Following is a question by the Hon SIN Chung-kai and an oral reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (June 15):
The sale of Home Ownership Scheme ("HOS") flats has ceased since 2003, and the authorities have stated that these flats would not be put up for sale as subsidized housing before the end of 2006. The Housing Authority ("HA") has more than 16 500 unoccupied HOS flats at present, and in preparing its recent financial forecasts, HA has assumed the sale of 2 000 HOS flats each year from 2007/08 onwards. In this regard, will the Government inform this Council:
(a) of the estimated respective maintenance fees, management charges, rates/Government rent and depreciation costs incurred by the suspension of sale of HOS flats since the commencement of the suspension until all the HOS flats have been sold out;
(b) given the delayed inflow of sale proceeds due to the suspension of the sale of HOS flats, of HA's loss in investment return as a result of the decision on suspension, calculated on the basis of HA's average rate of investment return over the past five financial years; and
(c) whether it will consider advancing the sale of the unoccupied HOS flats and setting a higher annual sales figure; if it will, of the timing for the resumption of sale and the number of flats to be sold each year; if not, the reasons for that?
The authorities concerned decided to cease the production and sale of subsidised public housing in late 2002 to minimise intervention in the property market and to facilitate its free and healthy development. To maintain public confidence in the property market, our housing policy must be clear and consistent so that intending home-buyers are able to make informed decisions on the basis of known facts and actual situation. The property market is developing steadily and there is no special reason to adjust the policy of not offering the surplus Home Ownership Scheme flats for sale before the end of 2006. In fact, the community's views on whether the sale of surplus Home Ownership Scheme flats should be advanced are rather diverse. Some quarters are concerned that early sale of Home Ownership Scheme flats may impact on the stability of the market and create confusion.
In the past months, I have informed the Legislative Council and the Panel on Housing on several occasions that the arrangements and timetable for the sale of surplus Home Ownership Scheme flats will be drawn up in the latter part of 2006 in light of latest market situations. It is premature to go into details at this stage.
The Honourable Member's question made reference to the assumption that 2 000 Home Ownership Scheme flats will be offered for sale each year from 2007-08 onwards. It should be noted that this is a sheer assumption used by the Housing Authority for its financial forecasts and for assessing its overall financial position in future. The Housing Authority has not made any decision on the number of flats to be sold or the sale arrangements.
As to the three-part question, my reply is as follows:
(a) The Housing Authority has not made any decision on the timetable and the detailed arrangements for the sale of surplus Home Ownership Scheme flats. Therefore, it is not possible to calculate meaningfully the total expenditure incurred by the surplus Home Ownership Scheme flats before their sale.
We have been keeping the Legislative Council informed of the expenditure involved in managing the surplus Home Ownership Scheme flats. In replying to the question raised by the Honourable Albert Ho at the Legislative Council in March last year, I provided a detailed breakdown of the expenditure involved in managing the surplus Home Ownership Scheme flats. At the meeting of the Panel on Housing in April this year, we updated Members on the latest expenditure on management fees and Government rents. As at the end of March 2005, the maintenance and management costs and Government rents incurred by the surplus Home Ownership Scheme flats was about $216 million. Another $170 million is expected to be incurred from April 2005 to the end of 2006. In addition, it is necessary to carry out simple touching-up works before offering the flats for sale. The estimated costs involved will be around $9.1 million. The latest estimated expenditure is at Annex. In comparison with the information previously provided to the Legislative Council, the latest figures have taken into account the decrease in the number of surplus flats available for alternative means of disposal from some 10 000 last year to about 3 000 at present, and the management fees incurred by the Kingsford Terrace Private Sector Participation Scheme flats which the Housing Authority purchased from the developer last August.
As to whether the unsold flats will depreciate or diminish in value, it depends on the selling prices of the flats in future. Since property prices fluctuate from time to time, it is impossible to make any estimates.
(b) Given that many factors and assumptions are involved in estimating investment returns, e.g. selling prices of the flats, the numbers of flats offered for sale, investment strategy, prevailing market situation at the time of sale etc, it is inappropriate to make unfounded estimates about potential loss of investment return due to cessation of Home Ownership Scheme sales.
(c) As stated above, in order to maintain the clarity and consistency of our housing policy, surplus Home Ownership Scheme flats will not be put up for sale before the end of 2006. The number of flats to be sold each year after sale resumption will be decided by the Housing Authority in the latter part of 2006 after thorough deliberation in light of prevailing market situations.
Ends/Wednesday, June 15, 2005