Reaching the Unreachable
Will sandwiched-class homebuyers benefit from new housing policy?
| Text : Jennifer Lo | Photo : www.thinkstockphotos.com |
Arecent report published by CLSA Asia-Pacific Markets points out the selling price of a flat in Hong Kong equals 15 times an ordinary worker’s annual salary. That means if a family saves up 30 percent of its monthly income it will take 46 years — almost half a century — to pay off the mortgage loan for a 500 square foot flat.
Skyrocketing housing prices not only mean a headache for these middle-to-lower class buyers seeking a roof in the city, but it’s also a sign the government needs to think of alternatives for this forgotten “sandwiched” class — a class too affluent for public housing but too poor to afford a private flat.
In his next Policy Address Chief Executive Donald Tsang is expected to unveil a set of new measures to subsidise home purchases. This includes a rent-to-buy housing plan, in which qualified buyers would be allowed to rent the flats for some time, probably three to five years, and the rent paid would count towards the purchase price.
Secretary of Transport and Housing Eva Cheng also hinted in a press conference the government is considering the possibility of redeveloping old housing estates to increase the supply of more affordable subsidised housing. She further explained subsidised housing would no longer be allocated by ballot but according to need, which implies a new income cap to be imposed on applicants.
The latest proposal came in response to mounting demand for re-launching the shelved Home Ownership Scheme (HOS) and concerns about curbing soaring property prices.
A survey conducted by Democratic Alliance for Betterment of Hong Kong (DAB) in August this year showed more than 90 percent of the 800 respondents think property prices are too high, while 70 percent welcome government intervention to cool down the heated property market.
Associate professor Chan Kam-wah of Polytechnic University’s social sciences department said in Metro Daily, the government’s cooling measure would be more effective if the supply of public and HOS housing could be raised from 40 to 60 percent in proportion to the city’s total housing supply.
The HOS is a subsidised public housing programme managed by the Hong Kong Housing Authority since 1978. It was part of government policy in the ’70s to provide lower-income earners a chance to purchase housing from the government at a lower market price, with discounts from 30 to 40 percent.
The housing programme has been tested through a number of market ups and downs, including the oil crisis of 1979, political uncertainty prior to the Joint Sino-British Declaration in 1984 and Hong Kong’s handover in 1997, as well as collapse of the IT bubble in 2000. The scheme came to a halt in 2003 with the government’s determination to combat falling real estate values.
Despite the government’s attempt to offer other types of affordable housing for the middle-to-lower class families through the Sandwich Class Housing Scheme between 1995 and 2000, the move was only piecemeal and largely ineffectual. Given a government policy to suspend the sale of subsidised housing in 2001, not all flats built under the scheme were sold but held in stock. Examples are Marina Habitat in Ap Lei Chau and The Pinnacle in Tseung Kwan O.
Is the government eventually bringing back subsidised housing? At press time we had to wait until October 13 to find out. But while big developers cheer the substantial earnings brought by soaring housing prices, let’s not to forget the sandwiched group, which is in need of viable alternatives to private housing far beyond its reach.
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