My Home Purchase Plan

Under this Plan, the Government will provide land for the HKHS (Hong Kong Housing Society) to build “no-frills” small and medium flats for lease to eligible applicants at prevailing market rent. The tenancy period will be up to five years, within which the rent will not be adjusted. Within a specified time frame, tenants of the Plan may purchase the flat they rent or another flat under the Plan at prevailing market price, or a flat in the private market. They will receive a subsidy equivalent to half of the net rental they have paid during the tenancy period, and use it for part of the down payment.

The Government has already earmarked sites in Tsing Yi, Diamond Hill, Sha Tin, Tai Po, Tuen Mun and other areas for a total of some 5000 flats to be built under the Plan. The first project will provide about 1000 flats in Tsing Yi by 2014. In the point of view of the Government, they would like to wisely spending the money of helping the sandwich class with flexibility in their home purchase plan, including the choice of opting to purchase the flat they rent, another flat under the plan, or a flat in the private market; which also want to help on slowing down the raising on both rental and purchasing prices currently in the market.

The Government thinks that the current price in the market has been raised too fast and too high which is not a health saturation and start forming up an “Economic Bomb”. As the “Property Market” is one of the main factors with Hong Kong’s economic environment, if the “Bomb” pops, Hong Kong’s economic will be affected badly. But in the other hand, the Government does not want to affect the growth of the real estate too much and too fast, therefore the Government implies with this soft plan in order to balance with the situations.

For the tax payers, they are mainly separated in to 2 groups: the group which cannot enjoy with the plan and the qualified applicants. For those who do not have the right to enjoy with the benefits are mainly the people who are either already owning a flat, or those people who are not qualified due to higher incomes. These people might not feel happy with the Government’s actions. For those who have already owned their own place, when the Government supporting plan comes, that means there will be more people able to buy their own place.

In the last few years, the economic situation of Hong Kong was not good and people were very careful on using their money, which made the banks dropped their interest rate of borrowing in order to attract people to borrow money either on buying flats or other usages. With the needs on mortgaging is rising due to this program, the interest rate will then have the potential on rising. This will affect to those people who already own their own place for living have to pay more on the mortgage pay back or need to extend the time of pay back as the raising of the interest.

The Government has setup very tight rules on the incomes and assets on qualifying the applicants for the supporting program in order to make sure all the qualified applicants are the users of the properties. Those people who do not qualify for the program due to higher income might be the most unhappy group as they would think the Government does not take care of them. Since the property prices have been increased so much in the last 5 years, although they have higher incomes, they still cannot afford the down payment on purchasing a place.

For the group of people who are the qualified applicants, of course they will be very concerned for this supporting program. However, they have to wait until the second half of 2014 for the building completion and there will be only 5000 units, which is really “Too Little Too Late! ” Another problem is that, the Government now estimating that the price of a 500 feet unit is 3 million, which would only apply to those flats in the remote areas.

The prices for the urban residents are already far outstripped with it. Who can predict and guarantee how would the real estate pricing will be after 7 years of time (The planned building will be completed after 4 years, the applicants have to rent and live there for 3 years before they can own)? In case of the property prices continue rising, those 300 thousand which is going to be rebate from the Government still not enough to pay for the down payment.

If the property prices rapidly decline, those applicants will be falling into a dilemma situation. Overall, to solve the housing difficulties of Hong Kong there are many ways, how the “My Home Purchase Plan “may receive with the desired results really depends on the future development of the real estate market trends. However, the “My Home Purchase Plan” does not really may not really be able to help on the current unhealthy situation on the property market.

In my opinion, I would suggested the Government should plan on some relaxation on the income limit for public housing and pay more attention on taking care of the middle and lower class families. In fact, the magnitude of increase in property prices and rents, is seriously out of the line with the general public’s income, which directly affecting the quality of life. The Government should pay more attention on how to plan on the public housing supply and how to make better use of resources balance.