Hongkongers spent a record US$4.5 billion to buy lived-in subsidised homes amid soaring private flat prices

By Sandy Li

/ SCMP |

December 14, 2021 11:46 AM SGT

Potential homebuyers look at a scale model of Home Ownership Scheme flats at the Customer Service Centre of the Housing Authority in Lok Fu on December 9, 2019. Photo: SCMP / Dickson Lee

SINGAPORE (EDGEPROP) - Hong Kong sales of lived-in subsidised homes rose to a record HK$34.9 billion (US$4.5 billion or $6.11 billion) for the first 11 months, as buyers rush for cheaper alternatives amid a surge in private home prices that have pushed them beyond general affordability.

The transaction value of lived-in flats under the Home Ownership Scheme (HOS) has exceeded 2020's HK$26.05 billion, according to Centaline Property Agency. The total number of deals in this period, at 6,530, was the highest since 1996, which saw 6,520 transactions.

The most expensive HOS flat transaction this year came last month, when a lived-in 577 sq ft flat at Fu Keung Court in Wong Tai Sin sold for HK$8.99 million, Centaline said.

"Sales of HOS will continue to surge this month, as Hong Kong's economy is improving and will boost buying confidence," said Wong Leung-sing, senior associate director of research at Centaline.

He said the total transaction value could increase to HK$37 billion and the total number of deals to 6,900 this year.

The frenzy came as the overall prices of lived-in homes reached an all-time high in August, with JLL predicting a jump of up to 5 per cent for 2022.

Wong also attributed rising prices to an easing of the mortgage lending policy for flats below HK$10 million for first-time buyers.

Under the current policy, homebuyers can apply for up to 90 per cent for flats worth HK$8 million or below and 80 per cent for flats that cost HK$10 million or less.

The Hong Kong government's subsidised HOS flats can be sold to buyers eligible for the scheme without paying a premium. The maximum income and total asset requirements of HOS are set for individuals at HK$33,000 and HK$850,000, respectively, and HK$66,000 and HK$1.7 million for households of two or more people.

If sold in the secondary market to buyers not eligible for the scheme, the sellers must pay a premium set by the government. Most sellers can realise a net gain even after paying the premium because of high discounts originally offered by the government. HOS flats are offered at a discount of at least 30 per cent to low-income groups.

"Given the long waiting time for the government's new HOS flats and the soaring private home prices, people would turn to the secondary market for a cheaper alternative," said Wong.

The vendor who sold the flat at Fu Keung Court paid a land premium to the government before selling it in the open market, according to records from Midland Realty.

A similarly sized flat without a land premium is now being offered for HK$6.6 million on Midland Realty's website.

In the private market, similarly sized flats at Lion Rise development in Wong Tai Sin cost about HK$10 million, according to Midland Realty.

In May, a 645 sq ft flat in the same housing estate sold for HK$10.88 million, setting a record for the city's HOS flat transactions, said Centaline.

In November, 493 lived-in HOS flats changed hands for a total of HK$2.57 billion, up 5.1 per cent and 2.6 per cent from October respectively, said Centaline.

Tin Chung Court was the most active trading HOS housing estate in Tin Shui Wai, with 14 transactions worth a total of HK$6.3 billion.

People obtain application forms to buy Home Ownership Scheme (HOS) flats at the Hong Kong Housing Authority in Lok Fu on May 23, 2019. Photo: SCMP / Sam Tsang

Wong said transactions below HK$4 million jumped 13.8 per cent from October to reach 66 deals last month, while those costing between HK$4 million and HK$5 million rose 9 per cent to 144 deals.

Flats sold for HK$5 million to HK$6 million advanced 2.6 per cent to 159 deals, and those above HK$6 million remained flat at 124 transactions, he said.

Last week, New World Development announced the launch of subsidised homes at discounts ranging from 40 to 50 per cent. They are meant to help low-income groups get on the property ladder.

As part of New World Subsidised Housing, the developer will offer 300 one-, two- and three-bedroom flats on a site in the New Territories West with a gross floor area of 130,000 sq ft to permanent Hong Kong residents and first-time homebuyers between the ages of 25 and 45.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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