HONG KONG, Oct. 12, 2011 /PRNewswire-Asia/ -- Vincent Cheung Kiu-cho,Cushman & Wakefield'snational director for valuation and advisory services said, "With the resumption of Home Ownership Scheme (HOS), 2,500 flats are offered by the first batch. The maximum household income of eligible citizens is raised; it is believed that the housing demand of local residents can be met, but the real impact is minimal, as the new HOS flats are to be completed in 2016 / 2017, when the appointment of the new Chief Executive is about to end. The continuity of housing policies is in question. Moreover, in four years after 2016 / 2017, 17,000 new homes will be completed, or 5,000 residential units a year, with only 2,500 introduced to the market in the first year. The overall impact on home supply is very limited. It is reasonable that priority is given to public rental housing, aiming at tackling the basic housing needs, for HOS. Besides, taking into account the uncertainties of the economy and property market, the measures introduced in this Policy Address are effective in relieving the current situation. They provide a response to demands of citizens, without adding pressure to the next Chief Executive and the property market."
Cheung further pointed out that the maximum monthly household income of eligible applicants is raised to $30,000, with reference to the mortgage repayment ability of eligible household being no more than 40% of household income, or less than $12,000 in housing each month. Considering that mortgage interest rate is at 2.5%, with loan amount at 70% of the home price and a loan period of 25 years, a flat costing around $3.8 million can be purchased with down payment of more than $1 million. According to the newly-announced Policy Address, new HOS flats will be sold from $1.5 to 2.8 million. The ratio of repayment to household income can be lowered, and lessen middle class households' financial burden in housing. He believes that the sale prices of HOS flats and those built by private developers are different. The number of new HOS flats is in line with the growth of the population, where Hong Kong needs 20,000 to 25,000 new flats each year, and can therefore tackle the market demand. The government earlier announced that private developers can offer 20,000 new homes each year. Together with the new flats under the HOS scheme, local demand will be met without causing pressure on property market.
In addition, the government suggests premium should be decided by purchasing price when reselling new HOS flats, in order to improve the turnover rate of owned HOS flats. Cheung believed that this measure can only increase profits earned by reselling HOS flats. Whether the turnover rate of these flats would be improved depends on the property market situation. This does not have any real impact on relieving demand for housing.
Regarding My Home Purchase Plan (MHPP), apart from the proposed "rent-and-buy" mode, a "buy-or-rent" option is now available, which allows participants to buy their MHPP flats directly at market price without going through a rental period. Cheung estimated that this decision makes MHPP and HOS parallel with each other, with similar quality of flats under both schemes. Therefore, he believed that the new flats are less likely to have great impact on home prices. In addition, the introduction of "ceiling price" enables the applicants of the plan to have more reasonable estimations when purchasing flats. However, it can be regarded as a form of subsidy in nature, especially when the property market becomes red-hot in the future. In other words, this form of option contract indirectly increases government's expense.
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