Hong Kong chief executive John Lee will deliver his second policy address on October 25. What can we expect for the HK real estate market?

As in the past, many sectors have suggested that the government relax property measures to revive the Hong Kong housing market. For example, Tan Yue-heng, member of the Legislative Council and chairman of Bank of Communications International, suggested that the government could consider making halving the Special Stamp Duty for non-permanent residents. Tan also suggested relaxing mortgage loan-to-value (LTV) ratios for first-time home buyers, and easing stamp duty measures for those hoping to trade up. 

As for the 12 proposals put forward by Legislative Council Member from the Election Committee subsector, Andrew Lam Siu-lo, four of them are related to land and housing. The four proposals are: (1) to increase the area of subsidised sale flats by 20%; (2) to allow landowners to "exchange land for debt and debt for equity", so as to convert low-value land resources into value-added land investments; (3) to invest in the future by promoting "saving money for spending on land"; and (4) to review the compensation criteria of the Urban Renewal Strategy. (4) to review the compensation criteria of the Urban Renewal Strategy: 'rehousing before clearance'. 

Among his proposals, the "save-money-for-land" scheme is relatively new. What is it? This is an innovative idea, similar to Singapore's Housing & Development Board (HDB) and Mandatory Provident Fund (MPF) money-saving models. The scheme proposes that the government can reserve plots of land in the Northern Metropolis area and the Artificial Islands in the Central Waters for residential use, for which home buyers can pay in instalments. 

For example, if one flat costs HK$3,000 per square foot, it will cost HK$30,000 to purchase 10 square feet of land, so as to encourage the public to put in their contributions. Under this scheme, the Government may set a lower limit for redemption. 

If a person wishes to withdraw from the scheme at any point, the Government can refund the principal plus interest. In addition, the Government can even provide flexibility, such as allowing buyers to purchase land with immediate family members, or purchasing land for their children.  

An additional innovative suggestion comes from Tang Ka-piu, a Member of the Legislative Council from the Hong Kong Federation of Trade Unions (FTU). He proposes that the Government should introduce an early mortgage repayment scheme for young people, believing that young people should start mortgage repayments sooner, so that when developments are completed in the next decade, more youths will be able to subscribe to these flats. 

The above relatively innovative suggestions are all aimed at the future. How can the government help citizens who are currently facing severe housing problems? Finding land to build houses is the most fundamental way to increase housing supply. In a short period of time, the restrictions on plot ratios and building heights can be relaxed to increase the number of homes in one district. 

For young people with insufficient down payment, the government may consider reintroducing the first-time home buyer loan scheme to provide low-interest loans for such buyers, so as to reduce the difficulty of buying properties for them. In fact, there have been voices calling for the resumption of home loans in the past. Only time will tell whether the government's Policy Address this time will follow public opinion or will bring new surprises.