Can first-time buyers get the home of their dreams now?

In his 2015 Policy Address, then-Chief Executive Leung Chun-ying proposed that the Housing Authority (HA) identify homes among its public rental housing (PRH) developments to sell to Green Form applicants.

The pilot scheme, with prices lower than Home Ownership Scheme (HOS) flats. This scheme will help Green Form applicants achieve home ownership while releasing more public rental housing flats for those waiting to rent.?

On 21 September 2022, the Housing Authority announced that 4,693 flats, ranging from 184 sq. ft. to 489 sq. ft., would go on sale under the Green Form Subsidised Home Ownership Scheme (GSH) starting on 29 September. About 10% of the flats are smaller than 230 sq. ft.

Application forms were distributed from 22 September for the new phase of "Green Home Ownership 2022", and applications from eligible persons would be accepted from 29 September to 12 October. In Q4 2022, winners will be selected, and the properties will be selected from the end of 2022 to the beginning of 2023.

The GSH scheme has alienation restrictions on these owners:

1.???Within the first five years from the date of the first Deed of Assignment of the flat from the HA to an owner (the first assignment), the owner has to sell the flat in the HOS Secondary Market to a Green Form Buyer (GF Buyer) nominated by the HA without payment of premium and at a price not more than the original purchase price under the first assignment.

2.???From the 6th to the 15th year from the date of the first assignment, the owner must sell the flat in the HOS Secondary Market to a GF buyer nominated by the HA without paying the premium and at their own negotiated price.

3.???After 15 years from the date of the first assignment:

(i)??????????The owner may sell the flat in the HOS Secondary Market to a GF buyer nominated by the HA without paying the premium and at their negotiated price.

(ii)?????????The owner may also sell or let the flat in the open market after premium payment.

Based on the finalised discount rate for the Sale of HOS Flats 2022 (HOS 2022) at 49%, the selling prices of the new flats for sale under GSH 2022 have been finalised at a 59% discount from the assessed market value, i.e. for sale at 41% per cent of assessed market value. The selling prices are low, from HK$750,000 to HK$2,710,000, and saleable areas range from 184 to 489 sq. ft. The average unit rate per saleable area ranges from HK$4,490 to HK$5,410.?

Summary of 3 new Green Form Subsidised Home Ownership projects

Ko Wang Court

-??????46-storey single-block residential building

-??????some units will enjoy a sea view

-??????a five-minute walk from the Yau Tong MTR station

Kam Pak Court

-?????Proposed estate with two residential blocks, one of 43 and the other of 46 storeys

-?????a 10-minute walk from the Heng On MTR station

Ching Tao Court

-?????42-storey single-block residential building

-?????a 15-minute walk from Sheung Shui MTR station

Banks guarantee to provide a “Prime Rate” plan for successful applicants of 25 years tenor and 95% loan ratio. Successful applicants will only pay 5% of the down payment to purchase these units. Based on a set down payment of HK$750,000, it only takes about HK$37,500 for the first payment to get one of these homes.

Table of the first payment and monthly mortgage repayments

The Housing Authority (HA) sets a quota of 1,400 GSH flats for family applicants applying under the “Priority Scheme for Families with Elderly Members”. Also, it sets aside 500 GSH flats for one-person applicants.

When the quota for a relevant application category is exhausted, the HA will invite applicants under the next application category to select flats. Priority will be given to family applicants affected by the public housing clearance plan announced by the Housing Authority. Next in line are family applicants who have participated in the "Priority Scheme for Families with Senior Citizens". Other families follow.

Single applicants affected by the PRH will get priority over single applicants. There are 500 places for singles, 1,400 places for families with senior citizens, and 2,800 for other families.

Not everyone can participate in this GSH scheme. Let’s look at the private sector in the second-hand market and check the stock of flats under HK$4 million.

According to Centaline Agency’s stock noted on 19 September compared on 29 September, the number of homes under HK$4 million increased by 8% to 1,617. Kowloon had the most significant increase in this category, from 277 on 29 September to 345, up by 24.5%. But, New Territories West had the largest share of listings at 732, accounting for 45% of the total. However, by 1 October, the overall stock of homes under HK$4 million had decreased by 15.5% to 1,367. New Territories East fell 30.8% to 283.

It may be the effect of the new development, One Innovale-Bellevue, launched in Fanling. Potential buyers who failed to secure primary sales most likely moved to the second-hand market.

Source: Centaline Agency

I divided the 1,367 listings on 1 October into two categories, i.e. subsidised (HOS & TPS) and private by size.

Some 104 private flats smaller than 200 sq. ft. were in New Territories West, 91 (87.5%) of which were in Tuen Mun.

New Territories West is also the champion in the 200 to 400 sq. ft. range, with 238 private flats under 300 sq. ft. Seventy-nine, or 33.2%, are in Yuen Long, and 17.2% (41) were in Tuen Mun San Hui. Tuen Mun had 133 flats in the 300 to 400 sq. ft. range, while Yuen Long had 107.

New Territories East led in the bigger than 400 sq. ft. range with 109 flats. These homes in the secondary market come from the subsidised sector, TPS and HOS (with no premium paid and for sale to a Green Form household). They are in Shatin, Ma On Shan, Tai Po, Po Lam and Fanling.

The GSH scheme restrictions prohibit owners from re-selling at a higher value than the purchase price within five years of the date of the first assignment. This makes it difficult for buyers to move to a bigger flat using money from their current apartment. New Green Form buyers may hesitate to sign such an onerous agreement.

The rising interest rate and queasy stock market have temporarily dampened any market rebound. Hong Kong residential property is becoming more affordable, bringing starter flats within reach for many more residents. Buyers can use these reasonably priced homes to get their foot on the first rung of the property ladder. There’s an excellent chance that they will be able to find what they want.

Thank you