OCTOBER 12, 2011, 2:32 A.M. ET
Hong Kong to Build Subsidized Homes
By Chester Yung
HONG KONG—Saying property prices remain far beyond many local households' reach, Hong Kong Chief Executive Donald Tsang Wednesday unveiled plans to resume construction of subsidized homes.
"We share the public concern about rising property prices and the difficulty in buying affordable small and midsize flats," Mr. Tsang told lawmakers in his final policy address, saying the government will provide more than 17,000 subsidized homes for sale over four years starting in 2016-17.
Such a program was widely expected, as Mr. Tsang, who has just under nine months left in office, has promised in recent months to address housing, a sore spot for his administration in the past few years.
"To be flexible, the actual number of flats to be built or put up for sale each year will depend on the demand at that time," Mr. Tsang said, adding that the government may stop building and selling the flats when private residential markets meet the demand.
The program would be a modified version of the government's earlier Home Ownership Scheme, by which low-income residents could buy housing at subsidized prices. It was abandoned in 2003 after developers complained that government intervention in the property market contributed to a sharp drop in residential property prices.
Mr. Tsang will step down at the end of June after serving the maximum two terms. His final policy address comes at a critical time for the city as social tensions simmer over inflation and property prices. Hong Kong's underlying inflation rate hit a three-year-high of 6.3% in August, up from 5.8% in July, while private-home prices—driven by abundant liquidity and persistently low interest rates—have surpassed the peak hit in 1997. Home prices rose 12% in the first eight months of this year after surging 56% over the two years ended last Dec. 31.
Note the starting date of 2016.
And the qualifier : "the government may stop building and selling the flats when private residential markets meet the demand"
"Tsang introduced a new Home Ownership Scheme that will provide more than 17,000 flats over four years from 2016 onwards. Families with a monthly income of 20,000 to 30,000 Hong Kong dollars ($2,570 to $3,850) will be eligible to buy flats priced at 1.5 to 2 million Hong Kong dollars ($192,800 to $257,000) with a floor space of 400 to 500 square feet"