The Practices And Problems Of The Mid And Low Income Group Housing In China

In modern society, housing is playing an undisputed important role in human life. But during the process of urbanization, most countries have to face insufficient supply of land and housing, which causes rapid rise of real estate. As a result, the mid and low income group with poor capacity for housing consumption are forced to face the housing shortage. However, when market regulation is useless, and based on the social attributes of resident housing, government need to take various economic and social policies to provide support for this group to solve the housing problem.Generally, developed countries have provided housing support as one of the public policies since the1930s. They mostly took active housing policies, such as legislation, establishing specialized housing agencies on the controlling of housing prices, rents, public housing construction, to ensure that the mid and low income group "there is room living". After years of development, the housing shortage in these countries now gets great ease, and the number of housing has even exceeded that of households in most countries.As a developing country, China also faces with severe housing problems due to the limited housing resources. China had been in the welfare housing allocation system until1998when it was cancelled, and then began a series of reforms. During this time, the rapid commercialization of housing market caused an unprecedented prosperity of real estate trade and investment as well as the scarcity of urban land and an unreasonable high housing price, which far beyond the price the mid and low income group can afford. Nowadays, this problem has become a hot livelihood topic concerned by the whole society.Therefore, this article will concern the housing shortage for the mid and low income group in China. After reviewing the housing guarantee system in China, the author is going to learn experiences and lessons from the U.S.to discuss the appropriate mechanism innovation of Chinese housing guarantee system. The whole article mainly includes following parts:Firstly, introduce a series of important housing policies and reforms from1949, in time order. The welfare house allocation before1998, not only bring the country a tremendous financial burden, but also ignore the individual demand that not conducive to the development of the real estate industry. So the government successively promulgated a series of reform policies, and ultimately formed the housing guarantee system including housing accumulation fund system, affordable housing system and low-cost housing system for the settlement.Secondly, analyze the statistics of affordable housing construction and investment from1997to2011. The result shows that the construction of affordable housing is not ideal both in unit number and capital investment, far behind the commercial real estate construction. Now the coverage rate of affordable housing in China is7%-8%, and there is still a wide gap from the demand. In2011, Chinese Central Government said that during"12th Five-Year", the country would build36million units of affordable housing and the coverage rate would be up to20%. As a result, there were more than10million units under construction all over the country in2011. At present, the construction of affordable housing is going into a rapid expansion.Thirdly, discuss the problems existed in the construction of affordable housing and the reason causing these. Part1talks about the lack of clearly defined standards for the mid and low income group and strict entry and exit mechanism, which leads to rent-seeking and unfair distribution in affordable housing. Part2talks about the housing finance market. With the widely construction of affordable housing, government fail to bear the financing fund. And given that there are no appropriate tax and loan preferential policies, the real estate developer are unwilling to participate. Moreover, as the mid and low income group is in the credit status and income level of disadvantage, so that they can’t go to commercial banks to seek for the housing financing support. Part3talks about the supplement of land. Due to the dependence of the local government for land finance, they lack the enthusiasm of providing land for affordable housing construction. Part4talks about the problem of the quality of affordable housing. Because of the low profits, developers tend to reduce the cost on the duration and building materials, while there is a government monitoring blank on the housing quality, as a result, there are many exposed affordable housing projects with a low-quality.Fourthly, classify the housing guarantee policies of the U.S. For the low-income group, there are Public Housing, rent voucher program, Low Income Housing Tax Credit and Mortgage Revenue Bonds; for the middle-income group, in the primary market, there is FHA and VA providing government guarantee for them to apply mortgage and FHLB serving as lenders to commercial banks; in the secondary market, there are Freddie Mac and Fannie Mae issuing mortgage-backed securities to provide stability in the secondary market for residential mortgages. Also, the author will introduce the housing acts of U.S from1932and the function of housing regulatory agencies.Fifthly, form the settlement mechanism innovation of the mid and low income group housing problem. Part1is from the view of supply of housing market, and the idea of "Government+market" may work. For low-income groups, government provides preferential tax policy attracting private developers, which is not only solve the funds problems, but also further expanding the number of affordable housing. For middle-income groups, by the mode of "market price+government credit enhancement+secondary market", it will inspiring the middle-income groups go into the commercial real estate market to buy their own housing, backed by the government’s guarantee. Part2is from the view of housing financing market, the author introduce the "Government+commercial organization" binary guarantee system. The government guarantee agency is primarily responsible for the mid and low stratum to apply mortgage, while commercial guarantee institutions is set up for the others, as an effective complement to government guarantees. What’s more, the nation needs to vigorously develop the securitization of mortgages in the secondary market, in order to reduce the risk and increasing the liquidity of the mortgage in commercial banks. Part2is from the view of government function, the author proposes to focus on the formation of legal system to ensure the affordable housing is constructed in a high quality and distributed reasonably. On the regulatory system, the author proposes to establish a new National housing Finance Board, specializing in the housing finance regulation of the mid and low group.This paper attempts to innovate from several directions:the first is the comprehensive collection and analysis of the statistics on the construction of affordable housing in recent years, including the number of construction units, area, capital investment and so on; the second is the comprehensive classification and analysis of U.S. housing policy, housing acts and the function of regulatory authority, and on this basis, the author derives the solution framework to solve the housing problems of the mid and low income group in China; the third is from the view of market supply, financial support and government functions, establish an innovative mechanism solving the housing shortage.