Ever since its revival in 2011, demands for Home Ownership Scheme (HOS) flats have far outstripped supply. This is the real problem. Affordability, though an important issue, is secondary.
Yet, there is again talk about “depegging”, that is, to stop referencing HOS prices to constantly rising market prices. The idea is to make them more affordable.
The desire to make such flats available to more people is understandable. It’s also a good political selling point, which is why political parties on both sides support it.
Under pressure, even Chief Executive Carrie Lam Cheng Yuet-ngor says she is open to revising or even dropping references to market prices to determine HOS prices.
She hasn’t told us how she plans on doing it, though. That is just as well because talk is cheap for politicians. At the moment, eligible applicants are subject to some income and asset limits.
There is no point in talking about making HOS homes cheaper for everyone when you can’t build enough to meet demand just as the private market has become unaffordable to most people.
It will only encourage more would-be homeowners to apply, with the inevitable disappointment and failure.
Put it another way: only promise to make the HOS even cheaper if you can maintain at least the current ratio of availability, which is already ridiculously low.
The latest sale of 4,431 HOS flats saw an average of more than 37 applicants competing for each unit. The previous sale of 2,108 HOS flats, in June, had 49 applicants fighting for every unit.
There are several ways to “depeg”: adjust the income and asset limits; charge flats at construction cost; drop all restrictions so long as a buyer can secure a bank mortgage, which may be offered at preferential rates for HOS clients.
All of these options, and more, have been debated ever since the HOS scheme was revived. But the main obstacle has always been that lowering prices will only encourage more applicants. The authorities can’t build fast enough as it is.
More than half of the 470,000 units the government expects to see built from the final years of previous chief executive Leung Chun-ying to the second half of the next decade will be public rental units and HOS flats.
But officials have already warned repeatedly they may not meet targets.
Don’t make HOS promises you can’t keep.