Widespread concern continues over Beijing's replacement of a welfare housing distribution system with a market mechanism, as houses on the market are believed to be hardly affordable for most local people.

"The problem is especially severe when considering that more locals will need to resettle in houses in the next few years because of urban renovation. There is no foreseeable reason why house prices will decrease," Lu Daoqia, director of the Urban Development Committee of the Beijing Municipal People's Political Consultative Conference, said in a recent exclusive interview.

According to an investigation of the conference, Beijing's leading political advisory body, local urban renovation will force a total of 340,000 households to resettle in the next five years, which means at least 2 million square meters (21,527,734.63 square feet) of low-cost housing will be needed each year to accommodate demand.

It is generally desirable for the public that per square meter (10.76 square feet) of housing be priced at 3,000 yuan (US$362) to 4,000 yuan (US$483), Lu said. However, the average price of housing per square meter in Beijing is between 4,500 yuan (US$543) and 4,750 yuan (US$539), and could be as expensive as US$2,000.

The situation is not improved when looking at the general population of the Chinese capital as a whole. Based on the average annual per capita income of urban Beijing people for the year 2000, 10,350 yuan (US$1,176), the average three-member household income is about one 11th of the total cost of an 80-square meter (861.11 square feet) apartment. This proportion in the world is usually one fourth or one sixth.

This explains why more than 20,000 people are waiting to buy houses in Huilongguan and Tiantongyuan, two economic housing projects in Beijing, and includes many people who have been forced to resettle, while there are plenty of commercial houses available on the market, said Lu. But with the economic development of China, the country's entry into the World Trade Organization, and Beijing's winning bid for the 2008 Olympic Games, profit-driven real estate developers see no reason to give up high-rate projects for economic ones.

More and more luxury buildings are coming out on the market, costing more than 6,000 yuan (US$734.6) per square meter, but only one fifth of economic housing that was planned for last year is actually under way, according to Lu.

"Some developers of economic housing deliberately slow down or postpone construction to win time and bargaining power with the municipal government for price increases," said Lu.

So far, 58 percent of local employees have bought their own houses, which used to be State-owned, and more are planning to do so in the coming years.

Moreover, it is already well accepted in Beijing that housing is a commodity and not a welfare gift.

For those Beijing residents who have purchased their own houses, their living conditions have been greatly improved.

(China Daily January 4, 2002)