UBS has released a research report indicating that the upcoming budget announcement on Wednesday (25th) may include policies such as reducing stamp duty on residential properties valued between HK$4 million and HK$6 million, exploring the possibility of allowing the use of MPF funds for home purchases or rentals, and reintroducing the Public Rental Housing Home Ownership Scheme. Given Hong Kong's relatively strong economic recovery since the beginning of the year, UBS expects the government will refrain from introducing additional broad-based stimulus measures. However, the bank believes the likelihood of reinstating the Home Ownership Scheme is relatively high, as it would allow the government to recover funds to improve its fiscal position while addressing the issue of well-off public housing tenants.

UBS stated that the direct negative impact of reintroducing the scheme on the private residential market would be limited. However, if competition from subsidized housing decreases or if income limits for White Form applicants are further relaxed, it could erode demand for small to medium-priced private homes in the HK$3 million to HK$5 million range. The bank believes the policy would have a slight negative impact on local developers, particularly those more heavily involved in the entry-level housing segment. On the other hand, the policy is expected to be positive for LINK REIT (00823), as it could support retail consumption in its shopping centers.

The Hong Kong government has not added any eligible housing estates to the Home Ownership Scheme since 2005. Currently, there are approximately 32,000 unsold units across 39 public housing estates in Hong Kong. UBS anticipates that if the scheme is revived, the government will focus on newer public housing estates. The bank believes that over 40,000 well-off public housing households and more than 7,700 households currently undergoing income and asset declaration reviews would form the core participating group.