More than 140,000 families are lining up for only 2,000 homes on sale in a new affordable housing project in Beijing as China’s nascent low-cost housing scheme struggles to meet demand.
The Beijing project is located along the fifth ring road in the southeast part of city – more than an hour’s commute to downtown business locations inside the second ring road, but the lure of prices of RMB 22,000 per square metre, about 30 percent below the market rate has been enough to draw crowds.
Under the terms of the housing program applicants who are permanent residents of Beijing who don’t yet own a home are given priority in applying for the units, as are those who have already applied for homes in other subsidised housing projects in the city.
Buying Part of a House, Using It All
The program stipulates that buyers will only own 70 percent of the equity in their homes and if they later re-sell will have to give back 30 percent of any capital gain to the government. Buyers are also forbidden from re-selling the homes within five years.
The government has made development of affordable housing a national priority as rising real estate costs rapidly put homes out of the reach of low and middle income residents in China’s large cities. In Beijing subsidised housing will take up a combined 70 per cent of planned land supply for residential use this year.
Given the demand for this latest project, however, it will take years for the supply of new affordable housing project to catch up with demand.