‘Sandwich-housing’ plan will harm Macau’s private property market
Macau’s government is considering the launch of a “sandwich-class” housing scheme to fill the gap between public housing and private housing, and to provide the territory’s residents with a new path to property ownership.
The idea arose from the concept of “staircase housing”, proposed by Macau Chief Executive Ho lat Seng in his 2020 policy address to describe the various tiers of the property market: social housing, economic housing, sandwich-class housing, apartments for the elderly and private buildings. The concept is an attempt to define market segments according to people’s differing needs and purchasing behaviours, in order to solve residential housing problems.
A “sandwich home” is positioned as a private property, larger and better configured than an economic home, whose price lies between the price of an economic home and the price of a private property. A sandwich home could be sold on the private property market after a set number of years.
Macau’s government has already publicly consulted on a sandwich-class housing programme, seeking a consensus on the definition of “sandwich class”, and determining application eligibility, pricing and lock-up periods.
The consultation text includes two proposed definitions of prospective sandwich-class homeowners. The first comprises residents whose income exceeds the upper limit for eligibility to apply for economic housing, and it takes into account those whose applications for economic housing rank further down the waiting list for such housing. The second comprises those whose income level exceeds the upper limit beyond which they are ineligible to apply for economic housing, and stipulates that applications for economic and sandwich housing cannot overlap.
The minimum monthly income of sandwich-housing applicants could be only 50% lower than, 20% lower than, or the same as the current monthly income ceiling for eligibility for economic housing. The monthly income ceiling for eligibility for sandwich housing could be higher than the current monthly income limit for eligibility for economic housing by only 10%-20%. At present, the monthly income limit for eligibility for economic housing for a family of two or more people is $77,820. As it stands, this limit captures more than 80% of the families in Macau who have the means to buy private properties.
According to figures from Macau’s Statistics & Census Service, as of the end of 2019, there were 234,059 completed residential buildings in Macau, including private buildings, economic housing and social housing. Among these, 182,827 were private buildings, 36,963 were economic housing, and 14,269 were social housing.
According to the government’s plan, there will be 28,000 public housing units in the Macau New Urban Zone A and 6,500 public housing units in Wei Long. Social housing units under construction and elderly people’s apartments currently being built will also be gradually supplied to the market, totalling nearly 40,000 public housing units. According to statistics from Macau’s Land, Public Works and Transport Bureau, there are more than 10,000 private housing units under construction or for which construction is planned, meaning that more than 50,000 residential units will be supplied in the future. At present, there are fewer than 200,000 family groups in Macau, but nearly 230,000 units. It is estimated that in 2040, the territory will have 40,000 more family groups. In addition, the government has reclaimed more than 80 pieces of idle land. Although not all of it will be used for housing construction, this land is sufficient for the purpose.
Our company believes that if Macau’s government launches sandwich-class housing, a re-drafting of applicable laws will be necessary, requiring a great deal of time and entailing significant administrative costs. Additionally, it remains unknown whether such a scheme can meet policy expectations. Sandwich housing will complicate Macau’s property market, although whether it impacts property prices, as such, will depend on specific pricing and other arrangements. However, if the government itself becomes a developer, it will inevitably compete with private developers, impacting the private market. If a sandwich-class housing plan is formulated, it would be best drawn up to optimise the existing conditions for public housing applications. Macau is a geographically small territory, and the simpler the legal system around housing, the better.
Moreover, after the government advanced the concept of sandwich-class housing, some older property owners began to worry that its advent would impact their property prices in the future. The hope is that – if the government introduces the new policy – it will make consideration of Macau’s 230,000 small-property owners a priority. If their rights are affected due to the launch of sandwich-class buildings, problems will arise, and their impact will not be able to be ignored.