6 cities begin govt-shared home program

Cities including Beijing, Shanghai and Shenzhen in China have begun testing the waters in subsidized housing that are shared by individuals and local governments, as the Chinese government has been trying to curb speculative activities in low-income housing, according to the Chongqing Evening News on Thursday.

Homing in on affordable housing units

Home prices 'will stay under pressure'

Also on the pilot list are Chengdu in the country's southwestern Sichuan province, Huai'an in the eastern Jiangsu and Huangshi in Hubei, said the report citing Feng Jun, chief economist of the Ministry of Housing and Urban-Rural Development of China.

Low-income home buyers will only have to pay for a negotiated share of the house at a lower price, and local governments will take care of the rest by giving up what would be their profits from selling the land.

As expected, the two parties will have to share the benefits and the risks in order to deal with housing market fluctuations, unless one of the parties initiates a buy-back of the other's housing share, at market prices.

Limited property rights will largely squeeze profits of speculators who are trying to seek private gains from applying for subsidized housing like affordable housing and capped-price housing with fully owned property rights, said the report citing industry insiders.

And in the longer run, the move will help deflate sky-rocketing home prices that have plagued most of the home buyer, they noted.

But problems remain over huge profits that can be generated in the buy-back link should market prices be intentionally brought down or up when houses are evaluated.

Therefore, an open and transparent mechanism should be set up in a bid to streamline the process including application, after-sales supervision, and buy-back, they said.