Shenzhen to adopt Singapore housing policy and drop Hong Kong model

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/ | May 6, 2019 3:52 PM SGT
Shenzhen, one of the most expensive cities in China, is poised to borrow a page from the playbook of Singapore for providing more subsidised homes, ditching the Hong Kong model the Chinese city has followed for more than two decades since private home ownership reforms were rolled out.
Shenzhen, known as China's Silicon Valley, will offer 1 million government-subsidised homes at as low as half of the prevailing market rate, according to a consulting paper issued by the Housing and Construction Bureau of Shenzhen on April 29.
"Shenzhen would like to be a pioneer seeking a scheme more like Singapore, separating more affordable homes to average individuals seeking a place to live," said Li Yujia, senior economist with the Real Estate Assessment and development research centre, Shenzhen " a research arm of the Shenzhen government.
"Currently we are still using a Hong Kong model, where most homes are built and sold as commercial products in the private market and only a small portion of cheap rental flats are designed for the poorest."
The subsidised homes will be equally split into three parts, including public rental flats leasing for 30 per cent of market rent, affordable homes at half of the market rate and other homes at 60 per cent of the market rate.
The measures are regarded as Shenzhen's dedication to carrying out what it vowed to do June last year " offering 1.7 million homes by 2035, of which 60 per cent will be government subsidised.
In 2018, government-funded homes in Shenzhen made up less than 20 per cent of housing stock, according to Li, compared with 45 per cent in Hong Kong and more than 80 per cent in Singapore.
The ambitious plan is dubbed as "the second housing reform" among market observers. The first reform was adopted in 1987 when the central government started experimenting in some pioneer cities, ending the practise of handing out homes by state-owned factories and farms.
In 1987 Shenzhen hosted the first land auction in China " ushering in an era where the housing market was controlled by the market.