LCQ12: Revitalising Home Ownership Scheme Secondary Market
26.4.2023

Following is a question by Dr the Hon Chow Man-kong and a written reply by the Secretary for Housing, Ms Winnie Ho, in the Legislative Council today (April 26): Question: It is learnt that the number of transactions in the Home Ownership Scheme (HOS) Secondary Market has decreased continuously, and the proportion of applicants under the White Form Secondary Market Scheme (WSM) who ultimately complete the transactions is also on the low side. One of the reasons is that the mortgage default guarantee period provided by the Hong Kong Housing Authority (HA) for HOS flats is 30 years, and banks generally use the "30 years minus age of building" rule to determine the mortgage tenor to be offered, resulting in some older HOS flats being unable to be granted by banks a reasonable mortgage tenor of not less than 20 years. There are views pointing out that as a large number of HOS flats are ageing, many second-hand HOS flats with premium unpaid will be, or may already be, unable to be sold in the market. In this connection, will the Government inform this Council: (1) of the number of successful purchases of HOS flats in the Secondary Market by Green Form Certificate holders in each of the past three years, and set out in Table 1 a breakdown by age distribution of buyers (i.e. (i) aged 18 to 35, (ii) aged 36 to 64, and (iii) aged 65 or above); Table 1 Year: Age of buyers Number of transactions (i) (ii) (iii) (2) of (i) the quotas provided, (ii) the number of applications for the quotas, and (iii) the number of successful purchases of HOS flats in the Secondary Market and (iv) its percentage in the number of quota applications, in each year since the launch of WSM, and set out in Table 2 a breakdown by category of applicants (i.e. singletons (set out by the following age groups: (a) aged 18 to 35, (b) aged 36 to 64, and (c) aged 65 or above) and households with two or more persons); Table 2 Year: Category of applicants (i) (ii) (iii) (iv) Singletons (a) (b) (c) Households with two or more persons (3) of the current age distribution of HOS courts in the territory, and set out in Table 3 a breakdown, by the three regions, namely Hong Kong Island, Kowloon and the New Territories, as well as District Council district, of the number of HOS courts in various age groups (i.e. (i) zero to 10 years, (ii) more than 10 years to 20 years, (iii) more than 20 years to 30 years, and (iv) more than 30 years); and Table 3 Region District Council district Number of HOS courts (i) (ii) (iii) (iv) Total Hong Kong Island Kowloon New Territories (4) as there are views pointing out that in order to revitalise the HOS Secondary Market, it is necessary for the HA to extend the mortgage default guarantee period to at least 50 years, whether the authorities will consider such a proposal which will not impose an additional burden on public finance, so as to provide a home ownership ladder for members of the public (especially young people); if so, of the details; if not, the reasons for that? Reply: President, In response to Dr the Hon Chow Man-kong's question, our reply is as follows: (1) In the past four financial years, the number of transactions of flats in the Home Ownership Scheme Secondary Market Scheme (Secondary Market) by Green Form applicants are set out below: Financial year Number of transactions* of flats# in the Secondary Market by Green Form applicants (Approximately) 2019/2020 1 400 2020/2021 1 600 2021/2022 1 600 2022/2023 2 100 #: Including flats under the Hong Kong Housing Authority's (HA) Home Ownership Scheme (HOS), Private Sector Participation Scheme, Middle Income Housing Scheme, Mortgage Subsidy Scheme, Buy or Rent Option Scheme, Green Form Subsidised Home Ownership Scheme (GSH) and Tenants Purchase Scheme (TPS) *: Figures exclude cancelled cases. According to the sample survey findings of the Survey on Buyers of Second-hand Home Ownership Scheme Flats 2021, from April 1, 2019 to March 31, 2021, the age profiles of Green Form applicants who successfully purchased flats in the Secondary Market are set out below: Age^ Percentage of Green Form applicants who successfully purchased flats# in the Secondary Market 35 years or below 21% 36 years to 64 years 58% 65 years or above 21% Total 100% ^: For family applications, the age of the successful buyer is the age of the applicant on the application form. #: Including flats under the HA's HOS, Private Sector Participation Scheme, Middle Income Housing Scheme, Mortgage Subsidy Scheme and Buy or Rent Option Scheme. Figures exclude flats under GSH and TPS. (2) Since the launch of the White Form Secondary Market Scheme (WSM), the allocation quota, the number of applications received and the number of successful transactions for each round (Note)(including the number of successful transactions as a percentage of the quota) are set out below: First round of the Interim Scheme to extend the Home Ownership Scheme Secondary Market to White Form Buyers (2013) Type of applicants Quota Number of applications received (approx.) Number of successful transactions (approx.) Number of successful transactions as a percentage of the quota (approx.) One-person 35 years or below 500 39 000 240 48% 36 years to 64 years 3 700 20 4% 65 years or above 90 0 0% Applicant did not provide information Less than 10 0 0% Sub-total 43 000 260 52% Family of two-person or above 4 500 23 000 2 100 47% Total 5 000 66 000 2 400 48% Second round of the Interim Scheme to extend the Home Ownership Scheme Secondary Market to White Form Buyers (2015) Type of applicants Quota Number of applications received (approx.) Number of successful transactions (approx.) Number of successful transactions as a percentage of the quota (approx.) One-person 35 years or below 250 20 000 150 60% 36 years to 64 years 2 700 10 4% 65 years or above 50 0 0% Applicant did not provide information 1 200 0 0% Sub-total 24 000 160 64% Family of two-person or above 2 250 20 000 1500 67% Total 2 500 44 000 1 600 64% Note: Data compiled from administrative records, excluding cancelled cases. Figures may not add up to the total due to rounding. Figures include flats in the secondary market under the HA's HOS, Private Sector Participation Scheme, Middle Income Housing Scheme, Mortgage Subsidy Scheme, Buy or Rent Option Scheme, TPS, and flats under the Hong Kong Housing Society's Flat-for-Sale Scheme Secondary Market. White Form Secondary Market Scheme 2018 Type of applicants Quota Number of applications received (approx.) Number of successful transactions (approx.) Number of successful transactions as a percentage of the quota (approx.) One-person 35 years or below 250 30 000 140 56% 36 years to 64 years 4 100 10 4% 65 years or above 130 0 0% Applicant did not provide information 280 0 0% Sub-total 34 000 150 60% Family of two-person or above 2 250 26 000 1 300 58% Total 2 500 60 000 1 400 56% White Form Secondary Market Scheme 2019 Type of applicants Quota Number of applications received (approx.) Number of successful transactions (approx.) Number of successful transactions as a percentage of the quota (approx.) One-person 35 years or below 300 69 000 110 37% 36 years to 64 years 10 000 20 7% 65 years or above 350 0 0% Applicant did not provide information 200 0 0% Sub-total 80 000 130 43% Family of two-person or above 2 700 55 000 1 200 44% Total 3 000 135 000 1 300 43% White Form Secondary Market Scheme 2020 Type of applicants Quota Number of applications received (approx.) Number of successful transactions (approx.) Number of successful transactions as a percentage of the quota (approx.) One-person 35 years or below 450 59 000 200 44% 36 years to 64 years 9 800 20 4% 65 years or above 300 Less than 10 Less than 1% Applicant did not provide information 400 0 0% Sub-total 69 000 220 49% Family of two-person or above 4 050 48 000 1 900 47% Total 4 500 117 000 2 100 47% The quota for WSM 2022 is 4 500 (4 050 for family applicants and 450 for one-person applicants). TheHA received around 117 000 applications during the application period, among which around 45 000 were family applications while around 72 000 were one-person applications. Since WSM 2022 is still in progress, we do not have the statistics of the relevant transactions. (3) As at end 2022, the geographical distribution of subsidised sale flats under the HA of different building age groups is set out below: District No. of subsidised sale flats under HA (approx.) *# (by building age) 0 &ndash; 10 years 11 &ndash; 20 years 21 &ndash; 30 years 31 years or above Total Hong Kong Island Central and Western &ndash; &ndash; &ndash; &ndash; &ndash; Eastern 800 1 200 21 600 9 100 32 700 Southern &ndash; &ndash; 5 200 4 700 9 900 Wan Chai &ndash; &ndash; &ndash; &ndash; &ndash; Kowloon Kowloon City 1 300 &ndash; 1 100 1 800 4 200 Kwun Tong 1 400 3 200 14 400 15 900 34 900 Sham Shui Po 5 900 &ndash; 1 800 2 000 9 700 Wong Tai Sin 900 2 400 16 100 14 100 33 400 Yau Tsim Mong &ndash; &ndash; 4 500 &ndash; 4 500 New Territories Islands 5 200 &ndash; 3 100 &ndash; 8 300 Kwai Tsing 1 000 &ndash; 7 800 7 800 16 500 North 3 200 &ndash; 13 300 6 000 22 500 Sai Kung 1 400 &ndash; 23 900 12 000 37 300 Sha Tin 3 100 3 100 19 300 29 600 55 100 Tai Po &ndash; &ndash; 3 300 13 700 17 000 Tsuen Wan 1 000 &ndash; &ndash; &ndash; 1 000 Tuen Mun &ndash; &ndash; 14 600 26 000 40 500 Yuen Long 2 600 1 000 20 900 &ndash; 24 500 Total 27 700 10 800 170 800 142 600 351 900 *: Figures may not add up to the total due to rounding. #: Including flats under the HA's HOS, Private Sector Participation Scheme, Middle Income Housing Scheme, Mortgage Subsidy Scheme, Buy or Rent Option Scheme and GSH. Figures exclude flats under TPS. (4) The Government has all along been striving to enrich the housing ladder through providing subsidised sale flats (SSFs) to help low-to middle-income families who cannot afford to purchase domestic flats in the private market achieve home ownership. To encourage banks and authorised financial institutions to provide better mortgage terms to SSFs purchasers, the HA provides a mortgage default guarantee to participating banks and authorised financial institutions (participating financial institutions). According to the Deed of Guarantee (DoG) entered between the HA and the participating financial institutions, the HA undertakes to meet the shortfall in repayment in the event of default by the mortgagors of SSFs during the mortgage default guarantee period under specified circumstances as set out in the applicable DoG. As provided in the prevailing DoG, the maximum mortgage default guarantee period for HOS and GSH flats is 30 years, counting from the date of the first assignment of the flats. The HA has to bear financial risks when providing mortgage default guarantee as the HA will need to meet the shortfall in repayment in the event of default by the owners of SSFs. Considering that the HA's financial risk should be kept at an appropriate level, the HA currently provides a maximum mortgage default guarantee period of 30 years to participating financial institutions. The HA's mortgage default guarantee period is only one of the factors which banks and financial institutions will consider in granting mortgage loans. Banks and financial institutions may provide different mortgage terms and conditions according to the actual circumstances of individual mortgage applications, including the repayment ability and financial position of applicants as well as other relevant factors. As regards the mortgage repayment period alone, while the HA has required banks and financial institutions to grant mortgage loans not exceeding 25 years, it does not stipulate that the mortgage repayment period has to expire with the mortgage default guarantee period. In practice, banks or financial institutions will provide mortgages based on their commercial considerations and individual circumstances of mortgage applicants. Extending the mortgage default guarantee period will increase the financial risks of the HA. The HA will keep in view the need for extending the mortgage default guarantee period from SSF buyers and participating financial institutions providing mortgages, as well as the relevant financial risk to be borne by the HA, and will review the arrangement as necessary at a suitable juncture.