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BIZCHINA / Review & Analysis

Rules to provide?affordable housing to needed families

By Hu Yuanyuan (China Daily)
Updated: 2007-09-04 10:33

The State Council's latest circular on housing requires local governments
to make subsidized rental accommodation available to poor families across
the country by the end of 2010.

It also tightens management of the low-cost housing system, a policy to
provide low-cost accommodation that's subsidized by the government.

Housing should be about 60 square meters (sqm) and cannot be resold
within a five-year period. Local governments will have purchase priority.

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"The most important thing about the circular, I believe, is that
government subsidies can now really go to the poor families rather than
to the rich," Pan Shiyi, chairman of SOHO China, told China Daily.

Affordable housing was once criticized as being too big and poorly
supervised. Some apartments were as large as 200 sqm. Some of the buyers
drove to sales centers in BMWs and bought several apartments at once.

"Such measures (in the new circular) increase supply by reducing
(housing) size and also curb demand through 'limited ownership'," said
Wang Hongxin, a professor at Beijing Normal University. "But the circular
won't be able to slow rising prices in the short term."

It usually takes around two years after a policy is released for land to
be offered and construction finished. But the proportion of low-rent
housing and affordable housing on the market determines its influence on
property prices, Wang said.

Although the circular stipulates the annual land supply for low-rent
housing, affordable housing, and medium- and small-sized housing should
be no less than 70 percent, the exact proportion of the first two types
is unclear.

"Therefore, we cannot be too optimistic about an increase in the supply
of affordable housing," Wang said, adding that a lack of incentive for
local governments to increase supply is also a factor.

Most industry experts expect indemnified housing will be limited to a
comparatively low price range, but standard housing may increase further
due to less government interference.

(For more biz stories, please visit Industry Updates)

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