Tsang to study subsidies for home buyer

HONG KONG: Under pressure to address rising property prices while not alienating existing homeowners, the Hong Kong government has turned to an age-old solution - a public consultation.

Chief Executive Donald Tsang Yam-kuen announced Thursday May 6 that housing minister Eva Cheng would contact various stakeholders and the public over the next five months to gauge their views on using taxpayers' money to help people buy homes.

This comes eight years after the government shelved the Home Ownership Scheme - which allowed people to buy subsidised flats - to reverse a slump in the market.

There have been repeated calls for Tsang to resume the HOS as property prices rise. He said the government was aware that some people who did not qualify for public rental flats could not afford to buy private flats.

"We appreciate the need to forge a consensus on provision of subsidies for people to buy property," he said during a question-and-answer session in the Legislative Council.

Tsang said he would give an account in his policy address in October if the government had further ideas on the issue after the consultation.

A political scientist at City University, Dr James Sung Lap-kung, said the government was trying to buy time. "It needs some time to reach a consensus within the government and monitor the situation in the global economy," he said.

The announcement came two days after Cheng said HOS flats were not the only option for home-starters, and questioned whether taxpayers' money should be used to help people to buy flats.

Tsang said he recognised that property prices had surged by one-third between January last year and March this year. But he cast doubt on whether public money should subsidise people to buy private property.

"We don't want the land originally reserved for building public housing flats to be allocated for other subsidised housing projects," he said.

Tsang reminded the public of the painful lessons of the property bubble in the 1990s. "After the property bubble burst in the wake of the Asian financial crisis, many home buyers suffering from negative equity blamed the government for encouraging them to buy homes."

His remarks underlined the predicament facing the administration in trying to satisfy people who want to buy homes and existing owners who fear any change in policy will hit prices.

"The government has great power to ruin the property market but there is little it can do to stabilise property prices during a slump," Tsang said.

A government spokesman said if the administration did subsidise home ownership, important topics had to be addressed, including:

  • Who should be the target of subsidies, how should that be achieved and what are the reasons for using public funds to subsidise them?
  • Are such subsidies fair to other taxpayers?
  • If land allocated for public rental housing development is used to build HOS flats, will that affect the supply of public rental housing?
  • If land allocated for private projects is used to build HOS flats, will that affect the supply of private flats?

An official said the government would canvass views on other options, such as providing affordable rental flats for the sandwich class. - South China Morning Post

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