China, in a turnaround, launches a drive to build low-income housing
Like millions of Chinese priced out of this nation’s booming housing market, Lao Yang could only dream of owning an apartment.
Crammed into a run-down rental courtyard home about the size of a typical U.S. bedroom, Yang and his wife increasingly were ashamed of raising their daughter in a neighborhood with communal bathrooms and charcoal heating.
Desperate for a bigger place, the retired steelworker applied to buy affordable housing from the local government. He wasn’t optimistic. Though his meager earnings as a sometime construction worker qualified him for a subsidized unit, he had heard that the system was rigged to favor people with political connections.
To his surprise, Yang won a lottery early this year awarding him the right to buy a new apartment at the Songjiazhuang Affordable Housing Community. The $35,000 unit in the working-class section of southern Beijing was about one-quarter the price of similar dwellings for sale on the open market.
“I felt so lucky when I got it,” said Yang, 54, who uses the common nickname Lao, which means “old” in Mandarin. With the help of loans from a bank and relatives, he moved his family into a 592-square-foot space, which was five times bigger than their former home. “I’ve worked all my life for this.”
Soaring real estate prices are driving China’s rich and poor further apart. So central planners are gambling on a complicated plan to build millions of low-cost housing units to bridge the gap. The government said it would break ground on 5.8 million units this year, with an additional 9.6 million dwellings to follow nationwide over the next two years.
In most cases, the government will guarantee developers a profit and donate the land, eliminating the biggest cost for builders. Projects will include cheap rentals and millions of new homes in areas deemed slums.
Applicants must prove that their income and assets qualify them as needy. Yang’s family, for example, could not earn more than $6,800 a year and hold more than $54,000 in assets. If they wanted to sell the property, they would have to wait five years and would be hit with a land fee if they sold at market value. They could avoid that penalty by selling to another low-income family at a reduced price.
The initiative is an important step for a government fearful of social instability and mindful there may be no bigger challenge than providing modern housing to more of China’s 1.3 billion citizens.
By assisting low-income residents like Yang, China is reaching out to the millions left out of the real estate boom — people whose views of privatization have been colored by forced evictions, greedy speculators and wealthy developers.
Ren Zhiqiang, one of China’s richest real estate moguls, inflamed passions here when he said, “If you can’t afford a house, why not return to the countryside?”
The new push for public housing is an ironic twist to China’s landmark property reform.
For decades, state-provided housing was a Marxist birthright for all Chinese. Modest abodes were distributed through an individual’s work unit, known as a danwei.
But the government abruptly ended that entitlement in 1998, privatizing property by allowing urban dwellers to buy their assigned residences at bargain prices. Anyone who declined could continue to rent from the state, but at continually higher rates set by the government.
The transformation was nothing short of radical. Residential property has become an engine behind China’s surging wealth and middle class. With land values suddenly unleashed, residents who bought their former state-owned homes could later sell the units at immense profit to developers looking to replace them with teeming blocks of high-rise apartment towers.
But for those unable to seize that opportunity, particularly young people who came of age after privatization, the chance of homeownership has faded as prices have soared out of reach.
Roommates Zhu Haiqing, 31, and Li Yihao, 27, visited the Songjiazhuang Affordable Housing Community on a recent weekday. The two friends run a small grocery store in a distant suburb popular with migrant laborers and were tired of sharing a dingy room.
Zhu said his income would qualify, but he did not believe that simply applying would give him a fair chance at one of the apartments.
“You still need connections,” he said. “You need to know someone.”
Such skepticism is common. Subsidized units built in previous years have been marred by suspicions of corruption. Reports surfaced of officials winning apartments only to sell them or rent them to others and lying about their incomes and driving luxury cars.
“The perception of affordable housing is not good,” said Chen Yunfeng, secretary general of the China Real Estate Managers Assn. “People think it’s not very fair.”
In addition, many developers avoided the projects, preferring the higher returns they could earn building luxury housing. And local governments had little financial incentive to donate land that could be auctioned off for millions.
Some units were shoddily built on parcels miles from city centers and without access to schools, public transportation or running water. Buildings in a recently opened development called Sunny Paradise, 25 miles outside downtown Beijing, started to be demolished last month because of substandard concrete, state media reported.
But experts say this time is different. Affordable housing will be one of the central government’s chief policy goals, meaning local officials can be evaluated on how well they follow through on construction targets.
Still, some would-be beneficiaries would rather stay put.
Beijing resident Chu Jinfeng lives with her ailing 73-year-old mother in a neighborhood of courtyard homes known as hutongs. All but a few of the surrounding buildings have been toppled to make way for luxury apartments. It won’t be long before she’s forced to move.
But Chu, 52, said she doesn’t want to move to the low-income complex assigned for residents in her district because it is hours away from her mother’s hospital.
“I’d rather live there, but I don’t have the money,” she said, motioning to the half-completed residential towers rising nearby. “Rich people can live here, and we’ll just have to move further away.”
Nicole Liu in The Times’ Beijing bureau contributed to this report.
