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 sq m and cannot be resold within a
five-year period. Local governments will have purchase
priority.
"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 200sqm. 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.
"Standard housing in suburban areas, however, may lose part of
its market share due to a jump in the supply of affordable
housing," said Pan Shiyi.
According to Ye Tan, chief commentator on the National
Business Daily, the circular will set China's real estate
sector back on track. "Low-income families will resort to low-rent
housing, and low- to medium-income families will be able to get
affordable housing while the remainder will buy standard
housing."
Guangzhou, Beijing and Shanghai, which have seen the largest
property price rises in recent years, are now actively working on
the circular's detailed rules.
Guangzhou's mayor is planning to give a press briefing on the
new circular, insiders said. And Beijing is also poring over the
rules, based on two previous documents on low-rent and affordable
housing.
Beijing's municipal government said early this year the city
will construct 300,000 sqm of low-rent housing this year, 10
millionsqm of affordable housing and 10 millionsqm of fixed-price
housing within three years. Beijing's Indemnificatory Housing
Office has strengthened its screening process for indemnified
homebuyers.
(China Daily September 4, 2007)
