Affordable housing is no holiday camp
By Wang Zhuoqiong (China Daily)
Updated: 2005-06-21 05:55

Back in March, Wang Li, a 35-year-old college teacher in Beijing, pitched a tent and lived in it for more than 50 days.

But Wang wasn't on a holiday camping trip. She was waiting for a chance to buy an affordable house.

The teacher's plight is shared by many in Beijing.

Wang was in a queue near the southern section of the Third Ring Road in Beijing. Developers received about 3,285 applicants for the project that will have just 441 flats, according to the Beijing Times.

Competition for the opportunity to sign up was fierce. People like Wang did whatever they could including camping out in line to have a chance to receive applications.

Yu Qi, 47, was luckier, receiving an application for a lower-cost flat at the Tiantongyuan community on the outskirts of Beijing after waiting just three hours.

The laid-off worker was among hundreds of applicants in a long line that spanned more than 500 metres. Security guards had to be stationed along fences to maintain order amid the chaos as vendors sold drinks and food for people queuing up.

On the morning of June 13, the developer released 5,000 flats at 2,650 yuan (US$320.4) per square metre, 2,000 yuan (US$241) lower than the market price for the properties in this neighbourhood.

"The price is reasonable and the flats are good. But there are just too few of them," Yu said.

Due to an urban planning project, Yu and her family were relocated to a rented housing project on the outskirts of the city.

"My husband and I have a monthly salary of around 2,000 yuan (US$241). Our savings plus the relocation compensation from the government 200,000 yuan (US$24,100) will allow us to afford an 80-square-metre flat," Yu said.

Many of the low-income families in the capital have to fight for the few affordable flats available despite a surplus of luxury housing on the market.

James Jao, a Chinese-American who is a senior consultant with China's State Council, said the supply of affordable housing cannot meet the demands of the lower-income residents. He is also the chief executive officer of the J.A.O Design International Architects & Planners Limited.

According to statistics from the Beijing Construction Committee, of nearly 20 million square metres of housing sold in 2004, only 2 million square metres of properties were aimed at low-income families.

Only 4.61 per cent of the total investment on properties in the city in 2004 was for affordable housing.

The need has become more acute since the local government rolled out its next five-year plan, squeezing the areas set aside for cheaper housing.

Liu Yongfu, director of the Beijing Construction Committee, was quoted by the Beijing Times as saying that cheaper housing will have an area of 10 million square metres in the next five years, a 5 million square metres downsizing from the previous five years.

Meanwhile, rising demand for cheaper housing has surged to 11 million square metres, due to the city planning, reconstruction and new road projects in Beijing.

While the shortage of the cheaper housing is a reality, just what constitutes a "lower-income person" is not readily apparent, making most local residents qualified to buy the cheaper houses.

"People driving BMWs get the application forms faster than people riding bicycles," said Liu Hongyu, a professor of Property Institute in Tsinghua University, in an interview with China Central Television.

"But affordable property developments were initiated to assist those with bicycles to buy houses," Liu said of the irony.

Zheng Siqi, a lecturer on property at Tsinghua University, blamed the incomplete individual credit system in the nation and vague definitions of what consitutes lower incomes as part of the problem.

"A lower-income family is identified by an annual salary of 60,000 yuan (US$7,255), which hasn't changed since 1998, when the cheaper housing scheme was launched," Zheng said.

"Incomes should not only count as salary," said Zheng. "Nowadays people's incomes consist of various of sources."

Therefore, some higher-income people have taken advantage of the cheaper housing schemes.

"You can see luxury vehicles parking at the large affordable housing communities," she added.

According to statistics from the Beijing Construction Committee, 10 per cent of 175,000 households purchasing the cheaper housing since 1998 have not passed recent qualification inspections.

To protect the interests of the lower income residents, the Beijing Construction Committee is tightening inspections on applicants' income taxes and improving supervision by publicizing information on the committee's website.

People who violate the rules will be banned from applying for cheaper housing for two years.

In addition, the razor-thin profit margin gained from the development of cheaper housing projects has reduced developers' zest to invest in such projects, said Sam Casella, president of Planning Authority LLC, a US-based consulting firm.

"Developers and the government have instead focused on more lucrative and high-end property projects," Casella said.

"When developers expect to build luxury flats, permission should be given by the government for mixed building projects - part of the approval for expensive housing, and part for less expensive housing," Casella said.

(China Daily 06/21/2005 page5)

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