Immigration to Hong Kong focus on life for immigrants in Hong Kong: According to a recent report released by CBRE, among 31 major cities globally, residential property prices in Hong Kong are approximately 1415 USD per square foot, ranking first, far exceeding the 1025 USD in London and 842 USD in New York.
"Housing issues have become the topic of greatest concern for Hong Kong citizens. In recent years, the growth in supply has been too slow and market property prices have been too high, triggering a series of social conflicts. The growth rate of citizens' income cannot keep up with the rise in property prices, leaving them to only sigh at the sight of homes," candidly stated Josephine Lee, Director-General of Our Hong Kong Foundation.
Our Hong Kong Foundation is a think tank established last November under the leadership of former Chief Executive Tung Chee-hwa. On November 9th, it released its first report addressing the "tough nut" of Hong Kong property prices, proposing a "Subsidized Home Ownership Scheme."
The report suggests that the HKSAR Government launch a "Subsidized Home Ownership Scheme," allowing residents of subsidized housing to purchase homes at a discount as low as 50%, with the goal of enabling 80% of Hong Kong citizens to achieve home ownership.
According to the scheme proposed by the foundation, all public housing will no longer be divided into public rental housing and Home Ownership Scheme (HOS) flats; all will be available for both rent and purchase, with "home ownership" as the goal. Low-income subsidized housing residents can "rent first and buy later" and can purchase at any time, with the land premium locked at the level at the time of move-in, and only a 5% down payment required.
Richard Wong, an advisor to the foundation and Chair of Economics at the Faculty of Business and Economics of the University of Hong Kong, pointed out that under the existing public housing policy, residents are forever chasing a floating and unsecured land premium target. Consequently, these residents face the awkward situation of holding 50% ownership but being unable to circulate it through the free market.
He stated that taking a residential unit with a market price of 4 million HKD as an example, the Housing Authority would sell it to a low-income family at a 50% discount, i.e., 2 million HKD. The government would provide a bank mortgage guarantee, and the resident would only need to pay a 5% down payment, i.e., 100,000 HKD, to achieve home ownership.
Compared with the "Tenants Purchase Scheme" during Tung Chee-hwa's tenure, the biggest difference between the two lies in the land premium. A 4 million HKD property is still purchased for 2 million HKD, but the new scheme locks the land premium at 2 million HKD, so these low-to-middle income citizens do not need to bear the additional land premium costs that rise with market prices.
At the same time, the new proposal suggests that the government can provide zero-cost hedging to avoid the impact of property price downturn cycles on homebuyers. For example, the land premium amount that homebuyers can choose could be the average of the land premium at the time of purchase and during the occupancy period, or based on the market price at the time of the land premium payment.
"The long-term goal of this plan is for 80% of Hong Kong families to own their own property, and in the future, to be able to trade up or down to rebuild the housing ladder and share in the fruits of economic development. At the same time, it can help the government recover the investment costs of building houses, which can not only release the value of housing resources but also be used to pay for other social expenditures," he said.
Data shows that currently, owners of HOS and public housing account for 18% of Hong Kong families, totaling about 450,000 households. Among them, 380,000 households do not have full ownership because they have not yet paid the land premium, and therefore cannot trade in the free market.
"Due to the soaring property prices over the past few decades, the amount of land premium has also risen. However, these households currently have lower incomes and cannot obtain loans from banks, so they need the government to step in and provide guarantees to correct this market failure," he pointed out.