June 5, 2018 / 11:31 AM / 2 months ago

China's Shenzhen to cap new private homes at 40 percent of supply

BEIJING (Reuters) - The Chinese southern boomtown of Shenzhen, famed for its eye-watering home prices, has set an unprecedented goal of capping the number of new private homes, as the government focuses on rolling out more affordable public housing.

FILE PHOTO: Residential apartments are located in downtown Shenzhen, China April 26, 2017. Picture taken April 26, 2017. REUTERS/Bobby Yip/File Photo

Shenzhen plans to build 1.7 million new apartments by 2035, of which only around 40 percent can be private homes, the city’s housing authority said in a statement on its website on Tuesday.

Heeding President Xi Jinping’s call for houses that “are for living in, not speculation”, local governments are starting to roll out policies to ensure multiple sources of home supply and multiple channels of financial support.

China’s under-developed home rental market has been a focus in the past year, particularly in megacities such as Shenzhen, which has a population of more than 12 million. In a national first, state lenders started giving loans last year to renters at ultra-low interest rates with long repayment periods in Shenzhen.

The housing authority said the remaining 60 percent of new supply would be equally split among three government-subsidized housing projects - homes for workers with special skills and expertise, with a floor area of less than 90 square meters; smaller homes of less than 70 square meters; and more modest apartments of 30-60 square meters strictly reserved for rentals.

To ensure affordability, the home buyer or renter, for example, can obtain a 40 percent discount off the property’s market value or rental price under the talent scheme.

Shenzhen will also boost land supply reserved for the rental segment of the market, it said.

Reporting by Stella Qiu and Ryan Woo; Editing by Jacqueline Wong

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