Target households of future subsidised sale flats will spend less than 35% of their monthly income on mortgage loan payments, government tests revealed.

Speaking to the media at a press conference on her second Policy Address today, Chief Executive Carrie Lam said the estimate is much lower compared to private flats.

The figure was calculated following a revision of the pricing mechanism for subsidised sale flats, a major housing initiative announced in June. 

Mrs Lam said the Government conducted tests on three batches of subsidised sale flats. Results showed that with the adjusted price and a loan-to-value ratio as high as 90% or more, the flats will be affordable for target households.

At the median price of $2.8 million per flat for two Home Ownership Scheme (HOS) estates in Cheung Sha Wan and Kai Tak, a family with a monthly income of $35,000 will need to spend about 32% of their monthly income on mortgage payments.

For the third HOS estate in Tung Chung, which has a lower median price of $1.9 million per unit, the same family would need to spend 22% of their monthly income for the payments.

As for the Starter Homes pilot project at Ma Tau Wai Road, Mrs Lam said the prices have yet to be set, but at an estimated median price of $5.9 million per flat, a family with a monthly income of $70,000 will need to spend 34% of their income on monthly mortgage payments.

These examples support the Government’s estimate that with the new pricing mechanism in place, the monthly mortgage payment for subsidised sale flats will not exceed 40% of the household income, she added.