SHANGHAI, Feb. 24 (SMM) -- Affordable housing goals for 2012 were down by 47% in Guangzhou, down 52% in Shenzhen, down 38% in Shanghai and down 20% in Beijing. Meanwhile, affordable housing goals in second-tier and third-tier cities like Wuhan, Chengdu, Wuxi and Suzhou also fell significantly in 2012.

The State Council sent an inspection team to carry out supervision of decomposition of affordable housing tasks for 2012 in some regions in early February, and a number of China’s central ministries also introduced policies and measures concerning affordable housing recently.

Regional governments accelerated the construction of affordable housing in 2011, and these projects will need more capital in 2012, combined with new construction area, the amount of investment in affordable housing in 2012 is much larger than 2011. In this context, it is a natural move by regional governments to find ways to relieve capital pressures.

Previously, the Ministry of Finance has urged to innovate upon financial support forms, expand the fund source for affordable housing projects and increase the investment in the construction on affordable housing t ensure that there is no capital gap left. China’s central bank said qualified government financing platform should be used to support the construction on affordable housing. The Ministry of Housing and Urban-Rural Development is also studying the expansion of the pilot of using accumulation funds to support the affordable housing construction.

Land and capital are top two problems faced by affordable housing construction, which are also the reason behind significantly falling goals of affordable housing construction in 2012. Whether or not China’s policies introduced recently can really ease local difficulties remains uncertain.

Steelease believes the falling goals of affordable housing construction in 2012 are a correction of unreasonable growth of affordable housing construction in 2011. On the other hand, local governments face strong financial pressures and can not undertake excessively high goals of affordable housing construction. Steelease believes lower goals of affordable housing construction in 2012 will negatively affect demand for steel products.