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HK revives housing scheme amid property cost anger

 Protesters hold the mock apartments as they demand Hong Kong government to help residents to buy apartment outside the new Legislative Council buildi...
 Hong Kong Chief Executive Donald Tsang delivers his last policy speech at the new Legislative Council building in Hong Kong Wednesday, Oct. 12, 2011....

Hong Kong Economy

Protesters hold the mock apartments as they demand Hong Kong government to help residents to buy apartment outside the new Legislative Council buildi...

Hong Kong Economy

Hong Kong Chief Executive Donald Tsang delivers his last policy speech at the new Legislative Council building in Hong Kong Wednesday, Oct. 12, 2011....

Hong Kong will resume a program to sell thousands of affordable apartments a year, the city's leader said Wednesday as he unveiled a key measure in his annual policy speech aimed at cooling public anger over the city's widening rich-poor gap.
Chief Executive Donald Tsang said the government will initially provide 17,000 apartments over four years starting in 2016 to families earning Hong Kong dollars 30,000 ($3,850) or less a month.
The 400- to 500-square-foot apartments are aimed at first-time buyers and will be priced from HK$1.5 million to HK$2 million ($193,000 to $257,000).
Pre-sales will start in 2014 or 2015, with about 2,500 available in the first year. The government plans to eventually sell about 5,000 units annually.
Hong Kong's government stopped the program in 2003 after housing prices plunged 60 percent. But prices have soared over the past year, stoking resentment toward the government and property developers from poor and middle-class families.
Tsang acknowledged the public discontent, noting that property prices rose 18 percent in August over the year before.
"In regard to housing, the financial tsunami has led to surging asset values and soaring property prices," said Tsang. "People have become frustrated because it is more difficult for them to own a home."
Hong Kong's property prices have been driven up by a relatively small supply of private apartments, abundant liquidity and persistently ultra-low interest rates, Tsang said.
Hong Kong has a reputation for being a freewheeling hub of capitalism, but its property market is heavily influenced by the government, which controls the sale of all land for development. About a third of its 7.1 million residents live in public rental housing.
Tsang was gloomy about the economic outlook in his policy speech, which is his last before he steps down next year. He warned that the special administrative region of China faces "enormous inflationary pressure," with the average inflation rate expected to hit 5.4 percent this year, the highest annual rate since 1997.