LCQ14: Measures to help youths in own a home
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Following is a concern by the Hon Kenneth Leung and a written reply by the Deputy Chief Secretary for Administration, who is carrying out the tasks of the Secretary for Housing, Mr Cheuk Wing-hing, in the Legislative Council today (July 30):
Concern:
In the last few years, the current-term Government has actively urged youths to go up the real estate ladder and has actually put in location a variety of steps to help youths in own a home. In this connection, will the Government notify this Council:
(1) amongst the candidates for the White Form Secondary Market Scheme 2024 (WSM 2024), of the variety of young candidates under the Youth Scheme (WSM) and their portion, with a breakdown by age (i.e. aged 18 to 29 and aged 30 to 39);
(2) out of the 6 000 quota under WSM 2024, of the variety of those eventually assigned to candidates aged under 40; whether the authorities will even more increase the quota for the Youth Scheme (WSM) in the light of the action got and the need of youths for own a home;
(3) whether it has actually assembled data on the particular varieties of applications for 80 percent and 90 percent loan-to-value (LTV) home loan under the Mortgage Insurance Programme (MIP) in each of the previous 5 years, and the particular portions of such numbers in the overall variety of brand-new home loan authorized each year; amongst the candidates for 80 percent and 90 percent LTV mortgage, of the variety of young candidates aged under 40;
(4) considered that the HKMC Insurance Limited (HKMCI) revealed in August in 2015 a brand-new plan, in which a waiver of the owner tenancy requirement under MIP will be approved to a qualified house owner (such as a house owner’s household anticipating newborn(s), leading to a modification in real estate requirements) for renting the home, whether the Government understands if HKMCI will think about improving such procedure (such as broadening the eligibility requirements from households with newborn(s) to consist of households with kid or kids also), therefore making it possible for more young households to alter home based upon household requirements;
(5) as it is discovered that some young households who formerly obtained home loan with a high LTV ratio through MIP discover it challenging to change their residential or commercial properties due to home cost changes, and some even discover themselves in unfavorable equity, hence impacting their life preparation, whether the Government has actually carried out studies and research studies, put together data, and kept track of on how such scenario has actually affected young households, and taken prompt procedures to avoid the issue from getting worse; and
(6) whether it will even more help youths in own a home under the subsidised real estate policies, such as changing the percentage of subsidised real estate supply, extending the Youth Scheme to subsidised real estate offered by the Hong Kong Housing Society, and increasing the yearly variety of applications that can be produced subsidised real estate and the percentage of bigger flats readily available, therefore making subsidised real estate a crucial channel for youths to acquire their very first home?
Reply:
President,
Considering that taking workplace, the current-term Government has actually actively carried out numerous steps to “enhance speed, quantity, efficiency and quality” in public real estate supply. With our constant efforts, the issue of back-loaded public real estate supply has actually entirely reversed. Paired with 30 000 Light Public Housing systems, the overall public real estate supply in the coming 5 years (i.e. 2025-26 to 2029-30) will reach 197 000 systems, which is 85 percent greater than that of the very first 5 year duration given that the current-term Government took workplace (i.e. 2022-23 to 2026-27), offering a strong structure for residents to live and operate in satisfaction. The Hong Kong Housing Authority (HA) has actually likewise been aiming to improve the real estate ladder by helping low- to middle-income households to buy their own homes through the sale of subsidised sale flats (SSF), and motivating them to go up the real estate ladder as proper according to their own cost.
We observe that lots of youths are striving to accomplish status seeking through build-up of experience and cost savings. Amongst purchasers of different kinds of SSF, youths under the age of 40 have actually constantly been the bulk. Almost half of the effective candidates for first-hand Home Ownership Scheme (HOS) flats are under the age of 40. Around 80 percent of candidates and purchasers under the White Form Secondary Market Scheme (WSM) are likewise youths under the age of 40. The selling costs of SSF are inexpensive for young individuals. Taking HOS 2024 as an example, after using the cost standards computation, the flats are cost around 70 percent of the marketplace cost. Based upon the typical market price, a flat of about 380 square feet in salable location expenses just around $2.7 million. As the HA offers a home mortgage default warranty for purchasers of SSF, typically, White Form purchasers can protect a home loan at 90 percent of the flat cost. Presuming a rate of interest at 3.5 percent and a 30-year home loan term, youths would just require to make a deposit of about $270,000, with month-to-month home mortgage payments of $10,900, to end up being house owners.
To even more help youths, the HA has actually presented a series of procedures to facilitate their flat purchase. Beginning from the next HOS sale workout, the HA will assign an additional tally number to young household and one-person candidates aged listed below 40 with White Form status. When it comes to the secondary market, beginning with WSM 2024, the HA has actually increased the quota to 6 000 by 1 500, all of which will be assigned to young household and one-person candidates under the age of 40.
The Hong Kong Housing Society (HKHS), as a close partner of the Government in real estate policies, likewise completely supports the Government’s appropriate real estate efforts in assisting young individuals understand their home ownership goals, consisting of the allotment of an extra tally number to White Form young household and one-person candidates aged listed below 40 for the purchase of SSF. The HKHS will continue to refer to the pertinent plans of the HA and actively work towards the very same.
In addition, the Government likewise helps those higher-income individuals who are not qualified for HOS and yet can not pay for personal real estate to attain their own a home goals through Starter Homes for Hong Kong Residents (SH) tasks. Apart from the very first 2 SH tasks sold by the Urban Renewal Authority (i.e. eResidence Towers 1 and 2, along with eResidence Tower 3) with an overall of over 600 SH systems offered, the Government is likewise taking forward a couple of other SH jobs, which will offer an overall of around 5 000 SH systems from the next couple of years onwards. Among candidates and last buyers of SH systems marketed in the past, around 85 percent were youth aged 40 or below.
Offering numerous types of subsidised real estate, the Government has actually likewise carried out other procedures to help people in home purchase. The current-term Government has considering that February 2024 eliminated all demand-side management steps for homes. The Hong Kong Monetary Authority has likewise because October 2024 changed the countercyclical macroprudential procedures for home loan. The optimum loan-to-value (LTV) ratio and financial obligation maintenance ratio (DSR) limitation were gone back to the pre-2009 levels before the countercyclical macroprudential steps were initially presented, with the optimum LTV ratio for all houses gotten used to 70 percent, despite the worth of the residential or commercial property, and the DSR limitation gotten used to 50 percent, supplying assistance to individuals with various requirements for home purchase. People might likewise get high LTV ratio home loan through the Mortgage Insurance Programme (MIP) according to their own requirements. In specific, for newbie property buyers with routine earnings buying residential or commercial properties priced at $10 million or below, the LTV ratio can be as much as 90 percent, which significantly lowers their deposit concern. To offer thorough assistance for people and young individuals who have goals in acquiring flats, the Government has given that February 26, 2025 changed the worth bands of Advertisement Valorem Stamp Duty payable for sale and purchase or transfer of property and non-residential residential or commercial properties, raising the optimum worth of homes chargeable to $100 stamp task from $3 million to $4 million. When it comes to SSF, given that many systems are priced listed below $4 million (taking HOS 2024 as an example, the typical market price is around $2.7 million), purchasers might therefore take advantage of the previously mentioned decrease in stamp task to $100, with cost savings to almost $60,000.
In assessment with the Financial Services and the Treasury Bureau, our reply to the concerns raised by the Hon Kenneth Leung is as follows:
(1) During the application duration of WSM 2024, the HA got an overall of around 34 000 applications. The oversubscription rate has to do with 5 times, showing the consistent strong need for pre-owned SSF of residents. Amongst all of the applications got, over 80 percent originated from young candidates deciding to sign up with the freshly carried out Youth Scheme (WSM), revealing that the plan was well gotten by the young candidates. Concerning the number and age circulation of young candidates who selected the Youth Scheme (WSM) under WSM 2024, please describe Annex 1.
(2) Balloting for WSM 2024 was performed in April 2025. The HA anticipates that approval letters will be released to effective candidates in the third/fourth quarter of 2025. Within the specific duration, holders of the approval letters might look for Certificate of Eligibility to Purchase (legitimate for 12 months) to buy a SSF with premium unsettled. The HA will constantly keep track of aspects consisting of the quota utilisation, need for SSF, general market conditions, and so on, to make prompt changes to both the overall variety of quota and the allowances under the Youth Scheme (WSM).
(3) The MIP is administered by the HKMC Insurance Limited (HKMCI) for promoting own a home in Hong Kong. When authorizing property home loan, banks need to abide by LTV requirement on owner-occupied property home loan financing, which is presently set at 70 percent. With the MIP offering home loan insurance coverage to banks, banks can offer mortgage with greater LTV ratio (i.e. above 70 percent) without sustaining extra credit danger. As long as an application satisfies the appropriate eligibility requirements, the bank can usually supply a mortgage of approximately 80 percent LTV ratio under the MIP. For newbie property buyers with repaired incomes, the optimum LTV ratio can even reach 90 percent, considerably lowering the deposit concern for property buyers.
The varieties of brand-new loans drawn down under the MIP in the previous 5 years (categorised by LTV ratio), and their particular percentages to the overall variety of brand-new loans drawn down (i.e. figures in the brackets) are set out at Annex 2.
Amongst above brand-new loans drawn down, the varieties of cases including a minimum of one property owner aged listed below 40, and their particular percentages to the overall variety of brand-new loans drawn down (categorised by LTV ratio) (i.e. figures in the brackets) are set out at Annex 3.
(4) In August 2024, the HKMCI put in location a brand-new plan under the MIP to authorize on a case-by-case basis qualified property owners’ applications for renting their self-occupied homes, so regarding assist them fulfill their unique requirements developing from modifications in individual or household scenarios (brand-new plan). The brand-new plan has actually been executed for around one year efficiently, providing considerable help to property owners with unique requirements. Under the brand-new plan, in addition to the circumstance that the house owner’s household is anticipating newborn(s)/ embracing kid or kids or the property owner has actually ended up being jobless, any house owner who has other unique requirements and has actually been living in the appropriate home for not less than 12 months might likewise send an application to the HKMCI through a bank for leasing the self-occupied home. The existing system currently enables house owners who have young kids and have the ability to satisfy the self-occupancy requirement to send applications for renting their self-occupied residential or commercial properties based upon their unique requirements. The HKMCI will think about authorizing the pertinent applications on a case-by-case basis.
(5) The goal of the MIP is to promote own a home and supply residents with an extra alternative for funding. As the change of the residential or commercial property market goes through different elements, people must think about their requirements for own a home and payment ability, and examine the dangers thoroughly.
(6) As pointed out above, both the HA and the HKHS are making unrelenting efforts to optimise different plans to assist youths with own a home goals make every effort to climb up onto the own a home ladder. The Chief Executive revealed in the 2024 Policy Address that the HA would change the ratio in between public rental real estate (PRH) (consisting of Green Form Subsidised Home Ownership Scheme flats) and SSF from 7:3 to 6:4 in order to increase the supply of SSF. In the next 5 years (i.e. 2025-26 to 2029-30), the HA and the HKHS will finish about 56 500 SSF. The HA is carrying out the plan revealed in the 2022 Policy Address relating to the minimum flooring location for brand-new flats. The salable location of all SSF finished from 2026-27 onwards will be no less than 26 square metres in basic. In the latter part of the coming years, we will schedule 10 per cent boost in flooring location for public real estate. We are likewise checking out other procedures to more help youths in buying SSF and the procedures will be introduced in a prompt way. That stated, we wish to take this chance to attract youths when again to release their possible and develop a more thriving future, however not to restrict their space for advancement simply for the sake of fulfilling the eligibility requirements for PRH application. In the previous 5 years (i.e. 2020-21 to 2024-25), the typical age of non-elderly one-person candidates that were housed to PRH was 57 years of ages. After comprehending the above chances and assistance offered by the Government for youths, youths need to prepare ahead of time so regarding climb up greater up the real estate ladder.