LCQ12: Revitalising Home Ownership Scheme Secondary Market
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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% |
#: 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 – 10 years | 11 – 20 years | 21 – 30 years | 31 years or above | Total | ||
| Hong Kong Island | Central and Western | – | – | – | – | – |
| Eastern | 800 | 1 200 | 21 600 | 9 100 | 32 700 | |
| Southern | – | – | 5 200 | 4 700 | 9 900 | |
| Wan Chai | – | – | – | – | – | |
| Kowloon | Kowloon City | 1 300 | – | 1 100 | 1 800 | 4 200 |
| Kwun Tong | 1 400 | 3 200 | 14 400 | 15 900 | 34 900 | |
| Sham Shui Po | 5 900 | – | 1 800 | 2 000 | 9 700 | |
| Wong Tai Sin | 900 | 2 400 | 16 100 | 14 100 | 33 400 | |
| Yau Tsim Mong | – | – | 4 500 | – | 4 500 | |
| New Territories | Islands | 5 200 | – | 3 100 | – | 8 300 |
| Kwai Tsing | 1 000 | – | 7 800 | 7 800 | 16 500 | |
| North | 3 200 | – | 13 300 | 6 000 | 22 500 | |
| Sai Kung | 1 400 | – | 23 900 | 12 000 | 37 300 | |
| Sha Tin | 3 100 | 3 100 | 19 300 | 29 600 | 55 100 | |
| Tai Po | – | – | 3 300 | 13 700 | 17 000 | |
| Tsuen Wan | 1 000 | – | – | – | 1 000 | |
| Tuen Mun | – | – | 14 600 | 26 000 | 40 500 | |
| Yuen Long | 2 600 | 1 000 | 20 900 | – | 24 500 | |
| Total | 27 700 | 10 800 | 170 800 | 142 600 | 351 900 | |
#: 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.
Ends/Wednesday, April 26, 2023
Issued at HKT 12:20
Issued at HKT 12:20
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