The Chinese government is undergoing a three year, 3.6 million unit, affordable housing building spree that’s supposed to serve low-income families. According to an investigation by Caixin Magazine, however, the intended occupants of these dwellings still can’t afford them. Local officials aren’t solving this problem by lowering prices- instead they’re raising income ceilings and letting richer Chinese fill the units.
“Land was finally acquired and low-cost homes built,” said one Shangahi official. “But the outcome was that they became a tool for making money. Homes used for guaranteed housing are more and more distant. This isn’t right. So we have to strengthen oversight.”
The problem is especially pronounced in cities like Chongqing, Beijing, Shanghai, and Shenzen. In Chongqin, government officials have totally repealed income limits on affordable housing. In Beijing, where subsidized units are limited, special interest groups (like state organs and cultural organisations) circumvent the arduous approval process and buy directly from real estate developers.
In 2008, when building started in Shanghai, the per capita income ceiling for eligable applicants was 2300 yuan, now its 2900 yuan. Property limits also increased from 70,000 to 90,000 yuan. More than 2000 households qualify under these requirements, yet several hundred still have yet to buy anything- they just can’t afford it.
Medium and low-income families comprise 40 per cent of the Shanghai municipality’s population and have an average annual disposable income of 52,260 yuan. Should an affordable housing unit go for 350,000 yuan, said Fudan University Associate Professor Chen Jie, a typical low-income family would still be faced with a home seven times their annual income, even after obtaining a bank loan covering 20 per cent of the down payment. Chen, who participated in government discussions concerning Shanghai’s guaranteed housing policy, said the burden is simply unbearable for these families.