BEIJING (Reuters) - China’s efforts to build more affordable housing will help compensate for a slowdown in market-driven real estate investment this year.
Here are some facts about the affordable housing plans.
* China is rolling out an affordable housing scheme to provide homes to its poor who are unable to buy units at market prices. Affordable housing is divided into different categories.
-- Economic housing: about 60 square meters; sold well below market prices
-- Price-capped housing: less than 90 square meters; prices capped by local governments when developers buy land lots
-- Low-rent housing: less than 50 square meters; owned by the government and rented to the extremely poor residents
-- Public-rent housing: less than 60 square meters; owned by the government, rented to a wider range of people than “low rent housing,” including migrant workers and new graduates
* The current trend is for governments to build more for-rent affordable housing, to reduce the incentives for undeserving people to acquire homes by cheating in their applications.
* China launched an “economic housing” scheme in 1998 and rechristened it affordable housing in an expansion in 2007.
* China failed to reach its affordable housing construction targets over the past several years, because local governments lack both political incentives and funding.
* China aims to build 5.8 million units of affordable housing in 2010. It is aiming for 12 million units by 2011, with an estimated total investment of 900 billion yuan.
1. central government;
2. investment from property developers;
3. local governments’ land revenues;
4. investment revenues from local housing provident funds;
5. real estate investment trusts (used by the municipalities of Chongqing and Tianjin on a trial basis, according to local media reports)
WHAT ARE THE DEVELOPERS’ INCENTIVES”
* guarantee of a 3 percent profit margin;
* use as little as 20 percent of their capital to build an affordable housing project, compared with a minimum of 50 percent for commercial housing construction
* bigger chance of winning public land auctions after helping to develop an affordable housing project.
Every city applies slightly different criteria to assess whether residents are eligible for affordable housing, typically focusing on both net worth and annual income. For example, these are the requirements in Shanghai:
1. Must have held Shanghai “hukou” residency permit for seven years;
2. Current living space less than 15 square meters;
3. Families of three or more must have per capita disposable annual income of less than 34,800 yuan ($5,126) and per capita assets of less than 90,000 yuan; For two-member families, per capita disposable annual income must be less than 38,280 yuan and per capita assets less than 99,000 yuan;
4. Cannot have sold or transferred housing to people outside one’s family in the past five years;
5. Singles (including those who are unmarried, have lost a spouse or have been divorced for more than three years) need to be at least 30 years old and meet the above requirements.
Reporting by Langi Chiang and Simon Rabinovitch; Editing by Mathew Veedon