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LCQ4: Assistance for home purchases

Following is a question by the Hon Tam Yiu-chung and an oral reply by the Secretary for Transport and Housing, Ms Eva CHENG, JP, in the Legislative Council today (9 July):


    Property prices have been rising continuously in recent years, and the lending rates for mortgage loans have also started to pick up recently. Many members of the public have relayed to me that they can hardly afford to purchase properties for self-occupation. In this connection, will the Government inform this Council:

(a) of the respective amounts of loan repayments received so far in respect of the Home Purchase Loan Scheme, Sandwich Class Housing Loan Scheme and Home Starter Loan Scheme; and

(b) whether it has any plan to introduce new loan scheme(s) for home purchases so as to assist members of the public (especially young people who cannot afford the downpayment but have the repayment capability) who need such assistance in purchasing properties for self-occupation; if so, of the details; if not, the reasons for that?


Madam President,

    My reply to the two-part question is as follows:

(a) The total amount of loans provided under the "Home Purchase Loan Scheme", "Sandwich Class Housing Loan Scheme" and "Home Starter Loan Scheme" are about $26.8 billion, $2.7 billion and $14.85 billion respectively.  Of these amounts, about $18.5 billion, $2.39 billion and $9.46 billion have been repaid respectively to date.

(b) In the past, when the Government implemented various home ownership loan schemes through the Hong Kong Housing Authority and the Hong Kong Housing Society, the objectives were mainly to assist middle-to-low income persons to purchase their homes and to encourage capable public rental housing tenants to return their flats for allocation to people more in need. According to the repositioned housing policy in 2002, assisting the public to purchase their homes is no longer an objective of the Government's housing policy. The existing housing policy of the Government is to concentrate resources to address the basic housing need of low-income families.  Any subsidised home ownership scheme will inevitably impact on the property market and will also divert resources from and affect the HA's ability in implementing the public housing programme.  Therefore, we need to carefully consider the matter. On a number of occasions in the past, including at the Legislative Council, we explained that at least three issues would need to be considered before examining whether subsidised home ownership schemes should be relaunched or we should deviate from the repositioned housing policy in 2002. The first issue is whether there is a serious imbalance in the property market. The second is whether there is a problem in the turnover of public rental housing (PRH) flats such that the waiting time for PRH has been seriously affected. The third is whether there is public consensus to vary the existing housing policy.

    According to the latest information we have gathered, the property market in general has been developing steadily and flats of various types and prices are still available in the residential property market. As far as the transaction figures for middle to lower priced flats are concerned, the number of property transactions of flats at less than two million dollars accounted for close to 60% of the total number of transactions on average since 2004. As regards the prices of private domestic properties in general, as at the first quarter of 2008, the price index for flats with saleable areas between 40 to 69.9m? was still about 30% lower than that at the peak of 1997. Besides, as for the mortgage-to-household income ratio, assuming that a household with the median private domestic household income purchased a domestic unit of a saleable area of about 40m? with a 70% loan-to-value ratio and a repayment period of 20 years, the mortgage-to-household income ratio was 32% as at the first quarter of 2008, which was much lower than the 77% at the peak of 1997 and roughly similar to the level between 2005 and 2007.

    At present, there is also a certain degree of turnover of PRH flats. Over the past few years, there has been a steady number of recovered PRH flats, which constitute an important source of public housing supply and account for about half of the PRH flats allocated by the HA on average each year. Given that there are over 110 000 applicants on the Waiting List for PRH, and based on the projection of about 2 000 to 3 000 new applicants registering every month, we consider that the existing turnover of PRH flats can meet the demand for the next five years.

    In addition, we note that various competitive mortgage schemes with preferential terms are already available in the market. Prospective home buyers can choose the schemes that suit their needs. With respect to the downpayment, through the Mortgage Insurance Programme of the Hong Kong Mortgage Corporation Limited, home buyers can borrow up to 95% of the value of their properties. In fact, home ownership is a very important decision for many people. We consider that it should be a matter of personal choice and affordability. Neither the Government nor the HA should assume again the role of a lending institution and influence peopleˇ¦s decision over home ownership which should be based on their affordability.

    At this stage, the Government will continue to monitor the development of the property market and the turnover of PRH flats with care and listen to the views of the community regarding the relaunch of various subsidised home ownership schemes.

Ends/Wednesday, July 9, 2008
Issued at HKT 16:46


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