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Effects of Housing Policy on Affordability

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Housing Affordability and Housing Policy in Urban China

Part of the book series: SpringerBriefs in Economics ((BRIEFSECONOMICS))

Abstract

The fundamental justification for government intervention in the housing market is based on the market characteristics, such as natural monopoly, externalities, imperfect information, and frictions. This chapter provides the theoretical basis to support the government policy in response to the affordability problem. In particular, the public housing strategy is to facilitate the supply of affordable housing to lower-income households through direct or indirect government involvement.

In the next 5 years, 36 million new units of public housing will be built. The approximate gross investment is 5,000 billion—The Twelfth Five-year Plan.

The recent emphasis on public housing for the poor is a good example of how government resources can be used to address a pressing social need. (World Bank 2012: 47).

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Notes

  1. 1.

    There are several debates in China on whether SRH should be regarded as “public housing” (security housing) as the buyers of SRH are not restricted to low-income households. However, according to our definition of public housing, i.e., housing allocated by the government rather than the market, SRH qualifies as public housing in the Chinese context.

  2. 2.

    The Anju program, launched by the State Council’s Urban Housing Reform Committee in 1995 and the first major nationwide construction plan for public housing since the 1978 reform, aimed to complete 25 million square meters of new for-sale public housing each year between 1995 and 2000. During 1995–1998, 71.577 million square meters of public housing were provided under the Anju program. The operation details and the reasons for the failure of the Anju program are described in Rosen and Ross (2000).

  3. 3.

    If the rent for PRH is 60–80 % lower than the market rate, for a project operated for 70 years, the IRR is on average decreased by 20–40 %.

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Authors and Affiliations

  1. Department of Construction Management Institute of Real Estate Studies, Tsinghua-Hang Lung Center for Real Estate Studies, Tsinghua University, Beijing, 100084, People’s Republic of China

    Zan Yang

  2. Institute of Real Estate Research, School of Public Economics and Administration, Shanghai University of Finance and Economics, Phoenix Building 503, Wuchuan Road 111, Shanghai, 200433, People’s Republic of China

    Jie Chen

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  1. Zan Yang
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Correspondence to Zan Yang .

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Yang, Z., Chen, J. (2014). Effects of Housing Policy on Affordability. In: Housing Affordability and Housing Policy in Urban China. SpringerBriefs in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54044-8_6

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  • DOI: https://doi.org/10.1007/978-3-642-54044-8_6

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  • Print ISBN: 978-3-642-54043-1

  • Online ISBN: 978-3-642-54044-8

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