. The starter home scheme is aimed at helping this particular group of citizens.
The eResidence project was developed by Urban Renewal Authority (URA), and the first batch of 450 flats comprises mostly studio and one-bedroom units with areas ranging from 261 square feet to 507 square feet.
Although the project offers a 38 percent discount to market prices, given the time lag of government home price indices used as reference, the actual discount level is not as much. Location and ease of commute are not very appealing ether.
In addition, the starter home project has various restrictions besides the five-year resale ban. Buyers need to pay land premium if they want to resell the flat after five years. For applicants who are single, the monthly income limit is set between HK$28,501 and HK$37,050. Family applicants must have household income of between HK$57,001 and HK$74,100 a month to be eligible. Asset limits of HK$1.28 million and HK$2.55 million are also set for single and family applicants.
Also, applicants should never own any residential property in Hong Kong or have enjoyed any housing subsidy from the government, the Housing Authority or the Housing Society.
The URA will carry out a draw in March to determine the sequence for applicants to pick the flats of the “eResidence” project in June.
Overall, eResidence may not be a screaming buy, but it still represents a discount, so it should attract a group of buyers.
That said, if the housing market falters in the next few months, private sector developers could adjust their offerings lower and eResidence buyers could change their mind if the price advantage narrows to a certain extent.
This article appeared in the Hong Kong Economic Journal on Jan 2
Translation by Julie Zhu
[Chinese version 中文版]
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