2024 Policy Address Analysis: Property Market Policy Guide for Dummies
Chief Executive John Lee's third Policy Address was recently released, with significant focus on housing policies. It introduced various measures to help citizens secure housing and improve living conditions, including relaxing the maximum loan-to-value ratio for property mortgages, transforming subdivided flats into “simple flats”, and reforming the Home Ownership Scheme (HOS) and public housing systems.
1. Increased Mortgage Loan-to-Value Ratio
The government has adjusted the maximum loan-to-value ratio for residential properties to 70%, benefiting both first-time homebuyers and investors. The increase in the mortgage ratio means buyers need a lower down payment when purchasing property, helping to ease their financial burden. Furthermore, the unified adjustment of the debt-to-income ratio to 50% further safeguards borrowers' repayment ability, encouraging more people to enter the property market.
2. Relaxed Luxury Property Investment
The government has also optimised policies for luxury property investment, especially for the “New Capital Investor Entry Scheme”. Residential properties with an investment amount of over HK$50 million will now receive more policy support, addressing applicants' demand for luxury properties without overheating the market. It is worth noting that the total investment cap is HK$10 million, meaning that even if applicants need to invest the remaining funds in other assets, it will attract a significant influx of foreign capital into the Hong Kong property market.
3. Subdivided Flats Transformed into “Simple Flats”
To address housing issues, the government has clearly defined and managed subdivided flats, renaming those that do not meet standards as “simple flats”. These must be confirmed by professionals, apply for certification, and have a grace period. Such housing must meet basic requirements, including windows, an independent toilet, and a minimum area of 8 square metres (approximately 86 square feet), to protect tenants' basic living rights and reduce the negative perception of subdivided flats.
4. Reforming HOS and Public Housing Systems
To further improve housing supply, the Housing Authority will allocate an additional lottery number in the next phase to white-form young families and single applicants under 40 years old purchasing HOS flats. The next phase of White Form Secondary Market Scheme (WFSMS) will increase by 1,500 quotas, all allocated to young families and single applicants under 40. Starting from the next phase, applicants who failed to purchase subsidised sale flats in the previous two rounds will receive an additional lottery number, increasing their chances of purchasing Green Form Subsidised Home Ownership Scheme (GSH) and HOS flats. The Green Form/White Form ratio for HOS will also be adjusted from 4:6 to 5:5, which will help increase the supply of subsidised sale flats.
Regarding public housing, the government plans to adjust public housing projects completed in the mid-to-late next decade, changing the ratio of public rental housing to subsidised sale flats from 7:3 to 6:4. Concurrently, the government will tighten the public housing affluent tenant policy, requiring affluent tenants to pay additional rent and lowering their income limits. In January next year, the government will also launch the “Reward Scheme for Prudent Use of Public Housing Resources”, rewarding individuals who provide concrete information to report abuse of public housing resources, striving to identify more abuse cases.
5. Northern Metropolis Development
The government has proposed an “industry-oriented” development strategy, releasing four plots of high-quality logistics land to support the construction of high-end logistics facilities. This will not only promote regional economic growth but also help create more employment opportunities. Additionally, the government has reserved at least 80 hectares of land in the Northern Metropolis for the planned development of the “Northern Metropolis University Town”, encouraging local tertiary institutions to collaborate with renowned Chinese and foreign institutions to develop more branded courses and research projects. The plan will announce the “Northern Metropolis University Town Concept Development Blueprint” in the first half of 2026, with flexibility reserved in planning to facilitate the development of student dormitories.
6. Improved Dormitory Facilities
The government will launch a pilot scheme to remove planning, land administration, and building plan approval barriers, encouraging the market to self-finance and privately convert hotels and other commercial buildings to increase student dormitory supply. The government will provide suitable land plots based on market demand for the construction of new dormitories. Concurrently, the Project Facilitation Office under the Development Bureau will provide one-stop consultation services for these projects, aiming to improve the overall efficiency of dormitory supply.
Furthermore, the government has launched a Youth Hostel Scheme, subsidising non-governmental organisations to rent suitable hotels and guesthouses for conversion into youth hostels. A task force has been established to provide targeted support and technical advice to assist relevant organisations in reaching agreements with hotel owners. The number of hostel places has now increased to approximately 3,000, which will effectively alleviate young people's demand for self-contained living spaces.
Conclusion
The 2024 Policy Address is Chief Executive John Lee's third Policy Address, proposing a series of key measures across various areas including housing, tourism, economy, finance, innovation and technology, healthcare, talent, education, culture, and sports. The policy measures in the report have garnered attention and evaluation from all sectors of society, deemed capable of promoting Hong Kong's economic development and improving livelihoods. John Lee emphasised that these policies were formulated after extensive public consultation and social consensus, aiming to collectively drive Hong Kong's reform and development and create a better future for its citizens.
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