China, in a Turnaround, Launches a Drive to Build Low-income Housing
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.