Affordable housing units should be sold in open market: observers

Tuesday, May 24, 2011
Issue 1314, Page 3
Word count: 1236
Published in: Macau Daily Times

By Poyi (Natalie) Leung & Alexandra Lages

Pan-democrats, businessmen and representatives of worker and resident associations are all in favour of allowing owners to resell affordable flats once the 16 year lock-up period has expired providing a final compensation payment is made to the government.

Last week, the Third Standing Committee of the Legislative Assembly (AL) called on the Secretary for Transport and Public Works, Lau Si Io, to clearly establish whether affordable units can be sold in the private market.

The president of the New Macau Association, Jason Chao, argues that owners should be entitled to sell their property in the private market, as a way “to promote a change in society”.

“We understand there are fears that some citizens may make use of the affordable apartments to gain unreasonable profits. However, this would only happen if they can trade them [flats] after a short period of time, because they purchased the apartments for a much lower price than those in the market,” he said.

Chao stressed that the draft law on affordable housing extends the lock-up period from six to 16 years and says this policy is strict enough to avoid speculative activities.

“A short-term trade of this property isn’t legitimate, but if they can make profits in the long-run it can improve people’s lives,” the pan-democrat argued.

He went on to say: “If they can resell their apartments in the private market, it can push society to change. For example, after 16 years, a couple might have children and the family got bigger and, during that time, they had a chance to move from a small apartment to a bigger one.”

“By reselling the apartment in the private market they can move to a bigger flat.

This is a healthy development for society,” Chao said.

Cool down prices

Chao also noted that today’s needs for affordable housing are different than during the Portuguese Administration.

“Back then, property prices weren’t that high, so not many people chose affordable housing. Now property prices in the private market have gone far above what most citizens can afford. Affordable apartments should be more significant now than back in the 1990s,” he concluded.

If affordable units cannot be resold in the private market, it will create a burden for the government, said the secretary-general of the Macau Federation of Trade Unions, and member of the government’s Public Housing Affairs Advisory Committee, Kong Ioi Fai.

“Affordable housing is an economic product and therefore its price could go up or down. What if property prices plunged unexpectedly like during the 2003 SARS outbreak?” he said.

The alternative proposed by lawmakers – creating a closed system, through which those units would be sold back to the government – “is hard to execute and the selling price is also very difficult to determine,” he said.

Kong also believes the 16 year lock-up period will prevent speculation.

“Since residents can only be allocated affordable housing once in a lifetime, there’s no way for them to apply for another unit after selling the first one. Moreover, allowing some public housing units to enter the private market can increase supply and may cool down property prices,” he said.

Other solutions 

The worker’s representative suggests the law should give the government first option of buying back the unit.

“The law may give a priority to the government to decide whether or not it wants to buy back the unit from the owner, and if it chooses not to – because for example the supply of affordable housing is wide at that time – then the unit can be sold in the private market,” Kong suggested.

On the other hand, Leong Kuai Peng, the leader of the Housing Concern Group at the Macau General Union of the Neighbourhood Associations, also known as Kai Fong, said affordable housing should be resold in the private market but only to Macau residents.

“Not only will affordable housing owners have the chance to improve their living standards by changing homes, but also non-Macau residents will not be able to buy these units to make a profit out of them,” she pointed out.

According to Leong, also a member of the government’s Public Housing Affairs Advisory Committee, land resources are very precious in Macau and therefore should be used by Macau people only.

“By allowing a number of used affordable flats to enter the private market, households on the waiting list will be given another option to buy them and property prices may also be reduced, to a certain extent,” she explained.

As for the proposal of selling units exclusively to the government, the Kai Fong’s representative believes “this mechanism will be hard to be implement and there is also no way for the government to estimate how many of the owners will sell the flats after the lock-up period”.

Nevertheless, this option means that owners won’t have to take any risks, as the government must help them “recycle” the flats in the end, she stressed.

Against resell 

On the contrary, Larry So Man Yum has expressed a different point of view. The social work professor and political commentator is against the private market resell, arguing it would no longer be serving the original purpose of using public resources to help the population.

Instead, after 16 years, owners should sell the houses to a restricted population – those who are on the waiting list for affordable housing – he said.

“This [affordable housing] is a basic social welfare commodity, so its objective is to help people. The government makes use of public money and land to build these types of houses and sell them to low-income families so they can have a decent home.”

“By paying a relatively low cost for housing, people can save more money in the future. They can accumulate more capital and invest more money in their children’s education, so that they can get a job good enough to afford a house of their own,” So suggested.

Also last week, the president of the Macau Civil Servants Association and lawmaker José Pereira Coutinho called on the government to axe the possibility of resale. He said that this measure is “unfair” and will lead to a further increase in housing prices.

Pros and cons

The AL third standing committee did not reach a consensus over which system should be adopted.

The chairman of the Macau Association of Building Contractors and Developers and AL committee member Tommy Lau Veng Seng is still undecided and will wait until secretary Lau updates the bill, he told Macau Daily Times.

The developer believes there will always be pros and cons in different approaches.

“We have to see how the resources are being distributed. On the one hand, if public housing could be sold in the private market it will create more supply.

“On the other hand, land resources in Macau are scarce. It depends on the Administration and if it can have a longsighted view of the housing needs and whether it is possible or not to build more public housing in the future,” he said.

About 30 percent of the 24,000 affordable housing units that were sold to local residents since 1985 have already entered the private property market.

According to official data, the Government sold 24,000 housing flats to Macau residents up to the end of 2010. Around 23,000 units had passed lock-up period, which currently stands at six years, and 31 percent – or 7,182 units – had been sold in the private property market.

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