Abstract
As a result of urban housing reform in China, it has become increasingly difficult for low and middle income families to purchase a house. In response to the growing demand for affordable housing, the Chinese Government has developed a specific housing policy to enable families to purchase properties from the private sector. The pricing mechanism of such housing is completely based on the family affordability and the profit margin of developers. To ensure the provision of housing for low and middle-income families, the future trend of affordable housing prices has become a concern for developers, consumers and may adversely influence the implementation of the current national housing policy. In this paper a systematic analysis of affordable housing development and its pricing structure is undertaken for the city of Shenzhen. As information pertaining to the factors influencing house prices is imperfect, a Grey model, which requires a limited amount of data to reflect unknown behavior, is constructed to provide a forecast for affordable house pricing. The analysis indicates that the government should adjust their current affordable housing policy to accommodate the forecasted upward trend in house prices.
Highlights
Prior to 1950s, housing in China was predominately owned by private individuals or families (Davis 2005)
Low-rent housing was originally designed for households with low income levels
Low-rent housing required no form of payment from the low-income households, as it was subsidized by the government
Summary
Prior to 1950s, housing in China was predominately owned by private individuals or families (Davis 2005). The average sale price of newly-built commodity housing in Shenzhen in 2008 was RMB$ 12,820 RMB/m2 (SSB 2009) With this in mind, the ratio of the average sale price of commodity (90 m2 per household) to the average annual disposable income (ADI) per capita of urban household is approximately 43:1. Systematic analysis of affordable housing development and pricing structure in Shenzhen, China. This ratio is significantly higher than the international standard of 5:1 to 6:1 (Bruegmann 2009). With such a high housing price to income ratio, it is almost impossible for low-and middle income families to purchase commodity houses directly from the market.
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