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David Ren

The Covid-19 pandemic has had a bigger impact on prices of subsidised homes on Hong Kong’s secondary market than it has on privately owned flats, a study showed.
Prices of Home Ownership Scheme (HOS) flats, before settlement of premium with the government, fell nearly 10 per cent from January 2020 to May 2022, according to Hong Kong Metropolitan University’s (HKMU) HOS Price Index, the first gauge to reflect subsidised housing price levels.
The Centa-City Leading Index, a gauge of lived-in home prices compiled by Centaline Property Agency, which tracks 130 private housing estates, rose 2.76 per cent during the same period.
Unlike private housing units, which can be traded freely on the market, the HOS flats are subsidised by the government to help those who cannot afford to buy private homes. These flats can be sold to buyers eligible for the scheme without paying a premium. If sold in the secondary market to buyers not eligible for the scheme, the sellers must pay a premium set by the government.

“The scale of Home Ownership Scheme flats in the secondary market is relatively smaller, which lacks liquidity,” said Arbitor Ma Yiu-chung, assistant professor at HKMU.
He said the gauge aims to make up for the lack of a price index dedicated to subsidised housing in the context of the government’s recent adjustment of the public/private split of housing supply from 60:40 to 70:30.
Ma noted that the upcoming supply of new HOS flats was also putting off buyers from the secondary market.
The Housing Authority said it would offer 8,926 flats of various sizes as part of this year’s Home Ownership Scheme, targeting lower to middle-income households. These flats are in Kai Tak, North Point, Ma Tau Kok, Kwun Tong, Tseung Kwan O, Sha Tin and Tung Chung.

Transactions of HOS flats, both with and without repayment of premium, slumped 28.5 per cent year on year to 2,279 deals in the first half of 2022. The average price, meanwhile, fell 3.7 per cent to a three-year low of HK$5.2 million (US$660,000) in the same period, according to Midland Realty.
The slump in the private property market was more pronounced, with deals dropping 39 per cent year on year to 17,708 in the first six months of 2022, while the value eased 38 per cent to HK$163.27 billion, the lowest since the second half of 2020, according to Hong Kong Property Services.
The decline in both HOS secondary market prices and transactions was driven by market forces, as many mid and low-income families became unemployed during the fifth wave of the Covid-19 pandemic, said Charles Kwong Che-leung, the dean of the School of Arts and Social Sciences at HKMU.
Home buying frenzy spills over into lived-in Home Ownership Scheme flats
The fifth wave of the Covid-19 outbreak in the city was caused by the highly transmissible Omicron variant of the virus, with daily cases hitting over 50,000 cases a day in March, before trending lower. Hong Kong’s jobless rate rose to a 12-month high of 5.4 per cent in the rolling three-month period from February to April as social-distancing curbs hit businesses hard.
“Covid had a bigger impact on mid or lower-income families, who are more likely to fit in the HOS criteria,” said Ma.
Apart from the unemployment rate, Ma said the rise in interest rates would also affect the HOS secondary market.
“If the interest rate keeps rising in the future, the HOS secondary market may weaken even further,” he said.


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Covid-19 pandemic hits value of Hong Kong’s subsidised Home Ownership Scheme flats, study shows

A potential homebuyer views a model at the Housing Authority’s Home Ownership Scheme Sales Unit in Kwun Tong district, in this file photo from August 2020. Photo: Felix Wong

Applicants submit their applications on the last day for purchases under Sale of Home Ownership Scheme Flats 2022 at the Housing Authority’s customer service centre in Lok Fu, on March 24, 2022. Photo: Edmond So

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Charming Garden in Mong Kok where a 592 sq ft flat Garden estate, a Home Ownership Scheme (HOS) project, sold for HK$10.65 million. Photo: Sam Tsang

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Applications for the sale of home ownership scheme flats for the Kai Long Court in Kai Tak, by the Hong Kong Housing Authority. Photo: David Wong

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There were 233 transactions at 50 housing estates during the week. Photo: Felix Wong

Business

Property

Hong Kong & China

Prices of Home Ownership Scheme flats, before settlement of government premium, fell nearly 10 per cent from January 2020 to May 2022, according to HKMU’s index
The Centa-City Leading Index, which tracks secondary home prices in 130 private housing estates, rose 2.76 per cent between January 2020 and May 2022


Lived-in Home Ownership Scheme (HOS) flats lost 10 per cent of their value between January 2020 and May 2022, according to a new index compiled by Hong Kong Metropolitan University.


Coronavirus Hong Kong

Property investment

Hong Kong economy