Property

Starter Homes plan off to a bad start

Anderson Road

The much anticipated 2017 Policy Address came out on October 11, however, the government’s new housing policies was only briefly mentioned but many had hoped it would be sufficiently included in the address. As for the much-anticipated Starter Homes scheme, the only information that was revealed is that the pilot scheme will take place next year, with a focus on Anderson Road and offering 1,000 units. The address didn’t mention at all the possible public-private partnership model that had been rumored in the market — a big disappointment for industry players and home seekers.

I have pointed out previously that if Starter Homes rely solely on private land developments, without the expansion of overall supply, it does nothing to curb home prices in the private market. Take the Anderson Road lot for example: 1,700 private housing units were initially planned for the development, and now 1,000 of them have been reassigned to become Starter Homes, leaving only 700 units available within the private market. With fewer units available for private market buyers, the supply-demand imbalance will only intensify. Carrie Lam may have taken notice of the market’s reaction, during the weekend she said in an interview that future Starter Homes will be built primarily on farmland in the New Territories, with special designs to increase the density of the developments so more Starter Homes can be made on a given lot. She also added that developers will have to pay a premium as usual to complete the private housing developments on the lot.

However, these added suggestions are absent from the Policy Address, making it hard to believe that they will be put into action. In fact, increasing the density of such developments would require the support of the Town Planning Board and the general public, which would not be an easy task.

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On the other hand, what do developers think? It doesn’t seem to be a good deal if a real estate developer cooperates and builds more Starter Homes on its land; not only will the developer not receive the extra profits, but it will also add rivalry to its private housing units. However, if the government introduces special incentives to draw developers to support the plan, there will be concerns of possible collusion. In a politically sensitive era, such an issue is bound to be controversial.

While the lack of land supply has already casted a huge shadow for the future development of the Starter Homes scheme, the collaboration between the government and developers may also jeopardise its implementation. A more practical solution might be land reclamation. The future work of the Task Force on Land Supply is of great significance, and it is worth exploring the feasibility of developing areas within Hong Kong’s country parks for housing. I hope that the work of the Task Force can yield substantial results that will become the cornerstone of Lam’s new housing policies. Whether it will come to fruition or not, we will just have to wait and see.

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