New World Launches Affordable Housing to Encourage Affordable House Ownership

New World Development (NWD), a Hong Kong property firm, has announced the launch of subsidized homes with discounts ranging from 40% to 50%, aimed at assisting low-income families in gaining access to the housing market. 

New World Subsidised Housing would provide permanent Hong Kong residents and first-time purchasers aged 25 to 45 with 300 one-, two-, and three-bedroom flats on a site in the New Territories West with a gross floor area of 130,000 sq ft. 

Those who live in subdivided flats or who are second-generation public housing renters will be targeted by the initiative. The eligible buyers must also meet Hong Kong’s Home Ownership Scheme (HOS) maximum income and total assets limits, which are set at HK$33,000 (US$4,230.5) and HK$85,000 for individuals, and HK$66,000 and HK$1.7 million for a household of two or more people, respectively. 

Once the government approves New World Subsidised Housing, the developer will transfer the New Territories West site to New World Build for Good, which was founded in September. The unit that will develop the flats will also be funded by NWD. 

The scheme’s flats will range in size from 300 to 550 square feet and cost between HK$2.7 million and HK$4.95 million apiece. 

The HK$2.7 million flat, which is based on the discounted land price under the present HOS plan plus construction costs, amounts to HK$9,000 per square foot. “If sold at cost, a homebuyer will only have to pay HK$135,000 as a down payment, or 5% of the HK$2.7 million unit price,” according to New World Build for Good. 

These units would require deposits of HK$270,000 (10%) if sold properly, which is seven times Hong Kong’s monthly median income of HK$18,400. 

The mortgage will be split into two phases under NWD’s plan. After making a down payment, a buyer of a HK$2.7 million flat will be able to take out the first loan of HK$1.215 million, or 45 percent of the selling price, in the first phase. This sum will be financed for up to 30 years at a rate 2.5 percentage points below the prime rate, which is currently at 5.25 percent per year. This translates to a HK$5,010 monthly payment. 

The remaining HK$1.35 million, or 50% of the purchase price, can be paid over a 10-year period after the first sale. This implies that homebuyers will have more time to pay for the HK$1.35 million loans, which can be taken out in one or many installments after the purchase is completed.  This will give flexibility to the repayment procedure and ease housing debt. 

Homebuyers can apply for mortgages of up to 90% for flats valued at less than HK$8 million under existing mortgage schemes. Buyers would be need to put down a 10% deposit, or HK$270,000, under new guidelines, with the rest 90%, or HK$2.43 million, funded by banks and paid in monthly installments of HK$10,019. 

Buyers of New World Subsidised Housing will be unable to resell their flats for ten years after purchase, and they will be required to pay the government the land premium before they can sell them.