Buyers scramble for new affordable homes in Hong Kong

Global Business

In a move that further complicates home ownership in Hong Kong, authorities have tightened mortgage rules. The city’s monetary authority insists it is meant to prevent speculation on half-priced homes that the government has put on offer. As the debate rages on, even the city’s tycoons have started to weigh in.

CCTV’s Cathy Yang reported from Hong Kong.

Buyers scramble for new affordable homes in Hong Kong

Buyers scramble for new affordable homes in Hong Kong

In a move that further complicates home ownership in Hong Kong, authorities have tightened mortgage rules. The city's monetary authority insists it is meant to prevent speculation on half-priced homes that the government has put on offer. As the debate rages on, even the city's tycoons have started to weigh in. CCTV's Cathy Yang reported from Hong Kong.

Nearly 95,000 locals rushed to apply for subsidized homes as soon as the government brought the scheme back after a 12-year break. Demand was so high the queue at the Home Ownership Scheme sales center in Lok Fu extended out into the streets.

Stacks of free brochures are still on offer, even as the application period had ended. Building models of those on offer are still on display.

Successful applicants won’t know exactly what it’s like inside, as construction will still be completed from 2016 on wards. Some 400-or-so square foot flats are being sold for at least $240,000 which is 50 percent cheaper than market rate.

Luck will play a big part in the process. Only 2.2 percent of total applications, or 2,160 subsidized homes, will be served. The one, over-arching criteria: the buyer must live in it, rather than use it as an investment.

Soaring prices have kept home buying out of reach for many in Hong Kong, considered one of the world’s most expensive cities to live. Many of those unable to afford private homes are turning instead to the government’s subsidized housing scheme.

Professor Richard Wong, chair of economics of Hong Kong University and served as a member in the Housing Authority, has recently published a book on housing. “The only solution is to sell to public rental housing tenants,” Wong said.

The housing shortage was a highlight in Chief Executive C-Y Leung’s policy address, one of Hong Kong’s tycoons has since come forward with his own solution. Lee Shau-Kee, Henderson Land Chairman, laid out bold plans to build cheap homes.

It is in estate in Shek Kip Mei northeast of Kowloon at Tai Hang Sai where Mr. Lee plans to build 5,000 flats. The price A $130,000 for 300 square feet of space. No downpayment required, payment terms set at either 10 or 20 years. Mr Lee’s top priority: to help Hong Kong’s working youth.

But in what complicates the task of awarding deserving buyers, the monetary authority have tightened mortgage rules. Concern is growing affordable homes would be exploited.