Home sweet home: Chief Executive Donald Tsang says the public will be consulted on whether homebuyers should be subsidised.

The Transport & Housing Bureau will conduct a consultation in the next five months on whether the Government should subsidise homebuyers, Chief Executive Donald Tsang says.

Attending a Legislative Council question-and-answer session today, Mr Tsang said housing became a hot topic recently, when flat prices rose by a third between January last year and March this year.

He attributed the upsurge to the extremely low mortgage interest rate, foreign capital influx into the local property market, and the low supply of new units. While the first two factors are subject to global market changes which are beyond Hong Kong's control, Mr Tsang said the Government is increasing the supply of new flats.

Gov't policy

"The Government's housing policy is to follow market demands and respond through land supply. The core of it is an application list system, supplemented by flexible enhancement measures. The irregular land auctions will also increase supply."

The Government will monitor price movements and sales practices of private developments, particularly small and medium-sized housing units, and will take timely measures to ease public concerns if necessary, Mr Tsang added.

Noting the Government is aware many people have difficulty buying homes, and there are calls to resume the home ownership scheme, Mr Tsang said there is a need to forge a consensus on this important subject of Government subsidising homebuyers.

Public consultation

"In the next five months, Secretary for Transport & Housing Eva Cheng will be consulting the various stakeholders and the public to gauge views on this issue. If after extensive consultation the Government has further ideas on the matter, I will give an account in my Policy Address in October."

The bureau will consult the Housing Authority on revitalising the HOS secondary market on May 17. Under the "two markets and three levels" framework the Housing Department has been looking into the objectives and the proposals' effectiveness and implications, including premium payment, administrative procedures for HOS transaction and mortgage default guarantee.

The bureau said if the Government is to subsidise home ownership, some important topics have to be addressed, including the target, the use of public funds, whether the construction of HOS flats will affect the supply of and waiting time for public rental housing as well as the supply and the price level of private residential flats. Preparation for the consultation work is now underway.