HONG KONG • When Chief Executive Carrie Lam officially announced a "Starter Homes" scheme yesterday to help Hong Kong's middle-class families own their first home, 27-year-old bank employee Jeffrey Chan was left unmoved.
Mr Chan and his fiancee together earn about HK$7,000 (S$1,217) short of what they need to qualify to buy a subsidised apartment under the new scheme. They will have to keep renting for now.
In a research note, Morgan Stanley estimates that only 170,000 households can benefit from the "Starter Home" plan which lets in those whose monthly income falls within a narrow band of HK$26,000 to HK$34,000 per person or HK$52,000 to $68,000 per household.
"It's still very difficult to buy a flat. It made no difference after she spoke," Mr Chan, a middle office associate at an American investment bank, told Reuters. "Property is ridiculously expensive now."
Home prices surged to a historic high in August, with apartments across Hong Kong costing an average of HK$130,000 per sq m, according to property firm Midland Realty. A recent UBS report reckoned Hong Kong, where the average living space is just 14 sq m per person, was the world's most expensive city for apartments.
Mrs Lam said the new scheme, first proposed during her election campaign, is targeted at the "sandwiched" households - those who earn too much to be eligible for cheap public housing, but are priced out of the private market.
Around 1,000 "starter home" flats will be launched by the end of next year, she said.
The Chief Executive also said the scheme would stipulate in certain land leases that developers would need to build a number of "starter homes" on top of private units, but she gave few details.
The authorities have tried a raft of measures to cool property prices, but Mrs Lam conceded that the government had "no magic wands" .
"On people's livelihood, meeting the public's housing needs is our top priority," she said yesterday.
"Even if our housing policy has broad community support, it takes time to find land for increasing the housing supply," she said, adding that her officials have shown readiness to think out of the box.
The authorities are also exploring the use of idle government properties and the possibility of converting industrial buildings into transitional housing.
She also signalled a shift in policy, saying that future public housing estates should include more units for those who qualify for subsidised rental to instead buy homes, a move in line with her policy of raising home-ownership rates in the city.
As a first step, 4,000 public rental units being built in Sha Tin will be converted into so-called Green Form Subsidised Home Ownership Scheme units for sale late next year.
Hong Kong's property shares closed the day down 1.8 per cent.