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LCQ1: Interim Scheme to Extend the Home Ownership Scheme Secondary Market to White Form Buyers

     Following is a question by the Hon Andrew Leung and a reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (December 17):


     In 2013, the Government introduced the "Interim Scheme to Extend the Home Ownership Scheme Secondary Market to White Form Buyers" ("the Interim Scheme") with a quota of 5 000 for persons meeting the eligibility criteria for the Home Ownership Scheme (HOS) White Form applicants to purchase second-hand HOS flats without payment of land premium. In this connection, will the Government inform this Council:

(1) of the respective numbers of persons aged 35 or below among the Interim Scheme applicants, the persons who were issued Certificates of Eligibility to Purchase and those who have purchased second-hand HOS flats under the Scheme;

(2) whether it has studied the changes in the prices of HOS flats since the introduction of the Interim Scheme, and how this situation compares with the relevant situation in the private housing market; if there are differences between the two, of the reasons for that; and

(3) of the authorities' measures, apart from the new round of Interim Scheme to be rolled out in the middle of next year, to assist members of the public aged 35 or below who aspire, and have the ability, to purchase second-hand HOS flats in buying their own homes?



     There are two categories of eligible applicants under the Home Ownership Scheme (HOS), namely "Green Form" (GF) and "White Form" (WF) applicants. GF applicants include Public Rental Housing (PRH) tenants and PRH applicants who have passed the detailed eligibility vetting and are due for flat allocation in about a year's time. WF applicants do not satisfy the requirement for GF status but meet the eligibility criteria set by the Hong Kong Housing Authority (HA). For example, for the pre-sale of newly built HOS flats in end-2014, the income and asset limits for family applicants are $46,000 and $1,010,000 respectively.

     To address the home ownership aspirations of WF applicants and to implement the Chief Executive's election manifesto, after discussion, the HA launched the Interim Scheme to Extend the HOS Secondary Market to White Form Buyers (Interim Scheme) in January 2013 to allow 5 000 WF applicants to purchase flats without premium paid in the HOS Secondary Market. The Interim Scheme provides WF applicants with an additional channel previously not available to them to have the opportunity to purchase subsidised sale flats before newly built HOS flats are released onto the market. The Secondary Market covers flats with premium not yet paid under the HOS, the Tenant Purchase Scheme, and the Flat-for-Sale Scheme of the Hong Kong Housing Society (HKHS). Currently, there are a total of about 380 000 such flats with premium not yet paid.

     When the Interim Scheme was first launched in January 2013, the HA received around 66 000 applications. The HA issued 5 000 Approval Letters in two batches. Of these, 3 983 holders of Approval Letters applied for the Certificates of Eligibility to Purchase from the HA, the HKHS, or both. As at the third quarter of this year (i.e. end September), a total of 2 161 applicants have achieved home ownership through the Interim Scheme. We have not kept breakdown of prospective buyers or buyers under the Interim Scheme by their ages, therefore we are not able to provide the related information. As far as we know, among the applicants who have completed transactions, 218 were one-person applicants while 1 943 were applicants from the family category.

     Our observation is that flat prices in the HOS Secondary Market rose relatively fast initially after the announcement of the Interim Scheme. This may be due to the fact that some HOS flat owners raised their asking prices in light of the new purchasing power in the market. However, flat prices have stabilised afterwards and generally followed the overall trend of flat prices in the private property market. Overall speaking, from August 2012 (after the announcement of the Interim Scheme) to June 2014, the cumulative increase in flat prices recorded in the HOS Secondary Market is higher than that of small and medium-sized flats in the private property market (with saleable area less than 100 square metres). However, flat prices are subject to the influence of an array of factors including the economy, demand-supply and expectations. We should therefore interpret the figures with care.

     The HA's Subsidised Housing Committee (SHC) conducted an initial assessment on the implementation of the Interim Scheme on November 24, 2014, details of which have been uploaded onto the HA's website. As mentioned earlier, until now about 2 200 WF applicants have achieved home ownership through the scheme, without which these persons might have found it difficult to purchase flats in the private property market. While the Interim Scheme is effective to a certain extent, with the experience of only one round of the Interim Scheme, the SHC considered that more empirical information is required to review the full and exact impact of the Interim Scheme on property prices to enable it to decide on the future of the scheme.

     Given the strong demand for subsidised sale flats nowadays (especially from persons eligible for WF status), the SHC considered it more prudent to release one more round of the Interim Scheme with 2 500 quota in the second half of next year. This can respond to WF applicants' home ownership aspirations on the one hand, and reduce the quota to a relatively conservative number on the other. A comprehensive review will be conducted thereafter to decide on the future of the Interim Scheme. Upon completion of the review, the Government will report the outcome to the Legislative Council Panel on Housing.

     President, housing stands out as one of the most challenging social issues which Hong Kong is facing. The society as a whole, including the younger generation, faces a serious supply-demand imbalance in housing. The ultimate solution to address the supply-demand imbalance must lie in increasing supply continuously and with sufficient scale. The Government announced the new Long Term Housing Strategy yesterday. It is the first long term strategic document on housing since 1998. Learning from past experience, we have made a major policy shift by adopting a supply-led strategy, with a view to rebuilding the housing ladder and maintaining a stable private housing market. Through providing newly built subsidised sale flats and facilitating the circulation of the existing stock, we hope to help the lower- to middle-income households, including young people and first-time home buyers, meet their home ownership aspirations.

     According to the latest overall housing demand projection, the total housing supply target for the next ten years (i.e. from 2015-16 to 2024-25) is now set at 480 000 units, of which 90 000 will be subsidised sale flats. Newly built HOS flats will be put on sale in phases, with the pre-sale of the first batch of 2 160 flats in end of this year and pre-sale of the second batch expected to be in mid-2016 (number of flats to be confirmed). The Government will also consider ways to expand the forms of subsidised home ownership and to leverage on the private sector's capacity in providing some of the subsidised sale flats.

Ends/Wednesday, December 17, 2014
Issued at HKT 16:01


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