Skyscrapers make up the skyline of Hong Kong. Chief Executive promised to ease the problems of soaring housing prices and land shortages in his Wednesday Policy Address Edmond Tang / China Daily

Tsang presents 'My Home Purchase Plan' as alternative to HOS

The Chief Executive has promised Hong Kong that he will address soaring housing prices and land shortages, with or without the cooperation of the private sector.

Donald Tsang made the housing issue the centerpiece of his annual Policy Address, as he announced programs to increase availability of land for housing; increase the supply of affordable homes and cool off the over-heated real estate market.

Land availability

He cited housing as the key issue facing Hong Kong today and identified the shortage of available land as the cause.

A land reserve will be created. If the private sector fails to apply for land sales under the Application List System, the government will act on its own to make land available for housing construction.

The Chief Executive promised that 30 hectares of industrial land across the city will be rezoned for housing. He also cited plans for additional reclamation on what he called an "appropriate scale" outside Victoria Harbour.

Tsang promised that the government would make a dedicated effort to construct 20,000 new housing units in each of the next ten years.

He predicted that the number would satisfy market demand, given that the average annual absorption rate of first-hand private residential flats has held at roughly 18,500 units over the past 10 years.

Affordable housing

The government will enhance construction of small and medium residential flats.

Tsang declared that a site at the former Yuen Long Estate will go up for tender later this year with a minimum number of units and size restrictions.

The Chief Executive called it a pilot scheme, which may be extended to other sites. The administration will discuss with the Mass Transit Railway and the Urban Renewal Authority to explore the possibility to provide more small and medium flats in their urban renewal projects and residential developments along the West Rail, he added.

Infrastructure construction at the Kai Tak Development Area will be accelerated so that some residential sites can be available in 2015, the Chief Executive said.

The government also planned to place on the market the former North Point Estate site and the Ho Man Tin site to be returned by the Housing Authority next year, as well as the sites in Tung Chung and Tseng Kwan O.

The administration will form the "Steering Committee on Housing Land Supply" that is chaired by the Financial Secretary to coordinate the efforts of the departments concerned.

Home ownership

Rejecting calls to restore the defunct Home Ownership Scheme, Tsang proposed an alternative "My Home Purchase Plan." Under the plan, the government would build 5,000 "no frills" flats, to accommodate prospective home-buyers in the so-called "sandwich class."

Local families with incomes under HK$39,000, financial assets under HK$600,000 who have not owned property in the last 10 years will be eligible. The administration has earmarked sites in Tsing Yi, Diamond Hill, Sha Tin, Tai Po and Tuen Mun to provide the 5,000 flats. The first project, providing 1,000 apartments in Tsing Yi will come on the market in 2014.

Prospective buyers would lease flats at a fixed rate for up to five years. At a "specified date" during the lease, tenants would be eligible to purchase their flat (or another), or move onto the private market. Half of the rental fees paid then would be rebated to provide tenants a sound basis for a down payment.

The Hong Kong Housing Society will be responsible for the plan's operation.

"The plan aims to help the city's sandwich class realize their dreams to have their own flats," Tsang stressed.

The Chief Executive also committed his government to constructing 15,000 public housing flats per year to maintain the current three year waiting period for public housing.

CIES adjustments

The Chief Executive also announced changes affecting mainland investors under the Capital Investment Entrant Scheme.

The decision follows a rising outcry that investors from the mainland were overheating the real estate market by heavily investing in luxury homes to acquire Hong Kong residency.

"The government, in view of public concern, has decided to temporarily remove real estate from the investment asset classes under the scheme," Tsang said.

The government also raised the investment requirement for residency to HK$10 million from HK$6.5 million. Both directs are effective on October 14.

Transparency in sales

Declaring that the government and the Real Estate Developers Association had been unable to reach a consensus on outstanding issues, the Chief Executive said legislation was being prepared to guarantee transparency of property transactions.

The Transport and Housing Bureau will study practicable recommendations within the next year to regulate the sale of first-hand flats, including citation of saleable floor area as the only basis for price listings.

The problem of so-called "inflated flats" will be addressed with a cap of 10 percent on the amount of "apartment features" which are permitted in the calculation of floor area. In the past, the concessions have served as a tool for developers to give the appearance of substantially greater floor space than actually is contained in flats.

Tsang said that the stability of home prices is vital and the administration will strive to prevent bubble formation in the local property sector.

Joseph Tsang, international director and head of capital markets at Jones Lang LaSalle, told China Daily that the above measures are mild and can contribute to the stability of property prices in the city.

Leung Chi Kin, deputy chairman of the Real Estate Developers Association of Hong Kong, said that the sole adoption of the use of saleable floor area for price listing purposes may lead to a surge in the selling prices of properties.

China Daily

(HK Edition 10/14/2010 page1)