How to make Carrie Lam’s ‘starter homes’ truly affordable for Hong Kong people

Maura Wong says the chief executive-elect’s proposal for this type of social housing can only work if prices are regulated, and there are ways to make such projects attractive to developers

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Published: 5:39pm, 6 Apr 2017Updated: 8:12pm, 6 Apr 2017

We need fresh ideas to deliver a housing solution for all segments of Hong Kong. Illustration: Craig Stephens

Chief executive-elect Carrie Lam Cheng Yuet-ngor has pledged to address Hong Kong’s housing crisis by launching a “starter home” scheme. But will such a scheme really help?

First, we must acknowledge that, as conceived, this is a type of social housing. The scheme is therefore much closer in philosophy to public housing and the Home Ownership Scheme (HOS) than measures introduced by the Leung Chun-ying administration to rein in private housing excesses, such as the special stamp duty measures, which have failed to check speculation or halt property price hikes.

Leung also introduced a “Hong Kong Property for Hong Kong People” scheme for one housing project in Kai Tak, restricting flat sales in that development to Hongkongers for 30 years, but the scheme has been dormant since.

Lam’s starter home plan needs to target those in need, and impose restrictions on household income for both initial and subsequent buyers. Affordability must be at the core of the policy. This means the starter homes should be priced with government participation and at levels referencing buyers’ income levels, rather than market prices. This will make them more affordable than HOS housing, where prices are set at the market rate with a 30 per cent discount.

Potential buyers visit the sales office of the One Kai Tak development in January. The developer won the project in 2013 under the “Hong Kong Property for Hong Kong People” initiative. Photo: Xiaomei Chen

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Without appropriate government oversight or participation in price-setting, the scheme will either repeat the same mistakes as the “Hong Kong Property for Hong Kong People” plan, where units were recently sold at buoyant market prices, pricing out many local homebuyers, or fail to differentiate itself from HOS.