As housing prices in China's large and medium-sized cities
continue to soar, policymakers should increase their efforts to
provide low-cost accommodation for the urban poor.
The State Council recently approved in principle suggestions
addressing the housing difficulties faced by urban low-income
families. The policy framework states that all low-income earners
will be covered by a low-rent housing system by the end of 2010,
and that more low-rent accommodation should be provided through
construction, purchase, renovation and other means.
This is a welcome policy move. It is belated recognition of the
government's duty to ensure basic housing for needy families in
urban areas.
Low-rent housing has been part of the country's social security
system for years. However, implementation of this policy has been
far from satisfactory. It was reported that the country has about 4
million families on minimum wages, but only 268,000 of them had
benefited from low-rent housing or subsidies by the end of last
year. Now, by including low-income families, the low-rent housing
system will cover about 10 million families - 5.5 percent of those
living in China's urban areas.
Lack of funding used to be the major sticking point for
developing a low-rent housing system. Since 1998, only 7.08 billion
yuan (US$932 million) has been spent on building low-rent housing
across the country. To meet this basic need for the country's 10
million low-income urban households, the government needs to spend
up to 50 billion yuan (US$6.6 billion) annually between 2006 and
2010.
Fortunately, China's robust economic growth in recent years has
significantly fattened the national coffers, making it possible for
the government to fund a massive expansion of low-rent housing.
The State Council's latest move is a signal that it's ready to
increase expenditure on causes that allow all members of society to
take a share in the country's development in a fair way. After all,
basic housing for low-income families is an obvious measure of the
country's progress in building an overall well-off and harmonious
society.
Another benefit of an expanded low-rent housing system is that
it will help prevent a housing bubble from developing. In June, new
commercial housing prices in 70 large and medium-sized cities were
up 7.4 percent year-on-year.
Soaring urban housing prices not only add to the pain of
homebuyers, but also inflate asset prices to an increasingly risky
level that could pose a threat to the country's sustainable
economic growth.
More low-rent housing for families in need will directly reduce
demand on the property market, and improve confidence in the
government's commitment to stabilize housing prices.
(China Daily August 5, 2007)