China calls for more funding to build cheap homes

BEIJING: China has ordered local governments and property developers to increase efforts to guarantee funding for the building of affordable housing, the official Xinhua news agency said on Monday.

China has in recent months turned its focus to building more state-subsidised homes to counter record property prices. Analysts say Beijing's bid to construct more cheap housing would also support the economy at a time of softening global demand.

The government's urging follows local media reports that the building of affordable homes has fallen behind schedule, partly due to a lack of funding.

To make up for the short-fall in cash, local governments may dip into land revenues, or allocate special funds and budgets for the building of low-cost homes, the finance and housing ministries said in a joint statement.

Local real estate developers must also provide their portion of funding, and they would get assistance in the form of discounted bank loans and state subsidies for investment.

"All localities must focus on the construction of affordable housing projects and local governments should increase their capital-raising efforts to ensure there is enough funding," Xinhua quoted the statement as saying.

The National Development and Reform Commission, the country's top economic planner, said it has allowed qualified local governments to sell bonds via their financing vehicles to get funding for the construction of low-cost housing projects.

China plans to start building 36 million affordable homes in the next five years, including 10 million this year.

Copyright Reuters, 2011