Thank you, President. Housing is an important livelihood issue. According to the latest international housing affordability report prepared by a public policy consultant, Hong Kong’s property price to median income ratio is 16.7, which is a significant improvement from the peak of 23.2 in 2021, but Hong Kong is still the most unaffordable city in the world. The Policy Address proposes a series of measures to further improve and enrich the home ownership ladder, which will certainly be welcomed by the public.
One of the objectives of improving the housing ladder is to encourage home ownership. As we can see, the rise in property prices in Hong Kong and other parts of the world has increased the wealth of property owners; home ownership can not only improve the quality of living, but also act as a common tool for financial management.
The more residents own properties in a society, the stronger their sense of belonging, resulting in social stability and sustainable development of various economies. At present, the housing ladder mainly consists of public rental housing (“PRH”), Home Ownership Scheme (“HOS”) flats and private flats. According to the Bureau, the ratio of PRH housing to subsidized housing to private flats will be adjusted from 5:2:3 to 4:3:3 to gradually increase the proportion of HOS flats, with a view to assisting more PRH tenants or eligible citizens to purchase subsidized flats.
The Government has announced that it has identified land for developing about 410 000 PRH units in the next 10 years. If there will be sufficient land supply in the future, it is proposed that the proportion of private housing be increased.
Being allocated with PRH is the public’s first demand for housing. If effective measures are introduced, PRH families with the means can be motivated to surrender their PRH flats as early as possible, buy HOS flats as a stepping stone, and then switch from HOS flats to private flats when they have accumulated enough savings. These three types of housing basically form a complete housing ladder to meet the needs of different sectors of society at different times.
Mortgage is an important tool to help young people or others to switch from HOS flats to private flats, and banks can consider extending the repayment period. Taking the price of a $5 million flat as an example, the maximum repayment period is 30 years, and calculating on the basis of a 70% loan-to-value ratio, the loan will be $3.5 million with a monthly repayment of about $16,500. However, if banks can extend the repayment period to 40 years for younger people with stable jobs, the monthly repayment amount can be reduced by $2,000, which is more affordable to members of the public. With normal annual salary increments, paying the mortgage will become easier after a few years, and people with savings can buy a bigger flat.
On the other hand, there are PRH estates or buildings in Hong Kong that are more than 40 or 50 years old but still structurally safe due to good maintenance. Unfortunately, most banks nowadays use 70 years minus the age of the building as the standard lending period. If the lending period can be extended to 5 to 10 years depending on the quality of the building, it is believed that more people can benefit and this will revitalize the entire private property market. We can draw reference from the example that after the Government implemented Dr CHOW Man-kong’s proposal of extending the mortgage guarantee period for HOS secondary market flats to 50 years, the number of transactions doubled.
To enhance the home ownership ladder, it is necessary to implement more measures to promote the turnover of PRH and HOS flats, so that those who have the means can move up to another level so that PRH flats can be allocated to those who are in genuine need as early as possible, and only in this way can public resources be put to good use. As for private housing, it is hoped that the pressure and burden of mortgage repayment can be alleviated. When the housing needs of people from all walks of life are addressed, their sense of well-being will certainly be enhanced.
Thank you, President.