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Following is a question by the Hon Leung Kwok-hung and a reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (June 3):
Question:
In February this year, the Hong Kong Monetary Authority lowered the maximum loan-to-value ratio for self-use residential properties with value below $7 million to 60 per cent across the board. Quite a number of members of the public have relayed to me that after the introduction of such a measure, the prices of low-priced residential flats have risen rather than dropped, which has also pushed up the rents of residential units continuously, causing members of the public enormous hardship. On the other hand, quite a number of members of the public hope that the Government re-launch the Tenants Purchase Scheme (TPS). In this connection, will the Government inform this Council:
(1) whether the Government will go along with the wishes of the public by considering afresh the re-launch of TPS, which on the one hand allows the existing tenants of public rental housing (PRH) in the territory to purchase at low prices the PRH flats in which they are living and on the other reduces the fiscal deficit of the Hong Kong Housing Authority; if so, when it will re-launch TPS; if not, of the reasons for that;
(2) as the Government said in reply to my question on December 3 last year that it would not be appropriate to implement rent control measures, whether the Government has any new measures to effectively help members of the public (especially those living on Comprehensive Social Security Assistance payments and those renting cubicle apartments and bed spaces) in the short run to rent private residential flats at reasonable rents; if so, of the implementation date and details; if not, the reasons for that, and whether the Government is turning a blind eye to the problem that members of the public cannot afford high rents; and
(3) as the Government pointed out in the reply mentioned in (2) that there was currently a serious demand-supply imbalance in Hong Kong's housing, whether the Government will immediately introduce measures to further restrict non-local residents in purchasing residential properties in Hong Kong and comprehensively implement the "Hong Kong Property for Hong Kong People" policy to honour the pledge of assisting middle-income families in buying their own homes made by the Chief Executive in his election manifesto; if so, of the timetable and details; if not, the reasons for that, and whether the Government has no intention to honour the Chief Executive's pledge, and ignores the home purchase aspirations of members of the public?
Reply:
President,
The crux of the rise in flat prices and rentals in the past few years lies with the supply-demand imbalance in housing and the inadequate supply of land. The current-term government is determined to solve the problem at source by adopting a supply-led strategy, setting a 10-year housing supply target and continuously increasing supply of land and housing, with a view to gradually averting the supply-demand imbalance. At the same time, two rounds of demand-side management measures were introduced in October 2012 and February 2013 respectively to curb external and speculative demands to prevent the market from being overheated.
The Government notes that the property market in Hong Kong turned buoyant again in the second half of 2014, with increasing risk of a bubble. In view of this, the Hong Kong Monetary Authority announced a new round of supervisory measures on property mortgage in late February 2015 to strengthen banks' risk management and resilience, and to enhance borrowers' ability to cope with the impact in the event of a property market downturn in the future. These measures aim to safeguard the stability of the banking and the financial system.
My replies to the three-part question by the Hon Leung Kwok-hung are as follows:
(1) During the public consultation on the Long Term Housing Strategy (LTHS), there were suggestions to relaunch the Tenants Purchase Scheme (TPS). However, in light of the management problems arising from the co-existence of individual owners and tenants of the Hong Kong Housing Authority (HA) in TPS estates, HA decided that apart from the existing 39 TPS estates, new TPS estates will not be launched. Nevertheless, there are still suggestions in society that subsidised sale flats with prices lower than that of Home Ownership Scheme (HOS) flats could be provided to public rental housing (PRH) tenants to facilitate them to achieve home ownership.
To this end, in his 2015 Policy Address, the Chief Executive proposed to HA that suitable flats should be identified among its PRH developments under construction for sale to eligible Green Form applicants, mainly PRH tenants, in the form of a pilot scheme, with prices set at a level lower than those of HOS. Generally referred to as the Green Form Subsidised Home Ownership Pilot Scheme (GSH), this proposal is a response to the LTHS's general direction of expanding the forms of subsidised home ownership.
HA has decided on the implementation details of GSH, including the eligibility criteria, price setting mechanism, resale arrangements, selected site, etc. The Housing Department will follow up accordingly.
(2) The Government appreciates the impact of high rental level on the public (especially the impact on the grassroots), and notes that there are views in society suggesting the Government to regulate the level of private residential rent and its rate of increase. However, both local and overseas empirical studies suggest that tenancy control measures can lead to unintended consequences, including reducing supply of rented accommodation (instead of increasing); higher asking rents and encouraging certain behaviour from landlords to offset the impact of the tenancy control measures; limiting access to adequate housing by the socially disadvantaged; and discouraging proper maintenance of rented accommodation by landlords, etc. The Government considers that introducing tenancy control measures in the midst of a severely tight housing supply may bring even more disadvantages to tenants before the benefits could be realised. This is not in the interest of tenants at large, nor those inadequately housed households and the general public. The fundamental solution to address the supply-demand imbalance and to curb rental increase lies with a continued increase in housing supply.
To meet the housing needs of the grassroots citizens, the Government will spare no efforts in identifying land to build more PRH units and to ensure the rational use of PRH resources. At the same time, the Government will also work with relevant organisations such as the Estate Agents Authority to enhance public education efforts, advertise tenants' rights, and promote good tenancy practices.
At present, the Comprehensive Social Security Assistance has provided a safety net for those who are unable to support themselves financially to meet their basic needs. Moreover, the Community Care Fund has rolled out various assistance schemes to provide residents in need with further economic support. For those having imminent housing needs, they may consider applying for Compassionate Rehousing through the recommendation of the Social Services Department. They may also apply under the Express Flat Allocation Scheme for earlier allocation of PRH flats.
(3) According to the Development Bureau, the policy objective of the "Hong Kong Property for Hong Kong People" (HKPHKP) measure is to accord priority to Hong Kong Permanent Residents in making use of our scarce housing land resources when there is a tight supply-demand situation in the property market. The Government announced in September 2012 that the HKPHKP measure would be applied to two residential sites in the Kai Tak Development Area. The two sites were sold through tender in mid-2013. Subsequently, the various demand-side management measures targeting at the property market implemented by the Government have effectively curbed the demand of non-local purchasers. Stamp duty statistics from the Inland Revenue Department indicate that purchases of residential properties by non-local individuals and non-local companies during the first quarter of 2015 stood at a monthly average of 93 cases (1.5 per cent of the total transactions), markedly below the monthly average of 365 cases (4.5 per cent of the total transactions) during the period from January to October 2012 (i.e. before the introduction of the Buyer's Stamp Duty). Hence, the Government is of the view that there is no pressing need to extend the HKPHKP measure to other sites at this stage.
Ends/Wednesday, June 3, 2015
Issued at HKT 17:44
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