HONG KONG Hong Kong Chief Executive Donald Tsang said on Wednesday the government would resume the construction of subsidised housing as part of measures to help low-income earners and soothe public discontent over sky-high property prices.
Tsang, due to step down next year after two terms in office, also unveiled other relief measures amid criticism that he was not responsive enough to housing issues and had failed to narrow the wealth gap in the former British colony of seven million.
In his final policy speech, Tsang proposed building 17,000 subsidised flats over four years from fiscal year 2016/17 under the Home Ownership Scheme (HOS) for low-income families. here
"In response to the aspirations of low- and middle-income families to buy their own homes, the government has put forward a new policy for the resumption of the HOS," Tsang told Hong Kong's legislators.
The HOS is a government subsidised programme enabling low-income residents to purchase flats at discounted prices.
Analysts say an annual supply of fewer than 5,000 units under the renewed HOS would fail to meet demand and move the private residential property market. Tsang's measures, they said, were aimed at bolstering his legacy.
"I think in his last years of governance he wants to keep a good name," said Kwok-yu Lau, associate professor at City University of Hong Kong. "He now realised that what he has neglected, especially in providing proper subsidised home ownership for the people, now he thinks he should do something."
WEALTH DISPARITY, HOUSING PRICES
Nicknamed "bow tie" for his colourful neckwear, Tsang's support rating has plunged in recent years amid discontent about wealth disparity and housing prices. He has also drawn criticism for his close links to high-profile businessmen.
An opinion poll released by the University of Hong Kong this month put Tsang's support at 48.4 points out of 100, down from 72.3 percent when he took the city's top political job in 2005.
Tsang blamed Hong Kong's wealth gap on globalisation.
"The wealth gap has become a structural cause of social tension," he said. "The wealth gap generated by globalisation is all the more acute in a city economy like Hong Kong. I believe that it is difficult to solve the problem completely."
Prices for Hong Kong's apartments, the most expensive in the world, have risen more than 12 percent this year, surpassing records in 1997 amid a low interest-rate environment, strong economic growth and buying by mainland Chinese investors.
Hong Kong suspended the construction and sale of HOS flats in November 2002, following a slide in the local property market amid a global economic downturn.
Tsang said the scheme would target families and first-time buyers with monthly household income below HK$30,000 ($3,850). But he said it could be suspended if private housing prices dropped.
The government has introduced measures to cool the housing market. Transactions have slowed since June, when the government lowered the loan-to-value (LTV) ratio for home mortgages - the percentage of a property's value that is mortgaged.
Mortgage rates have also been raised by Hong Kong banks.
Tsang said the government would supply between 2,500 and 6,500 subsidised flats per year over four years, with 2,500 flats to be made available in 2014 or 2015. The apartments would each have a saleable floor area of 400 to 500 square feet and be priced at between HK$1.5 million and HK$2 million.
In face of global uncertainties, Tsang announced other short-term measures to ease the burden on low-income households.
The government plans to spend about HK$1.9 billion to pay two months of rent for around 700,000 public housing tenants, and provide another HK$1.9 billion to the poor and elderly.
Tsang joined the government in 1967, was appointed financial chief in 1995 and steered Hong Kong through the 1997/98 Asian financial crisis. In 1998, he masterminded a government foray into the stock market to foil speculators attacking the Hong Kong dollar, which is pegged to the U.S. dollar.
($=7.8 Hong Kong dollars)
(Additional reporting by Sisi Tang and Twinnie Siu; Editing by Chris Lewis and Ron Popeski)
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