New income ceiling set by Housing Authority

30,000 potential home buyers being disqualified

By Sam Ho

Starting from 1 April, the monthly income limit for Home Owner- ship Scheme applicants will be reduced from $31,000 to $25,000, making 30,000 families ineligible for HOS housing.

Miss Esme Lau, senior publicity officer in the Housing Department, explained the details of the new policy.

“We review the limit every year in February,” she said.

According to Miss Lau, the new policy aims at safeguarding the rational allocation of housing resources.

It never means to boost the private residential market.

Said Miss Lau: “Also, the formulation of the new policy has never been affected by the will of tycoons.

“The decision is independent.”

Miss Lau said that three aspects are to be considered in the policy review.

Firstly, it is to offer the low-income group housing opportunities.

Secondly, it has to be coherent with the public’s expectations of the Housing Authority.

Lastly, the results of the latest Household Expenditure Survey, conducted every 5 years, are taken into account.

“These findings determine the latest situation of the housing market,” said she.

“The current reduction in the HOS income limit is rather mild and is not yet a full adjustment.

“The authority believes the majority of the public will find the new level acceptable and reasonable,” she said.

For those with monthly incomes above the limit, the authority believes that they are able to take care of their own housing needs.

Miss Lau said that the price is marked reasonably, as the mortgage for flats only constitutes about 40 percent of the household income.

Democratic Party legislator Albert Ho Chun Yan criticised this income limit review.

The draft of the policy was announced on 3 February and passed on 8 February.

“Housing policy is highly impactful and should never be approved in such a haste.

“The authority should consult opinions from the public and the Legislative Council,” he said.

“It gives me an impression that the authority intentionally avoided discussion among the public,” he added.

Mr. Ho questioned the income review mechanism.

Said Mr. Ho: “The authority claimed that there is a formula to calculate the income limit, but it is neither transparent nor revised regularly.

“The reduction of the income limit is simply too drastic. There may be something wrong with the review mechanism.”

In response to these criticisms, Miss Lau said that their decisions are made only after people from different walks of life are consulted.

“The Housing Department is the executive arm while the Housing Authority is the decision maker, and discussions have been made in the Housing Authority before any new policy is implemented,” said she.

“I cannot say whether every new policy should be passed in Legco before its implementation.

“The authority may revise the review mechanism next year to strive for a better system,” she added.

Prof. Liu Pak Wai of the Department of Economics at The Chinese University of Hong Kong supported the new government policy.

Prof. Liu said that the new housing policy has a market boosting effect and is necessary.

“The real estate market has been in a bad situation since the financial downturn in 1997.

“If the government continues to provide subsidised flats to people who are able to buy private flats, it would be unfair to private flat owners.

“Also, if the market situation is not improved, flat owners having negative assets cannot sell their flats,” said he.

Prof. Liu said the new limit just allows a better allocation of housing resources.

“Some of the white, or even green, form applicants of the scheme can afford buying a private flat because they have a sufficiently high monthly income.

“I am sure that they are able to buy a decent second-hand flat,” he said. “So, the income limit reduction gets those ineligible applicants back to the private residential market.”

He pointed out that there is still room for further reduction in the income limit.

Prof. Liu said the new housing policy will bring positive effects to the economy.

“Firstly, people’s consumption power may improve. “Furthermore, some relevant sectors may improve, too — say, banking and the building industry, etc.,” said he.

“Housing property is the main tool for small or middle-scale business to raise funds.

“So, boosting the market may help them to raise money for investment.

“Besides, this new housing policy is in favour of the real estate shares.”

Mr. Danny Yeung, an assistant sales manager of the Midland Realty Limited, said that the private residential market was improved after the cut on income ceiling, especially for second-hand flats.

“The new housing policies and the fall in interest rates contributed to the 50 percent gain in the transaction volume, compared to last month,” he said.

Mr. Yeung said that the second-hand market would be more active in coming months.

“There will be a continuous increase in the number of successful deals.”

While supportive opinions are heard on one hand, Mr. Ho said that a Legco discussion on the issue is still necessary.

Mr. Ho said, “Some legislators and I may ask the authority to revise the decision.

“Actually, a lot of people have shown their anger on the recent housing policy.”

He said the aim of the new policy is to prop up the private residential market.

Said he: “A stable property market should be maintained, but I don’t think these messy policies will be effective at all.

“Boosting the real estate market just benefits the private sector, but not the general public.”

He said, “The idea of HOS is to allow people to have a subsidised flat before buying their own private ones.

“So, the traditional common practice of the public is to live in a public housing first, then buy an HOS flat, and lastly a private flat.

“The new housing policy breaks this rule and narrows the intermediate state. It hinders people from having their own housing.”