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The following is the transcript of the English portion of the question-and-answer session given by the Chief Secretary for Administration, Mr Donald Tsang, at the press conference today (September 3):

Reporter: This is obviously a watershed in the housing policy. It looks like the government is saying in so many words that this is the end of its long role in providing flats for sale to people in the community - it's a wind-down business. And it looks like, because it follows the same experience that various people have interest in this, that despite your opening statement that you would not let policy be determined by vested interests, it does look like the tycoons are driving the policy. So how can you reassure the people of Hong Kong?

Mr Tsang: Well, I think the fact stands on its own. We are doing it in response to the recognition that the market has been distorted. There is an overlap between the Home Ownership Scheme and the private sector market, and there is a crowding-out effect. That was not the purpose of the Home Ownership Scheme. We are not doing it dependent to any vested interest in the market; we are doing it for the common good.

What's more, I am not withdrawing from the home ownership encouragement. We are providing loans to the people, which are interest-free loans for a value of up to $660,000, which will enable most families to go into the home ownership market, even though they may not be able to cope with it, to be able to go into home ownership, without government assistance. Now, it will be available. It gives them much wider choice. We are not withdrawing from public assistance in the housing area. What we are trying to do is to reduce the degree of intervention in that market, which I think is good for all concerned - for those who are looking for assistance, and good for the general taxpayers.

Reporter: Could you just explain why do you believe that there is an overlap between the public and private sectors? Specifically, what research or statistics back-up this claim?

Mr Tsang: I have tried to explain just now, at the moment in what we call the mass market - that refers to property which is valued at about $2.5 million a flat - and at the present moment those people who are eligible for the Home Ownership Scheme can be referring to families who earn roughly up to $25,000 per month. And for these families, if they are able to use half of their income for servicing a mortgage, they are able to afford flats up to $2.8 million. And for all the private market sales at the moment, the latest information shows that over about 70% of those sales refers to flats which are valued at $2.5 million or less. So for that reason, overlap becomes pretty clear. But we start to realise it because of the shrinking of the market and at the same time there has been a lowering of interest rates making a lot of people able to afford private sector housing than before.

Reporter: Longer term though, are you concerned about the possibility - the property market, in the past it's been characterised by bubbles, speculation - are you not concerned at all that longer term this kind of asset could repeat itself and affect Hong Kong's competitiveness, its high-cost environment?

Mr Tsang: The most important thing is: we are dealing with domestic premises, about local people, providing them with housing. What we are trying to do is to help them through loans. Loans are far more flexible than HOS flats, in terms of location, in terms of flexibility, in terms of market value for them. And it is an interest-free loan, so we are not reneging on our commitment to helping people towards home ownership. But to me, it is a more market-friendly form. It is for us to withdraw from the very heavy intervention in that market we have been sustaining for so long.

Reporter: Do you have any indication how big the overlap is between subsidised flats and private? And maybe one indication would be how many families are qualified for the loans that you are talking about today, each year?

Mr Tsang: Well, it is very difficult to quantify precisely. But what I am saying is, those families who are now making $20,000 to $25,000 a month are capable of affording private sector housing. And the number of these families in Hong Kong is roughly estimated at about 99,000 to about 100,000 families. So this is the sort of market we are talking about. This is the pool of people who are now capable of affording private housing but at the same time, because of the rules and criteria of the Housing Authority, remain the beneficiaries of the Home Ownership Scheme or the Home Loan Scheme.

(Please also refer to the Chinese portion of the Q-and-A session)

End/Monday, September 3, 2001

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