Caixin
Mar 02, 2012 05:10 PM

Industry Assn: Misappropriated Public Housing Undermines Market

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(Beijing) -- While the central government promised to build more public housing to ease the rapid rise of home prices, an industry association said the Chinese housing market is showing signs of backtracking, disturbed by a welfare housing resurgence.

Home available for sales on the market only accounted for 30 percent of the country's total supply in 1998, when the country introduced housing reform to phase out welfare housing, which was built by state-owned enterprises to be distributed among their employees, China Real Estate Chamber of Commerce said in a report released on February 29.

Commercial housing supply rose to 72.2 percent of the total in 2006 as housing reform moved on. But the ratio, which was expected to keep rising, has basically remained unchanged over the following years as state companies restarted welfare home building as a special attraction to the employees, said the chamber, an organization funded by property firms. .

The central government plans to build 10 million public homes in 2011, but quite a part of the number was made up by welfare housing, which were sold to staff of the government agencies, armies, universities, state companies and institutions for much less than market rates. These people do not fall within the low-income groups that the public housing projects are aimed for, said the report.

The report also opposes the government's plan to build public rental housing in a large scale, which will undermine the supply of private homes at market rental rates, it said.

Nie Meisheng, president of the chamber, said the government must build public homes to meet the demand of low-income groups, but not others.

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