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Middle class feels locked out of housing market

By Wang Qian (China Daily)
Updated: 2009-08-27 09:59

The lack of public housing available to middle-class families has made a home the most "unreachable" thing in urban China, say experts in the field.

Related readings: Price spike dashes people's dream Housing price up 1.0% in July Economist predicts housing price rally Beijing commercial housing to average 17,000 yuan/sm Experts: housing stock could run out Housing transactions down in cities

"We suggest the government implement the second housing reform in order to meet the housing demand from the middle class," said Li Ming, an expert on the Housing Act.

Li added that a proposal to that effect has been sent to the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development.

It calls on the government to introduce nonprofit developers that can provide affordable houses for middle-class families, but it does not say how that might be made to work.

Middle-class families make up about half of the urban population. They earn between 150,000 yuan ($22,000) and 300,000 yuan ($44,000) a year, according to figures released by the Chinese Academy of Social Sciences last year.

Last month, housing reached 14,500 yuan per sq m in Beijing, a 9 percent increase over June's price, according to the China Index Academy.

Throughout China, the cost of housing rose for the fifth straight month in July in 70 large and medium-sized cities, the statistics said.

The direct impact of the "crazy" house prices is that ordinary people cannot afford to buy housing, Li said.

He added that the first housing reform catered to low-income families and rich ones but left out the middle class.

The first housing reform, in 1998, largely opened up free-market housing in China. Before that, most urban residents lived under the welfare housing system provided by the government or in their work units.

The call for a second housing reform has been made before.

Liu Huiyong, deputy director of the China Investment Society, sent a report to the government earlier this year detailing how the second housing reform might be implemented. In it, Liu urged the government to compel employers to provide homes to workers.

"Too many parties make profits from the real estate market. It will be difficult to change the system, unless the government wants to," Liu said.

Many residents say such reform is not "practical."

Zhang Yunxing, a 28-year-old editor in Beijing, welcomed the idea of the government taking another look at housing reform.

"At the beginning, I wanted to buy a small house and then a second-hand small house, but now I cannot even afford the second-hand one," said Zhang, who earns more than 5,000 yuan a month.

Zhao Jingjing, a 26-year-old employee with a foreign company based in Beijing, said the idea of buying a market-priced home in the city was a joke. She bought her house in Huilongguan, one of the first of the city's 19 low-cost housing projects.