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NOTE FOR THE FILE
Reference.
Mu. Duty may wicht REAS
THE PUBLIC HOUSING PROGRAMME IN HONG KONG
Pae.
5.
CAFF //
4KK 362
1. I enquired about the progress on the Housing Programme in discussion with Mr Lightbody, Secretary for Housing, and Mr Jeaffreson, Secretary for Economic Services. In broad terms I was told that there is every expectation that their housing building programme will meet its various schedules and target dates.
2. There has been a small increase of building costs during the last four months, but really a remarkably small one when related to the rises in average wages and the consumer price index. In fact, the tender index as at 20 March 1977 is still lower than it was at the end of 1974. The rise mentioned above is in relation to costs at the end of 1975 and the beginning of 1976 and not over the five year trend.
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3. I was briefed enthusiastically on the programme for privately owned housing. Some surprise was expressed that we in the FCO did not seem to have taken much notice of this. In outline the scheme is to provide flats for private purchase for households with an income of about HK$3,500 per month. Flats, including the cost of land and services, will be sold by the Government at cost, i.e. between 20% and 25% below the market value. Mortgages will be available for a down payment of 10%, i.e. less than the going commercial down payment which is between 20% and 25%, and repayment schedules will be over 15 years as opposed to the average of 8 years from commercial sources. Interest rates will be between 1 and 1% below prime rate and this is possible because of a Government guarantee for 15% of the loan. Given that the flats are sold at about 20% below their market value and the Government guarantee 15% of the balance, the Mortgage Association, which is backed by the commercial banks, has, of course, almost cast iron security for its loans.
5 April 1977
D.F. Miln
pp JA B Stewart
GODE 18 - n
1. HKK 360/3
lifier l