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Recent Policy Changes in China’s Real Estate Sector

Lou Jianbo
Publication date: 
Thu, 30 Aug 2007

The reform of the urban housing system, begun in the late 1980s, has resulted in a general improvement in accommodation for most of the urban population in China. In less than twenty years, the government managed to provide new and reasonable quality owner-occupied housing to as much as 80 per cent of the urban population. This achievement was made possible by the transition to a market economy and the rapid economic growth that followed.

However, unlike real estate markets in most Western countries, China’s was established and fostered by the government, which views it as a tool for the implementation of its housing policy. When the government feels the need to provide more housing to low- and medium-income urban families, it intervenes in the market without hesitation.
This policy brief investigates the recent changes in housing policy, the reasons for them, their effectiveness, and the implications for the future development of the real estate market. It provides a brief summary of the three-tier structure of the urban real estate market, assesses the major issues affecting the housing market, and explores the recent responses to these problems, including restrictions on foreign investors.