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25,000 HA flats up for sale, but no more loans

Staff reporter

Thursday, June 03, 2004

Despite the Housing Authority's (HA) government-mandated

goal of phasing out its involvement in the sale of public housing

units, the authority announced yesterday that it will still release

for sale up to 25,000 low-cost flats by the end of the year, while

also eliminating its loan scheme for low income home buyers in the

private market.

The two moves, coming in separate announcements, are part of the

authority's move away from direct involvement in the property market.

The low purchase price of the sale flats should not effect the

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property market because they are pegged to low income tenants and

cancelling the Home Assistance Loan Scheme is meant to get the HA out

of the financing business.

Still, ending the loan scheme raised concerns about pressures on the

private housing market.

Centaline Property Agency executive director Louis Chan said first

time buyers are likely to be hardest hit by the decision. "Low-income

families or some first time buyers may not be able to afford down

payment for buying properties if they are no longer subsidised by the

government," he said.

Prices and transaction volume for small size homes, valued at below

HK$1.5 million each, are expected to fall by five per cent and 20 per

cent respectively in the short term due to an expected decrease in the

number of first time buyers, he predicted.

"First time buyers without sufficient capital may scrap plans to buy

flats."

An HA committee member, Ho Hei-hwa, expressed concern that the move

would cause more people to apply for public housing and this will

force the authority to build more public housing flats. Commenting on

the end of the loan scheme, Ng Shui-lai, chairman of the subsidised

housing committee at the Housing Authority, said: "The decision on

home ownership should be left to the market and should not be swayed

by intervention from the government with the provision of a loan

scheme."

The scheme provides interest-free loans of up to HK$530,000 or monthly

mortgage subsidies of up to HK$3,800 to help low-income individuals or

families to buy their own flats.

More than 8,000 low-income families are subsidised, although the

scheme was halted last year pending a review.

Meanwhile, the authority said that a batch of 5,100 flats in Cheung

Wah Estate, Fanling, will go on sale by the end of this month pending

the completion of a drainage survey and necessary repair work.

Flats in three remaining estates including Lei Tung Estate, Po Lam

Estate and Shan King Estate will be sold by stages in the coming

months for a total of about 25,000 this year.

The flats to be released for sale are under the scheduled Tenants

Purchase Scheme Phase 6A that was announced a year ago. Ng said he did

not anticipate the release having an impact on the private housing

market.

An additional 25,000 flats under Phase 6B should be released for sale

next year. An HA spokesperson said there were no further plans by the

authority to sell flats after Phase 6B is completed.

"We plan to concentrate on our core business, which is providing

housing for the poor," spokesperson Esme Lau said. "Home ownership

is not our key business."

The authority's Subsidised Housing Committee yesterday endorsed the

sales plan, the list price of which is set at a discount of 60 per

cent off the assessed market value.

An additional special credit of 30 per cent of the list price will be

offered to tenants who buy their flats within the first year.

A credit at 15 per cent will be offered in the second year.

The list prices of 99 per cent of the flats are below $300,000 and the

purchasers are to spend no more than 1.12 times their current average

expenses on housing.

Committee Chairman Ng Shui-Lai said tenants' affordability has always

been the guiding principle in determining the Tenants Purchase Scheme

flat prices, adding that the guideline also ensures that the tenants

will not be spending more than double the rent they are paying after

the purchase.

Analysts said the sales were unlikely to upset the private property

market, which has seen price rises of as much as 40 per cent in the

past eight months.

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END


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