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.

Related readings:  China strives to fund low-income families' housing  Complaints about housing, cars on rise  Housing bureau issues controversial guidelines Special Coverage: Housing in China

"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.

      1   2     

      1   2