A Government review on the merits of continuing with the provision of home ownership loans has started, and the results are expected in mid-2004.

This was the message from Secretary for Housing, Planning & Lands Michael Suen today, addressing the conference on Housing & Social Development organised by the Asia-Pacific Network for Housing Research and HK University's Centre of Urban Planning & Environmental Management.

Mr Suen said intervention in the property market by the Government through the supply of subsidised sale flats of the Home Ownership Scheme variety is no longer justified in terms of cost-effectiveness and the maintenance of a healthy property market.

"We have therefore changed the emphasis in the manner we offer assistance to families who are above the income limit for rental public housing and who, nonetheless, wish to own their own homes," he said.

Government's role changed

The Government has moved away from the role of a direct 'bricks and mortar' provider of homes under the Home Ownership Scheme to provide loans for this purpose.

"It was not an easy decision as we did recognise that the provision of home ownership loans was a form of market intervention. However, we judged that the abrupt withdrawal of this assistance without alternative arrangements would be counterproductive," he said.

It would be prudent to attempt a phased process, he said, noting that the Government has already begun a review on the merits of continuing with the provision of the loan scheme in the future.

"We expect to come to some conclusions in the middle of the year."

Mr Suen said it has always been Government policy to maintain a fair and stable environment to enable the property market to operate smoothly.

Review launched on rent adjustment mechanism

Turning to the Housing Authority's financial position, Mr Suen said the cessation of the production and sale of subsidised flats has adversely affected its financial position.

The authority is now actively exploring ways to strictly control the construction and management costs of public rental housing. It will undertake a review of the mechanisms currently in place for adjusting the rents for public housing.

The review will also examine the existing allocation policies of public rental housing, including ways to expedite allocation, lower the vacancy rate, and tighten up on our policies concerning well-off tenants.

"On breaking new grounds for additional income, the authority is taking steps to divest its retail and car-parking facilities by means of a public listing on the Hong Kong Stock Exchange, which we hope to implement within 2004-05," he said.