Chinese Vice Premier Li Keqiang on Thursday ordered local governments to increase funding for affordable housing projects, stressing that the construction of 10 million units was a mandatory task that must be fulfilled this year.
Speaking at a national conference on affordable housing for low and middle income groups, Li said that the construction of 10 million affordable housing units this year is of great significance for the government to stabilize public expectations, control housing prices, improve people's lives and boost domestic consumption.
"Housing is imperative for people's lives and local governments must waste no time in beginning the construction of 10 million affordable housing units this year and putting them into service as early as possible," Li said.
To facilitate the government's subsidized affordable housing projects, Li said that local governments should ensure basic market supply with small units and guide the public to "reasonable consumption."
More efforts are also needed to develop low-rent public housing and satisfy the demands of residents for affordable public housing, Li said. To support the construction of affordable housing, local governments can use tax breaks, determine the rent for public housing reasonably and finance construction projects in different ways, such as bank loans and social investment, he added.
Li also called on local governments to increase land supplies for common commercial housing construction. The vice premier called on authorities to ensure transparency and fairness in the distribution of affordable housing units to benefit low-income groups who are in need.
He stressed the need to discourage house purchases for the purposes of investment and speculation and to increase the supply of common commercial apartments and strictly implement the central government's macro control policies for the real estate market.
The Chinese central government signed strict agreements with provincial governments to guarantee the construction of 10 million government-subsidized apartments this year. The target of building 10 million government-subsidized apartments is 72.4 percent more than last year, according to official figures.
China's affordable housing provisions are divided into different categories, including "economic housing" that are sold below market prices, "price-capped housing," government-owned "low-rent housing" for extremely poor residents and "public-rent housing" for a wider range of people.
Many local governments obtain a large part of revenues from the construction of commercial apartments because a fee is charged for the release of land to developers. Subsidized housing, in contrast, is sometimes ignored because the government often has to provide the land for less money to attract the interest of developers.
The policy comes after the State Council, or China's Cabinet, introduced eight measures on Jan. 26 to curb rising housing prices.
The measures called for an increase in the supply of apartments that poor residents could afford, the introduction of rules preventing residents from buying more than a certain number of properties and the adoption of higher transaction taxes.
Sixty-eight out of 70 cities reported that the prices of local homes had risen from last year's figures, the National Bureau of Statistics reported on February 18. Ten out of the 70 cities surveyed saw prices rise by more than 10 percent, according to the bureau.