Residential buildings tower over Aberdeen harbor. Hong Kong government confirmed it will build 17,000 flats under Home Ownership Scheme by 2017. Lam Yik Fei / Bloomberg

The Hong Kong government will build 17,000 newly subsidized flats under the Home Ownership Scheme (HOS) during the 2016-2017 period onwards to meet housing needs of the so-called sandwich class group.

The government expected the pre-sales of the first batch of new HOS flat to be launched between 2014 and 2015.

The administration also reiterated that the pre-sales of the 1,000 flats under the "My home Purchase Plan" at the Tsing Luk Street project would take place by the end of this year, and it would also release all the remaining 832 surplus HOS flats in early next year in a bid to boost the immediate supply of subsidized residential flats.

Secretary for Transport and Housing Anthony Cheung, in a written reply to legislator Abraham Shek at the Wednesday Legislative Council (LegCo) meeting, stressed that the government will assess the HOS demand in future, and set the relevant supply target under the "Long Term Housing Strategy" review.

In a written question submitted by the real estate and construction functional constituency legislator Shek to the administration at the Wednesday LegCo meeting, Shek asked whether the administration would conduct a comprehensive review of the current measures for revitalizing the HOS market.

Shek also queried whether the new 5,000 eligible white form (WF) applicants who purchase the HOS flats on the HOS Secondary Market without paying land premium each year would fuel home prices in the HOS Secondary Market.

Cheung said that the government had been monitoring the price changes in the property market closely, including the HOS secondary market. "We note that despite the global and local economic slowdown, overall property prices have increased persistently, including the transaction prices of second-hand HOS flats."

"HOS flat price changes with (land) premium not yet paid on the HOS secondary market are attributable to various factors, but not (due to) any single individual reason," Cheung reckoned.

"These factors include land supply, transaction volumes, mortgage lending situation, the liquidity level, interest rates, and the people's expectation of the future market," he added.

Chief Executive Leung Chun-ying announced in July that, from early 2013 onwards and before the new HOS is launched, 5,000 eligible WF applicants for HOS would be allowed to buy HOS flats on the HOS Secondary Market without paying land premium each year.

The WF applicants refer to those non-public rental housing (PRH) tenants who meet the income and asset criteria to purchase HOS flats. This contrasts with the green form (GF) applicants who are PRH tenants who meet the income and asset criteria to buy HOS flats.

"The measure is to address the home ownership needs of those who are eligible and also facilitate the turnover of HOS flats in the interim, thereby revitalizing the HOS secondary market," Cheung added.

"The potential HOS flat buyers should pay more attention whether interest rates would really normalize after 2015 rather than to the supply amount of the HOS flats. This is because the HOS buyers are more vulnerable toward interest rate hikes than those private residential flat buyers," Centaline Property Agency Research Director Wong Leung Sing told China Daily.

The HOS, which was initiated in the 1970s, was suspended in November 2002. Amid the rising demand for the resumption of the HOS, the government in 2010 announced the "My Home Purchase Plan" to build approximately 5,000 "no-frills" small and medium flats for "rent-than-buy" to those eligible applicants. Chief Executive Leung Chun-ying in August scrapped the "My Home Purchase Plan" as all the 5,000 flats would be sold directly.

oswald@chinadailyhk.com

(HK Edition 12/06/2012 page2)