At a conference with journalists yesterday, the mayor of Shanghai, Han Zheng, unveiled a host of new economic goals and initiatives for the city. Many of these initiatives touched upon the city’s real estate market; notably Han reaffirmed the need to maintain the city’s restrictions on housing ownership while at the same increasing access to affordable housing for Shanghai residents.”There is one fact that we should acknowledge; in Shanghai, residential property prices are too high,” Han said during the conference, echoing strong public sentiments regarding the meteoric rise of property values seen in the city during recent years.
Shanghai, China’s financial and commercial centre, is home to one of the most expensive real estate markets on the mainland. During December of 2011, the average home price in Shanghai was 22,238 RMB ($3513 USD) per square meter, according to prominent developer Hanyu Property; well above the average 15,588 RMB ($2,462 USD) per square meter price recorded during the same month throughout China’s largest 10 cities, as measured by the China Index Academy. Shanghai was also one of the first cities in China to implement restrictions on its housing market, and is currently one of only two cities in the country to have a property tax.
“Last year’s housing regulations achieved positive progress, but their achievements were just a first step,” Han said yesterday. Han went on to largely reiterate recent remarks from the country’s central government, by suggesting that the current restrictions on the city’s housing market would not ease or change in the near future.
But as government housing policies continue to take their toll on the real estate industry and drive down property prices in many of the country’s top-tier cities, Han also went on to affirm the importance of constructing new affordable social housing for the city’s lower and middle classes in accordance with the country’s most recent Five Year Plan. The Shanghai government, Han said, would invest in the construction of new social housing while at the same time work to renovate ageing housing and relocate tens of thousands of the city’s residents into newly constructed accomodations. Han further mentioned that by relaxing application criteria for social housing, more of the city’s low income households would have increased access to affordable housing units.
The Chinese government aims to begin construction on 7 million affordable housing units this year, and how well local officials comply with meeting these targets will have a major impact on their job performance evaluations, according to a recent article from Reuters, citing Shanghai Securities News.
In recent years, the creation of affordable housing units in China has been a major concern for the country’s central leadership. Regarding this issue though, many governments at the local level have in recent years been plagued by problems including shoddy construction, lack of funding and general mismanagement. Only 30% of the 10 million affordable housing units the central Chinese government hoped would begin construction by the end of last year actually got underway, according to a Wall Street Journal article from last December, citing a Xinhua report.
During yesterday’s nearly 3 hour long conference, Han also touched on a number of other issues, including pensions for the elderly, growing wealth inequalities, minimum wages, railway safety and the city’s financial exchange.