Housing low-income families

THE DRAFT REGULATION THAT THE STATE Council published on Thursday to solicit public opinions on subsidized urban housing could give China's cooling property market a much-needed shot in the arm.

By explicitly including 100 million migrant workers into government-subsidized urban housing programs, the new regulation assures homebuilders of sufficient demand in coming years. Yet, even more important is the long-term significance this new effort has for the country's ongoing urbanization, which will be a major driver for economic growth and transformation over the coming years.

The current picture for the real estate sector is not rosy. Housing prices are losing steam across the country. New home prices in China's 70 major cities rose 8.7 percent year-on-year, down from the 9.6 percent growth in January.

Moreover, recent reports of price cuts in Beijing, Hangzhou and Shenzhen, where property sales used to be very strong, have sent a chill down the spine of some property developers.

It is feared that the possible collapse of property prices will pose a systematic threat to the overall economy. Meanwhile, ironically, such a fear has fuelled some blind optimism that the government will thus do whatever it can to avoid a collapse.

A blueprint for a new type of urbanization that the Chinese government revealed in mid-March to prop up the economy amid flagging growth, nevertheless, indicates Chinese policymakers are unlikely to sacrifice macroeconomic control and economic restructuring to save the decade-old surge in house prices.

Instead, as the draft regulation on subsidized urban housing shows, the government is shifting the priority of the development of the property market toward meeting the growing housing needs of low-income families, including millions of rural residents who have had stable jobs in cities for years.

The country's plan to allow 100 million migrants to obtain urban household registrations by 2020 will bring about a massive demand for subsidized low-cost homes the construction of which can considerably cushion the world's second-largest economy against the effects of a cooling property market.

The rapid rise of house prices since 1998 when China began market-oriented housing reform has tremendously boosted investment in property, enriching property developers, local governments and homeowners. But it also led to an inadequate supply of subsidized housing for low-income families in cities.

The latest regulation is a welcome sign that Chinese policymakers will no longer tolerate profit-driven property development standing in the way of people-centered urbanization.