Issue of national law on housing splits political aides

PUBLISHED : Saturday, 10 March, 2012, 12:00am
UPDATED : Saturday, 10 March, 2012, 12:00am


As the mainland continues its ambitious public housing projects to make housing more affordable for citizens, political advisers are split over whether there should be national legislation on the issue.

While some say a law should be drafted to ensure the proper use of low-income housing, others suggest that creative solutions by local governments should be encouraged.

Yang Chao, a delegate to the Chinese People's Political Consultative Conference, has urged the government to pass legislation on the financing, use and management of such projects as soon as possible, as problems have already emerged in recent years.

He voiced concern that some local governments' management of low-income housing could lead to speculative activities and corruption.

'In some places, a beneficiary is allowed to buy ownership of the property after living [in the apartment] for several years. I think there are more negatives than positives,' he said.

'This could lead to problems such as power-for-money deals.'

But Li Daokui, an academic adviser to the central bank, said unified rules would not help local governments finish construction of low-income housing, as they have been struggling to find money to meet Beijing's requirements.

Li suggested that local governments use private investors to fund and supervise the projects.

'I don't think it would be most effective to have Beijing work out a law and then make all places abide by it,' he said.

'We should allow local governments to be creative.'

A funding shortage among local governments has long been a major concern as the mainland continues its push to provide a sufficient supply of affordable public housing.

In his government work report on Monday, Premier Wen Jiabao said Beijing was planning to start building seven million low-income housing units this year. To date, five million have been completed. Last year, Beijing ordered the construction of 10 million units, but only about four million were completed.

But while low-income housing is in hot demand, political advisers warn that a large number of private apartments are unoccupied, especially in some medium-sized cities.

Zhang Hongming, a property researcher at the Shanghai Academy of Social Sciences, said unoccupied housing should make up a reasonable 5 per cent of the total, but speculation has led to a much higher percentage.

'Many people consider property an opportunity to make a fortune,' Zhang said. 'They don't buy because they need to live in it, nor because they want to rent it. They do so to sell it when the price is higher.'

Indeed, Li also noted that 'in some second- or third-tier cities, a shocking number of housing projects sit idle'.

'It's not that a building is only half-occupied - the whole building has no residents. Some are even half-finished,' he said. Instead of only catering to the poor, public housing should also benefit more middle-class and young families, he said.

Young college teachers are part of the so-called sandwich class, according to Li, who also teaches finance at Tsinghua University in Beijing's Zhongguancun area, where he said some lecturers could not afford to stay in the area even after working there for 10 to 20 years.

Li says he expects property prices to continue falling this year as Beijing persists with its tightening measures, but not by as much as 60 or 70 per cent, which some market watchers have predicted.