Shenzhen plans rules on joint residential ownership

Shenzhen, one of the six cities picked in April to further test individual-government joint home ownership, is to unveil detailed rules this month governing the trial program, which analysts said will alleviate pressure on the property market.

Local media reports quoted the Shenzhen government as saying that an affordable housing project in the city will adopt the new ownership structure during the second half of this year.

Another plan is being considered under which ownership would be split three ways among home buyers, government and enterprises, the reports said.

Press officers with the city government could not be reached for comment on Thursday.

The cities, including Beijing, Shanghai, Shenzhen and Chengdu, where home prices are the highest in the country, were selected in April by the Ministry of Housing and Urban-Rural Development to test the structure.

The plan is intended to help fulfill Premier Li Keqiang's promise in March to increase the supply of jointly owned homes this year to combat speculation.

Though the joint ownership structure has been adopted sporadically in the past few years since it was launched in Huai'an in Jiangsu province in 2007, the high-profile announcement of the trial this year signaled the central government's determination to give jointly owned homes a bigger share in China's housing market.

In Shanghai, for instance, the municipal government has lowered the application threshold for jointly owned homes by four times since 2010. At present, households of at least three people with a monthly per-capita disposable income of less than 5,000 yuan ($810) are eligible.

As of the end of March, 67,000 households had bought homes that are jointly owned with the government.

Under the joint ownership structure, the government buys homes in conjunction with families using part of the proceeds from land sales, and it owns a partial stake in the house. When the house is sold, the government takes part of the proceeds in proportion to its ownership.

Only selected houses are eligible, and they're sold at a discount to market prices.

"Jointly owned homes will contain home price increases ... and help change Beijing's model of macro controls on the housing market," said Zhao Baogen, an analyst with Uwin Real Estate Research Center.

In May, the average home price in 100 major cities sampled by the China Index Academy Ltd, a Beijing-based research institute, dipped 0.32 percent month-on-month, the biggest drop since June 2012, to 10,978 per square meter.

The average price in 10 key cities, including Beijing and Shanghai, was 19,605 yuan per sq m, down 0.18 percent month-on-month but up almost 14 percent year-on-year, the academy said.

UBS AG's China economist Wang Tao wrote in a May 27 research note that unlike previous property downturns in China, this one had no obvious policy trigger and instead was a result of shifting supply-demand fundamentals.

"The pace of adding new housing has exceeded that of underlying demand, and an increasing share of property supply has been absorbed by investment demand," she wrote.

Construction of jointly owned housing projects will further increase supply, which could deepen the current downturn.

In Beijing, for example, 50,000 units of joint ownership housing is expected to hit the market this year. That would be equivalent to more than half of the 80,566 units of new home sales last year.