The Shanghai Securities Journal reports that the housing system in China now faces a historical change. With property developers mainly controlling the housing market, housing system in China’s urban areas cannot develop in a sustainable way. In China, it shouldn’t be ignored that more and more people in cities cannot afford to buy a house and their numbers are growing rapidly.
By the end of last year, the total area of the building floor space for residents in China’s urban areas is estimated to have reached 10.4 billion square meters. If every year about 700 million square meters of new buildings are constructed, it would mean by 2010, the total area of the building floor space would reach 14 billion square meters. However, for the 700 million square meters of newly constructed buildings, a portion (let’s say 2.5%, or 305 million square meters) would be allocated to farmers since the new houses are built by tearing down old houses in rural areas and farmers originally living there would be compensated with a sum of money or a house equal to the value of their old houses. If these 305 million square meters are deducted from the new building areas, it would mean that the total area actually available for new buyers is only around 400 million square meters. And among the rest of these 400 million square meters, 160 million would be "reserved", meaning that they would not be put on sale in the property market. So there would remain 240 million square meters of new housing area. And for these, 75% would be bought by those who already have a house and can now afford to buy another one.
In other words, every year only some 60 million square meters of newly constructed commercial houses are actually bought by those who really need a house to live in.
The figure shows that every year among the 20 million newly increased urban population, only 10% of them, otherwise known as the "exceptionally rich group", can buy a house in the city. And the rest of them, or 18 million, will become a new member of the city’s population without a house. If we consider the number of those who lost their houses either because of relocation or because of poverty (these people could amount to 3 million, or 0.5% of the 560-million urban population in China), it would mean that every year, over 20 million people will add to those who do not have a house. By 2010, or five years later, the figure would grow to 100 million.
In light of this large population that do not have a house, the solution to the problem might be very easy: will the government protect the interest of the property developers or the interest of the general public? It shouldn’t be a difficult choice.
China Daily