Govt mulls intervention if prices exceed HK residents' affordability

Home buyers on Friday showed their fierciest ever enthusiasm for subsidized housing as fears about a further rise in the already sky-high prices heightened after Chief Executive Leung Chun-ying's maiden Policy Address offered no expected short-term property curbs.

The first batch of around 1000 units of new government subsidized housing offered for sale has been oversubscribed by nearly 40 times while the 5000 quota for the right to purchase a second-hand subsidized flat without the need to pay the premium has been oversubscribed by at least three times by the Friday deadline, government sources said.

Thousands of local residents filed applications to buy subsidized flats at the Tsing Luk Street residential project, as the application deadline ended on Friday, amid the market perception that the latest government measures are ineffective in curbing the city's soaring local home prices.

At the Housing Society (HS) central office in Tai Hang, thousands of local residents flocked to apply for the subsidized flats at the Tsing Luk Street residential project under the "My Home Purchase Plan". Government sources said that the HS has received more than 40,000 applications for the approximately 1,000 subsidized units of the residential project, representing at least a 40 times over-subscription.

Approximately 65 percent of the applications were submitted by single persons.

"Local home prices are indeed expensive so we cannot afford to buy private residential flats," said one applicant after filing the application on behalf of her children who are getting married soon. "Local home prices seem (to be) always rising with no sign of dropping even after the Policy Address announcement on Wednesday."

The Tsing Luk Street residential project is the first subsidized housing project the government launched after it resumed the program last year. The program was suspended in 2002 after home prices plunged following the Asian financial crisis in 1997-98.

Meanwhile, Friday was also the deadline for applicants to apply for purchasing subsidized flats at the HOS secondary market without paying land premium. The government previously said that 5,000 eligible white-form applicants can buy subsidized flats in the secondary HOS market without the need to pay the land premium.

Local residents also did not want to miss the opportunity to become homeowners by submitting their applications for HOS flats at the Lok Fu Housing Authority (HA) general office on Friday, along with their applications for the Tsing Luk Street flats. Government sources said there are at least 20,000 applications for the HOS flats, including 60 percent of them submitted by young single adults.

"The issue of soaring home prices has never been really tackled so the local youth should take every opportunity to use subsidized flats to climb up the property ownership ladder," said another local young applicant.

Local home prices continued to swell even after the Wednesday Policy Address announcement, as the market perceived that it provided no real harsh measures to curb the city's skyrocketing home prices.

The Centa-City Leading Index (CCL), which tracks home prices in the secondary market, rose further 0.28 percent last week to 115.93, just a tad away from its record high of 116.81 the local residential price trend index, rose to a eight-week high to the 115.93 level as announced on Friday, as the enthusiastic market response toward the Tsing Luk Street project fuelled more price hikes.

Chief Executive Leung Chun-ying said on a Friday English radio program that the administration will remain vigilant toward the global external economic environment in designing its housing policy.

Meanwhile, Secretary for Transport and Housing Anthony Cheung, in another radio program, said the government is obliged to intervene in the housing market if home prices are beyond the affordability of residents. The administration will study any possible option to enhance home supply, Cheung added.

oswald@chinadailyhk.com

(HK Edition 01/19/2013 page2)