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Public Rental Housing Eases Distress in Chongqing
Feb 15,2011 08:48CST
data analysis
Source:SMM

CHONGQING, Feb. 15 -- As the southwestern city of Chongqing's ambitious public rental housing project began accepting applications this week, the less well-off there may finally be free from the distress, common among their counterparts in other Chinese cities, over dauntingly high housing prices.

Under the city government's plan, the project, which began construction last year, will build 40 million square meters (sq m) of apartment buildings in the next three years to house two million low- and middle- income people who are over the age of 18 and live in Chongqing's urban center, but who do not own their homes there or live in extremely small homes.

That would mean one-third of the population in Chongqing's urban center may be covered by public rental housing, with rent 40 percent less than that of comparable commercial housing once the project is completed. 

Chongqing was the first major Chinese city to begin a public housing project on such a large scale.

The city's vice-mayor, Ling Yueming, announced on Feb 11 at a press conference that one-tenth of the total public rental housing will be allocated to eligible applicants through a lottery on Mar 2.

For Tong Xiaoqiong, 61, who became Chongqing's first eligibility-verified applicant on Saturday, winning this lottery will be a huge relief due to her current hardship and perhaps even consolation for her life's sufferings.

A retired worker from a bankrupt state-owned factory, Tong had lost her husband and their only two children to illness or accidents, one after another, by 2005, the year she sold her only apartment to pay medical bills.

Since then, she has been living alone in shabby rented apartments and moved four times when she could not afford increases in her rent. Now living in a one-bedroom apartment where dust frequently falls from ceilings, Tong said she was happy and felt grateful to the government for providing affordable housing for her.

After all, her minimal pension can in no way pay for a decent rented apartment, like those in the housing project, or for purchasing an apartment in China's housing market where prices continue to rise despite a series of government market-cooling measures.

Housing used to be a social benefit and was provided by the government for free in Chinese cities before the market reform of the housing system in 1998.

Since the government stopped providing free urban housing, real estate companies have sprung up and the real estate market boomed. Along with this booming market, housing prices have been skyrocketing over the past decade to a degree that most of the urban less well-off see their dreams of owning a home beyond reach.

That was the reality for Gao Jing. Gao, a 29-year-old migrant worker, has been working in Chongqing's urban center for 13 years. She said buying a commercial apartment was unthinkable for her and her husband.

"A rented home will always be a rented home. You can be kicked out at any time. Since I have a baby now, my longings for owning a home have become ever stronger, even if it's just a one-bedroom apartment," said Gao who, along with thousands of people, came to a public rental housing information station on Saturday.

Chongqing's regulations on public rental housing stipulate that a tenant can buy his or her rented apartment after five years of renting at the price based on the apartment's construction cost.

Although the price has not been announced, it will certainly be lower than prices of commercial housing, because the Chongqing government exempts public rental housing from land use fees and other taxes. These fees and taxes usually account for a large portion of housing costs in China.

In face of the high housing prices, buying a home with a mortgage has become common in China. So, too, has the coined phrase "mortgage slave", referring to millions of homeowners who spend a large portion of their income on mortgage payments.

Li Min, who graduated from a local college in 2010, also came to the information center and pinned his hope on living in public rental housing to avoid becoming a "mortgage slave".

"I want to rent it so that I can buy it after five years. I can hardly buy a commercial apartment. Look, one square meter of commercial apartments here now costs over ten thousand yuan,” said Li, with a monthly income of 1,600 yuan ($242), while pointing to the surrounding neighborhood.

The Chongqing government has named the city housing supply model as a "dual system" , meaning the poor can live in government-built public housing while the well-off can buy housing built by real-estate companies.

Tian Fenglun, an economist with Chongqing Academy of Social Sciences, said the dual system tackled the deep-rooted problems in housing reform and was a major move to improve the housing supply system.

Chongqing's public rental housing project has won the endorsement of Vice-President Xi Jinping and senior leader Li Changchun. They both praised the project while visiting a public rental housing community under construction in their respective inspection tours to Chongqing last year.

China's central government last year announced the largest-ever plan to build ten million units of rental and other types of public housing in 2011.
 

China macro economy
real estate industry

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