China has the largest population of any country in the world. Explosive population growth has led to extensive real estate development in recent years. The average new housing price in China’s 70 largest cities increased 7.7% in March from the previous year, easing from the previous month’s 8.7% (Usually, the apartments/condos will last no more than 70 years, due to the land using right and the quality of building. Therefore, it’s normal for Chinese to buy new condos. We only have tiny little bit single family houses in China)
China is in the midst of an urban revolution. More than half of China’s population, 690 million, wants to move into cities. In order to slow the rise in real estate prices and address the housing shortage in cities, China started building more than 7 million units of public housing in 2014. This is seen as the government’s biggest move to counter high housing prices in China. However, the action comes with criticism. People are alleging China’s public housing is poor quality compared with commercial condominiums and apartments. They describe the units as small and dark, and have many problems and poor management. In China, most of the affordable housing is in high-rise buildings, which are not pretty and lack quality. They are located around the city, but not inside the city, which also means they lack amenities. However, even with this added poor quality housing, there is no way the government can ever meet the needs of public housing. The demand is just too high.
From my perspective, China’s public housing problem is even more difficult than it seems. This is because of the millions of immigrants we are receiving in China – a number which is increasing. In addition to adding more affordable public housing units around the cities (all affordable housing units are public housing in China), the Chinese government should consider the following solutions:
- Provide low-interest loans to encourage local developers, employers and urban villages to offer more affordable housing.
- Reform the land and housing system to provide cheaper land in specific, targeted areas
- Offer special tax subsidies for affordable housing projects