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eTeacherChinese Official Newsletter
Issue #68 - 07/11
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Housing in China
Housing in China
In recent decades, China has experienced three increasing cycles in the real estate industry.
The first cycle started from 1980 to the end of the 80's of the last century, when the industry and related market of real estate was formed preliminarily. The second cycle started in 1992, since, the real estate industry entered into a fast lane of development until an abrupt fallback in 1997. After a short period of recovery, from 2000 on, a new wave of real estate boomed increasingly. 

As the latest cycle came along with the economical maturing period of China, the fast development of urbanization and re-urbanization, the increasing

 high ratio of urban population of the whole population, as well as the augment of housing area per capita sustained a rapid growth of China’s real estate industry which was widely recognized as the golden decade of real estate by the people.
 
In this newsletter, I’ll introduce a short briefing of the housing and life-style of Chinese people, including its past, recent changes, as well as the contemporary state in today’s China.
 
Historical Housing
Following improvements to living conditions, attitudes in urban China to accommodation and home lifestyle have changed dramatically in history. 
Beijing’s housing culture can be traced back to the Song (960-1279) and Yuan (1279-1368) dynasties. Siheyuan (a compound of buildings around a square courtyard) date back to the 12th century, and reached their zenith during the Ming (1368-1644) and Qing (1644-1911) dynasties. After the founding of the People’s Republic of China in 1949, uniformly designed apartment blocks were built in order to meet the increased demand for housing. At that time, accommodation was regarded as a state awarded benefit, but without any right of choice. Work-allocated housing was an accepted form in the early years of New China. 
Historical Housing

Most people in the community knew one another. When taking a walk after supper, you would bump into various neighbors and stop to chat with each one. There was practically no privacy; all household matters were common knowledge among neighbors and colleagues. During the first years of China’s reform and opening, some people who had been living in work-allocated accommodation Work-allocated housing was an accepted form in the early years of New China. Most people in the community knew one another. When taking a walk after supper, you would bump into various neighbors and stop to chat with each one. There was practically no privacy; all household matters were common knowledge among neighbors and colleagues. During the first years of China’s reform and opening, some people who had been living in work-allocated accommodation for decades quit their jobs and went to work for Sino-foreign joint venture companies. One of the motivations for changing the job was the higher salary that would enable them to buy a better apartment.
Rapid economic development and growing demand for commodity houses ushered developers into the housing market. They, along with government officials, have since explored ways of meeting housing needs based on levels of consumption. To most urbanites, buying a house is the means to a comfortable life, rather than a solution to basic needs. 

 
Housing Reform
Housing Reform
The main goal of housing reforms is to give all Chinese citizens the chance to live in their own homes, rather than offer opportunities for investment.
In the 1994 “Decision Concerning the Deepening of Urban Housing Reform,” the State Council initiated the State Low-cost Housing Project. This helps low-and medium-income families to purchase their own apartments. In January 1995 the State Council Housing System Reform Leading Group and relevant departments worked out “The State Low-cost Housing Project Implementation Plan,” which marked the project’s formal implementation. Its aim is to construct 1.5 billion square meters of apartment buildings between 1995 and 2000. These blocks are intended for urban low-and medium-income families who have never benefited from allocated housing, or who live in dangerous or seriously over-crowded conditions. Property will be sold to them directly at cost price. The natural effect of this project will be the establishment, step by step, of a housing supply system that operates in a way similar to social security.

For impoverished families to whom even low-priced apartments are out of reach, the government has designed a “Low-Rental Housing Project.” Guandong Province was the first to implement its own low-rental housing by specifying qualified applicants as “families whose per capita income is lower than the local poverty line as declared by the local government, whose per capita housing space is less than six square meters, and whose residential registration is in the category of permanent urban residents.”

Housing resources for the project consist of public-owned accommodation that has become available since its former residents moved to new homes, low-rental government constructed housing, and unsold commodity housing purchase by the government. Such housing is strictly for rent, and its tenants are the urban poor.

 
Consuming and Investing Houses
Apartments and houses sold as commodities are rapidly becoming the most popular form of general public investment.
As housing prices have maintained an upward momentum over the past years, many believe that bricks and mortar represent the most value-steady and value-adding form of investment. The wealthy would consequently prefer to invest in a second, or even a third apartment than, saystocks and shares, and young light-pursed first-time buyers would far rather take out a mortgage on an apartment than rent one. 
Consuming and Investing Houses

Purchasing trends at both ends of the property market have hiked up already high real estate prices. Property purchases by young people, however, are easier said than done. Some succeed with the help of their parents, other by getting a mortgage. The average Beijing citizen needs to save every cent of their salary for three decades or more before they can afford a 90-square-meter apartment. In 1991, Shanghai followed the example of Singapore in introducing the Public Housing Accumulation Fund system, which makes it easier for people on average incomes to afford their own housing. The system has since gone into force across the entire country. It works by pooling the financial resources of the government, the work unit, some of which provide their employees with housing subsidies, and the individual buyer. 

 
Hot Real Estate
Hot Real Estate
The Chinese real estate industry started in the mid-1980’s. Its enormous growth potential has engaged the attention of academic and economic circles as well as the business world. Government official and scholars can often be seen discussing and debating with real estate developers and buyers whether and “bubbles” exist in the industry.
Chinese real estate has remained, in general, a seller’s market with a steadily rising demand. Its main customer base consists of potential buyers of apartments. Prices of commodity housing have maintained a steady upward trend, and made a sharp climb in more recent years. Between January and November of 2005 the average price of apartments under construction or planning in Beijing was 6776 per square meter, an increase of RMB 1183 over the same period in 2004. However, in 2010 this number reached astonishing 24374, an increase of RMB 9502 over the period in 2009.
 
Real estate has links to more than 50 other industries, including construction, building materials, metallurgy, textiles, household electric appliances, furniture, and house remodeling. Real estate investment in developing countries at least doubles the development of relevant industries, according to a World Bank report.

The Chinese real estate industry, however, has a few snags to resolve before it can maintain healthy growth. They are: over-heated growth and investment; over-pricing; and conspicuous structural contradictions. The latter is reflected in excessive non-residential buildings and ultra-large apartments and the dearth of small apartments and affordable apartment buildings. The fiscal policy heavily applied by local government that over-reliance on land auction, and the lack of construction of affordable housing for low-income families to buy or rent have led the real estate into the edge of derailment. These issues have become the critical ones for the State to settle.

 
 
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