? ?
BIZCHINA / Review & Analysis
Building of low-rent low-priced homes
By Ma Hongman (China Daily)
Updated: 2007-09-10 10:23
Market economy was first introduced to the Chinese property market in a
national conference held in June 1998. However, in the intervening years,
it was decided the market would no longer be the sole power in allocating
estates to different social groups.
In a working conference on housing held on August 24 and 25, the
government stressed its responsibility for providing people with proper
housing.
Special coverage:
 
Related readings:
?Affordable housing prices down in major cities
?Rules to provide affordable housing to needed families
?Complaints about housing, cars on rise
?Shanghai housing bureau issues controversial guidelines
The government plans to establish a system covering most of the urban
population. Families with the lowest income will be offered low-rent
houses, those better off financially will be allowed to purchase
low-priced houses and the middle-income will be allowed to buy homes in
common estates.
The low-rent and low-priced houses will be subsidized by the government.
The conference required all local governments to ensure that low-rent,
low-priced houses make up at least 70 percent of new estate projects.
This specific requirement will definitely boost public welfare by
guaranteeing proper shelter for people of relatively low income. It also
indicates a major change in the government's strategy of regulating the
property market.
The State has tried to cool the heated market in recent years. The major
moves it took range from imposing specific limits to the size of flats,
to controlling the financing sources of estate developers. But none of
these seemingly forceful policies has worked effectively, and property
prices have kept increasing in almost all cities of the country.
The failure of these measures lies in one simple fact: they did not
directly change the balance of supply and demand. As long as demand is
greater than supply, property prices will keep increasing.
When the State-sponsored estates, the low-rent, low-priced houses, come
on the market, they will change the demand/supply ratio. The government
will be able this time to achieve its policy goal directly with the use
of public funds. This could mean a sweeping change to the real estate
market.
Of course, this change will only come about with the full application of
the policy. The key element is money.
According to the central government's plan, the fund for building
low-rent, low-priced housing will be drawn from the land transference
income of local governments - 10 percent annually.
Hou Ximin, an official with the Ministry of Construction, estimated the
money would be more than 25 billion yuan ($2.9 billion) each year. He
believed this would be adequate for building homes for the low-income
groups.
So the issue boils down to one question: Will local governments offer 10
percent of their land transference income on time to build these houses?
Many are reluctant to give a definite answer.
(For more biz stories, please visit Industry Updates)
?? ?? 1?? 2?? ??
?? ?? 1?? 2?? ??
Learn Chinese, Learn Mandarin online
