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2010-11 Policy Address by Chief Executive (3)

Public Housing

20. On PRH, the committee will ensure an adequate supply of land to produce about 15 000 flats each year, thus maintaining an average waiting time of three years.  To ensure rational allocation of limited resources, the Housing Department will step up checks on PRH tenants' household income and assets.  In addition to checking some 5 000 randomly selected cases a year, an additional 5 000 random checks will be conducted this year.

21. Some people want the Government to use proposed PRH sites to build Home Ownership Scheme (HOS) flats.  Any proposals that may undermine our pledge to maintain the waiting time of three years for PRH are unacceptable.

Subsidising Home Ownership

22. The Government recognises the importance of a stable home, and is fully aware of our people's wishes to improve their quality of life and move up the social ladder through home ownership.  Many find it unnerving that property prices have kept rising and years of hard-earned savings cannot even cover a down payment.  They hope that the Government will help them realise their aspirations for home ownership. The Transport and Housing Bureau (THB) started consulting the public on subsidising home ownership last May.  The exercise was completed in mid-September.

23. There are diverse views on the resumption of HOS. We share the public concern over soaring property prices and the difficulties in purchasing their first flat. The conventional HOS has already helped over 300 000 families buy their homes.  We believe that we should introduce more targeted measures in light of the latest situation to help the sandwich class purchase their own flats.

24. As to whether the Government should offer loans to these prospective home buyers, many consider that home ownership loan schemes may lure some families into acquiring properties they cannot afford.  Some are also concerned that such a scheme will spur short-term demand for properties, which will further push up property prices.

My Home Purchase Plan

25. Any form of subsidised home ownership will only serve as a buffer.  In the face of short-term market fluctuations, it is appropriate for the Government to offer relief measures to potential sandwich class home buyers to give them time to save up.  In this regard, the Government, in collaboration with the Hong Kong Housing Society (HKHS), will introduce an enhanced scheme of subsidised housing known as the My Home Purchase Plan.

26. Under this Plan, the Government will provide land for the HKHS to build "no-frills" small and medium flats for lease to eligible applicants at prevailing market rent.  The tenancy period will be up to five years, within which the rent will not be adjusted. Within a specified time frame, tenants of the Plan may purchase the flat they rent or another flat under the Plan at prevailing market price, or a flat in the private market. They will receive a subsidy equivalent to half of the net rental they have paid during the tenancy period, and use it for part of the down payment.

27. The Plan has the following merit:

(1) It provides the sandwich class with flexibility in their home purchase plan, including the choice of opting to purchase the flat they rent, another flat under the Plan, or a flat in the private market;

(2) It provides them with rental flats for a maximum of five years so that they will have sufficient time to think through their housing plan while building up their capability to buy a flat.  This means they will not have to rush into buying flats that are over-priced during short-term fluctuations in property prices.  Also, there will not be any rental adjustment during the five-year period.  This will help them save for part of the down payment for their future flat purchase;

(3) There will be no re-sale restrictions or premium payment requirement as is the case of conventional HOS flats.  This will facilitate upward mobility in the property market;

(4) Flats under the Plan will, to an extent, fill the supply gap of
"no-frills" flats in the first-hand private market; and

(5) The Plan will not reduce the supply of private residential land or land for PRH, as the land will not come from either the Application List or the sites earmarked for PRH.

28. The subsidy equivalent to half of the net rental paid may not be sufficient to cover the down payment in full.  Tenants must conscientiously build up savings to meet the down payment and related expenses.  The Plan reflects Hong Kong people's spirit of self-reliance by enabling them to make their home purchase wish come true in a practical and step-by-step manner.  The Secretary for Transport and Housing will announce details of the Plan later.

29. The Government has already earmarked sites in Tsing Yi, Diamond Hill, Sha Tin, Tai Po, Tuen Mun and other areas for a total of some 5 000 flats to be built under the Plan.  The first project will provide about 1 000 flats in Tsing Yi by 2014.

Revitalising the HOS Secondary Market

30. The Housing Authority is taking measures to revitalise the HOS secondary market. These include the Premium Loan Guarantee Scheme launched by the Hong Kong Mortgage Corporation Limited, which allows HOS owners to pay the premium by instalments.

(To be continued)

Ends/Wednesday, October 13, 2010
Issued at HKT 11:24


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