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The following is issued on behalf of the Housing Authority:

Responding to the Chief Secretary for Administration's statement earlier today (September 3), the Chairman of the Housing Authority (HA), Dr. Cheng Hon-kwan, welcomed the Government's clarification of its policy on the provision of subsidised Home Ownership flats.

"Various conflicting views have been aired over the last six months about the value of the Home Ownership Scheme (HOS) and the appropriateness of planned levels of production and sale. We welcome the Government's clarification of its position, as well as its confirmation of the continuing value of the Scheme."

"Given the current economic climate, we fully understand the reason for the Government's call for a moratorium on sales. We also agree that moving forward there must be no overlap between the public and private markets."

Dr. Cheng noted that earlier in the year the HA had reduced the income and asset limits, which govern eligibility for the purchase of subsidised home ownership flats, in order to avoid such an overlap. However, the subsequent series of adjustments by banks to mortgage interest rates had nullified the effect of this reduction.

"When we reduced the HOS income limit from $31,000 to $25,000 in April, nobody foresaw interest rates continuing to fall. At their current level, families earning over $20,000 a month do not really need our help and we should be re-focusing our resources on those who do. This will involve reviewing both the income and asset limits, and the adjustment mechanism."

Nevertheless, Dr. Cheng noted that none of the HA's customers would be disadvantaged by the Government's moratorium on sales.

"While we will not offer HOS or Private Sector Participation Scheme flats for sale during the moratorium, the Authority and the Government will make available additional loans over the period equivalent in number to the 12,000 flats originally planned for sale in the second part of this financial year. This is consistent with our strategic aim of progressively moving from bricks-and-mortar to financial assistance."

"Our finances are sufficient so these additional loans will not be a problem for us in the short term, nevertheless I am grateful for the Government's assurance that it will assist the HA if necessary. For the longer term, financial arrangements will need to be reviewed."

Dr. Cheng said that the HA looked forward to working with the Government on the issues raised by the Chief Secretary for Administration and said that he was confident that they could all be resolved before the middle of next year.

End/ Monday September 3, 2001

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