Xiamen unveils scheme to boost affordable housing programme

PUBLISHED : Saturday, 20 December, 2008, 12:00am
UPDATED : Saturday, 20 December, 2008, 12:00am

Municipal authorities in Xiamen , Fujian , have unveiled a housing scheme to widen access to affordable homes, a move in line with efforts to shore up the broader mainland economy.

The initiative is the first of its kind on the mainland and allows all prospective homebuyers to apply for government-initiated schemes regardless of their income level and family assets, according to Gao Shirui of a government office overseeing welfare housing.

Affordable housing programmes were introduced on the mainland in 1998 and modelled on public schemes in Hong Kong. But the initiatives have failed to meet public expectations in many cities because of the lack of government commitment and oversight at lower levels.

Mr Gao said families with an annual household income of less than 50,000 yuan (HK$56,600) made up about 40 per cent of Xiamen's registered population, and most of them had benefited from the affordable housing schemes.

However, municipal research found that a significant number of households could neither qualify for the schemes nor afford more expensive, commercially developed homes.

Under the scheme, residents with a Xiamen household registration are allowed to buy a home of up to 60 square metres at 7,000 yuan per square metre in downtown areas, where most housing sells for more than 10,000 yuan per square metre.

Homeowners would have to hold onto their properties for at least five years or surrender 60 per cent of profit on the sale of the property to the government.

'Our bottom line is for every family to have a home to live in, and if you want a better housing standard or have more money to spend, there are plenty of commercial properties to choose from,' Mr Gao said.

The initiative dovetailed with the central government's push to shore up the property market amid a bleak outlook for the economy, which was feeling the squeeze from the global financial turmoil, he said.

However, Xiamen is one of the few places on the mainland to heed public grievances over the high prices of commercial housing in the past two years.

Beijing has offered sweeteners ranging from tax breaks to easier credit access to widen home ownership, but most potential homebuyers appear less than impressed and unwilling to rush into buying until prices drop significantly.

One major preferential policy effective from November 1 saw the property deed tax decline to 1 per cent from 1.5 per cent for people buying their first homes if they are smaller than 90 square metres.

Also, for those buying their first homes, regardless of the size, the down payment requirement will be lowered to 20 per cent from 30 per cent, and banks will be allowed to charge as little as 70 per cent of the benchmark lending rates for such mortgages.

It also removed the 0.05 per cent stamp tax and land value-added tax for home purchases.

Real estate investment is the second-largest contributor to the country's urban fixed-asset investment, which is a major driver of the overall economy.