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Study on the Pricing Model of Affordable Housing in Guangzhou, China

Qiqi Zhang

Public Management School, Jinan University, Guangzhou, China. Email:

Kongmei Cen

Public Management School, Jinan University, Guangzhou, China, Email:

Mu Zhang

Shenzhen Tourism School, Jinan University, Shenzhen, China, Email:

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Indemnificatory housing is related to our life in China, how to make price reasonable is necessary for its social welfare function. This paper introduces the pricing process of affordable housing and focuses on the demonstration of price-limited housing which is both indemnificatory and commercial. Combined with the cost method and the market method, the pricing model was constructed based on the system: market valuation price---the ratio of house price ---selling price. Taking Guangzhou-- a city in south China-- as the object, the key --price ratio- was calculated according to the data. Reasonable of that model was examined with an example of a house in Guangzhou, China, named FengJingHuaTing. With the expansion of the government welfare project, the study of the pricing model of the purchase type of indemnificatory housing is of great value to the citizens and market.

1. Introduction

1.1. Background of Affordable Housing in China

Housing is one of the most basic necessities of life. Under the conflict between growing demand for material and culture and the rising price of housing, any citizen has the right and need to reach a "housing" level. Therefore, the Chinese government is paying more and more attention to the construction of affordable housing. Building affordable housing system and reasonable pricing are the keys to the effective implementation of affordable housing policy. The affordable housing in which the government invest or raise money to construct, sold or rented with limited standards and prices to eligible families and single residents with housing difficulties, consists of low rent housing, public rental housing, affordable housing, limited housing, limited commodity housing and so on (Wang, D.X., Peng, H. C,2013).

In 1998, the housing system was reformed in China. The welfare housing system was replaced by a new market-oriented system, and housing commercialization, monetization, and socialization were gradually implemented. The market reform promoted the rapid development of the real estate industry, but the market cannot effectively solve the housing problem of the middle and low-income stratum, unless with the aid of the national policy. In order to solve this housing problem, the housing security system was gradually established in China: high and middle-income people are satisfied by the market; provide affordable and limited housing to the middle and low-income people; the lowest income people have access to the low rent housing and the public rental housing (Huang, G.Y, 2009). The construction of affordable housing and reasonable pricing play an indispensable role in the healthy development of China's real estate market.

However, in the exploratory stage of housing system reform in China, the pricing model isn’t mature. For example, economically affordable housing lost its price advantage in 2008 due to a small difference from ordinary commercial housing prices in Guangzhou, China, as well as limited housing.

Affordable housing is an important government project. Only with a reasonable price and policy, can it play its role well. Only by establishing a stable and reasonable housing security system can the housing problem of middle and low-income families be solved. At the same time, it also plays an important role in adjusting the structure of the real estate market, restraining unreasonably rising price, driving the development of the related industries.

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