HOS drawing power softens as private flat prices slide

Competition for a subsidized Home Ownership Scheme flat this year will be less fierce, with only around 18 applicants fighting for one of over 9,100 flats amid falling home prices and a gloomy economic outlook.

Two hours before the application closed last night, the Housing Authority received 163,000 applications for the scheme - meaning the batch was only 17.8 times oversubscribed.

This compared with 242,000 applications for over 8,900 flats last year - or 27 times oversubscribed.

Lawmaker Scott Leung Man-kwong, Legislative Council housing panel's deputy chairman, was "surprised" by the response, saying homebuyers might have been drawn to the private market.

"When applications began [on July 31], home prices had already been showing a downward trend. There were also new private flats being sold at a relatively cheap price close to that of subsidized housing," Leung said, referring to The Coast Line II in Yau Tong.

Economist Andy Kwan Cheuk-chiu, Ace Centre for Business and Economic Research director, said the market still expects a dampened buyers' interest and the downward trend in private home prices to persist.

"If I expect [private housing] to be sold cheaper, why should I go for subsidized housing?" Kwan said.

He added that multiple mainland property developers are defaulting on debts.

"People are worried that the mainland's economic downturn will eventually affect Hong Kong," Kwan said, adding it is still uncertain whether the US Federal Reserve will stop its rate hikes. "These are all factors dampening market sentiments."

Federation of Public Housing Estates executive director Anthony Chiu Kwok-wai expects the total number of HOS applications this year to be around 170,000 to 180,000.

Chiu blamed the correction in housing market and location of this year's HOS flats for the response as many units are being built in Yuen Long and Tuen Mun - locations less attractive than those of last year.

Nonetheless, some people are hoping to get a chance to buy a HOS flat, submitting applications at the Housing Authority's customer service center in Lok Fu. Many are eyeing Kai Yuet Court in Kai Tak.

Up for grabs are 9,154 flats at Kai Yuet Court, On Ying, On Lai and On Wah courts in Kwun Tong, Siu Tsui Court in Tuen Mun and Long Tin Court in Yuen Long at 38 percent discounts from assessed market values. Prices are from HK$1.49 million at Long Tin to HK$4.94 million at Kai Yuet.

Separately, Cleresa Wong Pie-yue, the authority's subsidized homes committee chair, said the "well-off tenants policies" should be reviewed to rationalize allocation, including raising the age threshold to 65, from 60, for tenants exempted from income and asset tests.

michael.shum@singtaonewscorp.com