Shenzhen turning its back on Hong Kong property model in favour of affordable public housing

By Sidney Leng sidney.leng@scmp.com / https://www.scmp.com/economy/china-economy/article/3034258/shenzhen-turning-its-back-hong-kong-housing-model-favour?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | October 29, 2019 12:24 PM SGT
Shenzhen plans to turn away from the Hong Kong housing model and towards a system that focuses more on affordable public housing for its professionals and low-income residents as the newly dubbed model city seeks to avoid the property woes of its neighbour.
As part of its latest housing reform, the municipal government this week published a rule setting a benchmark land price across the city, stipulating that land sold for subsidised housing should be priced at 30 to 40 per cent of the benchmark rate.
Shenzhen plans to cap the selling price of newly built affordable homes in its downtown area, that was once its original special economic zone, at 50,000 yuan (US$7,000) per square metre (10.8 square feet). Affordable homes built in other areas will be restricted to 20,000 (US$2,800) and 30,000 yuan (US$4,200) per square metre, according to a report from the state-run Shenzhen Special Zone Daily.
The move is also in line with the Chinese leadership's guidelines that housing is for people to live in, not for people to speculate to gain profits.
Shenzhen was the first Chinese city to begin selling land in 1987 with the help of Hong Kong professionals, notably Leung Chun-ying, the former chief executive of Hong Kong who was then a property agent executive, at a time when land sales were technically illegal in China.
Selling land to developers for residential and commercial development was later endorsed by Beijing and replicated across China, and was a key factor underlying its rapid urbanisation and property development over the last decades, which fundamentally changed the urban landscape.
However, as the city of over 12 million becomes more affluent, the lack of affordable housing for local residents, especially young professionals and low income groups, is also becoming a social problem. The city's average home price increased more than 10 times to more than 50,000 yuan (US$7,000) per square metre between 2005 and 2015, making Shenzhen one of the most expensive place to buy a home.
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