Housing projects proceed too slow for govt

By Jin Zhu (China Daily)
Updated: 2011-06-07 07:20
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Beijing - China will find it difficult to achieve its goal of building 10 million government-subsidized residences this year since most of the planned projects have not started yet, analysts said.

In May, the Ministry of Housing and Urban-Rural Development began requiring local authorities to release construction plans and to report details about the completed projects by June 6.

The demand came as part of a large push by the central government to encourage local governments to finish the construction on time.

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Analysts, though, said many cities have procrastinated on the projects, making it unlikely the country can meet its goal this year.

In East China's Jiangsu province, for instance, work on about 135,000 government-subsidized residences had begun by the end of May, meaning that local authorities have only met 30 percent of their goal for the entire year, according to a statement on the provincial government's website.

Other cities reported that, by the end of May, they had built from 30 percent to 40 percent of the subsidized housing called for by the goals.

China plans to build 36 million government-subsidized apartments in the next five years - 10 million of them are to come in 2011 - as part of a campaign to curb soaring property prices and provide housing for workers with low incomes.

Construction was to start before the end of October on all of the 10 million subsidized houses called for by the government's plan, according to the ministry's announcement.

Li Chang'an, a public policy professor at the Beijing-based University of International Business and Economics, told China Daily on Monday that local cities may begin building government-subsidized residences faster in the second half of the year.

"Local authorities now have a strong sense of being responsible for building affordable houses, since the central government has held them accountable for that task," he said.

"A lack of money, which has stifled such projects in recent years, will be the greatest obstacle to the country's achieving its construction goal this year."

China will spend about 1.3 trillion yuan ($197 billion) on the projects. More than 500 billion of that will come from the central government and local governments and the remainder from social institutions and individuals.

"For local governments, it won't be easy to raise enough money in the next few months to support subsidized housing, especially when many of them now are burdened by huge debts, which were partly brought on by the large amounts of money spent on infrastructure in recent years," Li Wenjie, North China region general manager of property agency Centaline China, said on Monday.

Many developers want to enjoy a good reputation among the public and therefore are interested in building subsidized houses.

"But the absence of supporting policies always makes them hesitate," he said.

"For instance, no government agency is responsible now for ensuring tenants pay rent on time. So developers worry about how they will get their money back when they plan to build low-rent public houses."