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China facing huge housing shortage
China is facing a huge shortage in available housing due to mass migration from the countryside to the cities, as Huey Fern Tay reports.

When China's next generation of leaders takes power next month they'll inherit a country vastly changed since Hu Jintao and Wen Jiabao took the reins a decade ago.

One of their big challenges will be a huge shortage in available housing, a symptom of mass migration from the countryside to the cities.

Affordable housing is the responsibility of the next premier Li Keqiang, but one scheme set up to address the issue has been plagued by problems.

China correspondent Huey Fern Tay reports.
HUEY FERN TAY, REPORTER: For three centuries, the village of Cuandixia has resisted the passage of time.

(Footage of the village is shown)

The narrow uneven foot paths and old houses are a reminder of a China being consigned to history. But Beijing is just three hours away, and the pressures of the new China are forcing people here to adapt.

The population has halved in 40 years, as people moved to the nearest suburb two hours away to make a better living.

Chuan Zhou Hua's family has lived in this house for 13 generations. She runs a bed and breakfast from her ancestral home, and while her son moved away several years ago, she doesn't want to move.

CHUAN ZHOU HUA (subtitled): I live here in winter. I don't want to move.

HUEY FERN TAY: Chuan Zhou Hua's monthly income is only 3,000 yuan on average, it's a tough life. But three years ago, she parted with some of her hard earned money to make a down payment for her son's apartment.

He is a kindergarten teacher and could not afford a home on his own. She knew that if she didn't help him, no one else would.

CHUAN ZHOU HUA (subtitled): I bought when the prices were at a peak but I had no choice. I could afford the deposit but had to get a bank loan to pay the rest. I did not want to borrow money from others because then I'd own them a favour. I felt much better borrowing from the bank.

HUEY FERN TAY: The desire for home ownership is very strong in China. It's not just about having a place to call your own, it's also about financial security, as there are few avenues for investment in this country.

That is why people like Yan Xue would rather invest in an apartment than put their money in a bank, even if it means taking on a huge mortgage.

YAN XUE (subtitled): There are many young people around me who don't own a home yet and can only watch from the side. So long as there's demand, there'll be very little room for prices to fall.

HUEY FERN TAY: But the property boom has priced many ordinary Chinese out of the market.

China's leaders have responded with a host of measures. One of them was an ambitious plan to build 36 million new units of affordable housing between last year and 2015.

Nearly two years on, property analysts believe the target of 36 million units will be missed because it was never achievable in the first place.

ROSEALEA YAO, PRINCIPAL ANALYST, DRAGONOMICS (subtitled): So the government needed some kind of public relations to show the public that they are doing things. They are increasing the supply to meet the demand from the bottom of the market. So they developed these 36 million units but it's really questionable.

HEUY FERN TAY: The policies that have been put in place to curb property speculation have put a lot of stress on people directly or indirectly involved in the real estate sect other. But any respite for them could see a rebound in prices and a surge in public discontent.

Affordable housing is one of the defining challenges facing China's next set of leaders. The country's prime minister in waiting Li Keqiang, who models himself as a man of the people, has in particular made it one of his core projects.

But funding is now a problem, because the downturn in China's property market has affected governments who are heavily dependent on selling hand land for revenue.

China's National Audit Office also discovered local governments had mismanaged around $465 million set aside for these buildings last year.

ROSEALEA YAO (subtitled): And the recent data from the first three quarters shows land sales volume down by 17 per cent and the value is down by 30 per cent. So that has a very big impact on local government revenue.

HUEY FERN TAY: Beijing's policy makers are also faced with a public relations problem. Affordable housing has gained a reputation for being poor quality, even though the scheme has only been around for four years.

We went to a suburb on the outskirts of Beijing where most of these apartment s are being built.

The men renovating one of the apartments told us cheaper materials have been used ,which is not surprising. The profit margin for units like these is only around 3 per cent making it difficult to generate interest amongst private property developers who are used to margins at least 10 times that figure.

CONTRACTOR: It'll be cold here in winter because the walls are hollow.

HUEY FERN TAY: And that's a little like China's public housing project. While the government's commitment looks good, a closer inspection leaves much to be desired.
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