New measures aimed at protecting low income housing, including size restrictions and time limits on new purchases, went into effect on Wednesday.

The policies will ensure low-end housing goes to needy urban residents and is not used to line developers' pockets, said Yan Mengyu, a Beijing-based real estate investor, Thursday.

The new policies reduce profit expectations from investments into low-end housing by restricting unit sizes to between 60 and 80 square meters, which, in turn, affects potential rentals, Yan said.

At the same time, housing can only be sold after a period of time, which in Beijing could be up to five years. Moreover, if the housing is sold at market prices, the seller will no longer be allowed to buy more low-end housing.

The Beijing municipal government said on Tuesday that as of next Thursday, economically affordable housing bought less than five years ago can only be sold cheaper than the purchase price, instead of the market price at the time of re-sale. There will also be a 10 percent comprehensive land compensation fee and purchasers can only be people eligible to own such housing - families earning less than 60,000 yuan (US$7,200) a year.

Since the rules were released, real estate agencies in Beijing have been flooded with calls from owners of economically affordable housing, who are eager to sell before the deadline, said Yan.

The new national policy will also affect real estate developers who vie for low-end housing projects. Yan said the limited area might take away much of the glamour of such projects in the eyes of many real estate developers, who find real profits in more spacious units.

Sales of economically affordable housing to higher-income earners has long been a controversial issue.

What has drawn much media fire in recent years in such large cities as Beijing is the sharp contrast between the long queues of people waiting for several days and nights to buy low-end housing and the packed cars in existent residential squares of those complexes.

Nearly half of the 1,000-odd people, who answered a survey carried out by the Central Television Station in the aftermath of the new national policy, said low-income earners have not really enjoyed the benefits of low-end housing programs.

According to the Ministry of Construction, low-end housing will comprise only 15 to 20 percent of new housing in the country.

Some, however, doubt the ultimate effectiveness of the new policy considering the poor track record of similar efforts. For example, a move to ensure the reliability of income reports of applying families by making them public has drawn no attention from local people in Beijing.

The new policies were adopted by the Ministry of Construction, the State Development and Reform Commission, the Ministry of Land and Resources and the People's Bank of China.

(China Daily May 14, 2004)