Cable de extensión del motor (MLE Motor Lead

Undeniably, the HPF system has functioned effectively as a housing assistance policy, providing financial support for home purchases and contributing to developments in the housing and housing finance market; however, the system has some limitations.

Firstly, accessibility to the HPF for those most in need is limited. In relation to the qualification of the HPF, those who have signed an employment contract for over a one-year length to become actively involved. This means groups such as laid-off workers, rural migrant workers, temporary-employed, and self-employed individuals are excluded from participating in the scheme (Yeung and Howes, 2006; Burell, 2006). More specifically, data has revealed that rural migrant workers12 _{and temporary workers numbering around 277 million, in 2015, are} excluded from the HPF system (NBS, 2015). This group need the support of HPF when it comes to housing purchases, because they lack sufficient household income and have low prospects of increasing family wealth.

In addition, the HPF system has extended tangible social inequalities, because it exaggerates income inequality. Typically, those with higher income obtain more benefits than low-income groups (Yeung and Howes, 2006). As house prices are increasing at a faster rate than incomes, the HPF only alleviates the housing difficulties of the high-income group, who can thereby access the market more quickly, due to their larger HPF deposits, which enable them to obtain low-rate HPF debt. Research conducted in Beijing found that over 80 per cent of HPF debt is applied for by high-income families (Wang, 2000). More specifically, those who have low professional status, basic educational attainment, and low-paid jobs obtain relatively few benefits from the HPF, and as has been empirically evidenced in a number of recent studies (Ying et al., 2013; Xu, 2016).

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As discussed previously, the HPF scheme is an income-based housing assistance project that absorbs a set proportion of employees’ monthly income, providing a given amount of low- rate HPF debt to mitigate housing difficulties nationally. By 2014, the proportion of employees using HPF debt for housing purchases had reached 68.69 per cent across the nation (MOHURD, 2014). However, low-income employees are generally unable to save enough to become eligible to obtain HPF debts (Burell, 2006). This is because HPF is an income-based housing assistance system that absorbs a fixed proportion of the employees’ income. Therefore, exaggeration of income inequity is a significant feature at the root the HPF system. In addition, regional inefficiencies and discrepancies mean that developed regions have greater opportunities to benefit from the HPF system. Therefore, in subsequent sections, data at the national level are graphed to show the regional differences in housing and economic sectors. Moreover, in the subsequent chapters of this thesis, data at the household level are employed to examine the regional differences in the HPF system, highlighting the implications of disparities.

As referenced in the preceding section, the coverage of the HPF has expanded to most cities in China. However, the benefits of HPF vary across the country, according to the levels of economic development in each region. Developed cities, such as Shanghai and Beijing, have absorbed more HPF funds, and their economic statuses have provided residents with greater access to HPF debt. Data show that by the end of 2015, the aggregated HPF deposits in Beijing were 7902.51 hundred million Yuan, whereas those in Shanghai were 6096.56 hundred million Yuan. Meanwhile, Guangzhou absorbed fewer HPF funds than the other two cites, but remained at 3869.21 hundred million Yuan.13 _{However, in contrast, developing cities like} Lanzhou, absorbed aggregated HPF deposits of 550.39 hundred million Yuan in 2015, representing just 6.9 per cent of Beijing’s figure (MOHURD, 2015). Moreover, the maximum debt that employees can obtain from their HPF accounts varies between cities. Data show that employers located in Beijing could obtain the eligible maximum HPF debt of 1.2 million Yuan per employer in 2015, and employers in Shanghai could obtain 1 million Yuan per employer, while those in Guangzhou could obtain up to 0.6 million per employer, half the

13 _{Guangzhou is the provincial capital city of Guangdong province, whereas Guangdong province absorbed}

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sum in Shanghai. Thus, the economic differences between the regions influence the HPF due to variations in regional unemployment, income levels and the implications and impact of monetary policies.

The HPF is a housing assistance policy that aims to overcome housing difficulties and helping low- and middle-income households to achieve homeownership. As it is a demand-side assistance policy, it would not dramatically increase house prices, for the reasons that follow:

Firstly, the intended outcomes driving the implementation of the HPF were to overcome liquidity constraints and achieve homeownership using for average-to-low and low- income households by granting access to HPF housing debt (Burell, 2006; Wang and Murie, 2011). However, the HPF system operates very strict criteria to decide whether to grant HPF housing debt, setting an upper limit for the HPF debt that a borrower can apply for. This to some extent restricts potential borrowers (especially new HPF participators) from accessing HPF housing debt, and when entering the homeownership market. The intention of the housing assistance policy is to allow purchase of affordable housing for those proven to be in a position to access it (Li and Yi, 2007; Wang and Murie, 2011). Thus, the HPF housing debt can be used for the purchase of affordable housing; however, the central government announced the restrictive policies on sales of affordable housing within the HPF framework, requiring that owners of affordable houses cannot resell their properties within 5 years. If they need to sell they must to seek approval from the relevant government agency and if sale is permitted, they had to sell at the original purchase price (Mak et al., 2007). This policy to some extent reduces interest from speculators, effectively controlling the house price appreciation for affordable housing.

Second, as was discussed in section 2.3.3, the accessibility to HPF is restricted; some households such as self-employed, seasonal workers, migrants, and low-skilled workers are excluded from participating (Wang and Murie, 1999, 2000; Li and Yi, 2007). As a result, it would prevent some potential homebuyers from entering the homeownership market, subsequently reducing the demand for housing from those groups.

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Aside from assisting housing purchases, the outcome of HPF now has now been extended to support rental payments since 2007. A Notice was jointly issued by the PBOC, the MOF, and the MOHURD in 2015,14 _{requesting the release of the requirement to use HPF savings to} support rental payments, in order to stimulate the implications of the HPF on house renting. This notice allows HPF participators, who have paid for HPF for 3 consecutive months in full, and who have not owned an owner-occupied home or rented a public rental property, to use their HPF savings for a rental payment. This action buffers the down payment pressures for liquidity constrained households, allowing disadvantaged households with insufficient capacity to save longer for the housing purchase while maintaining the rental tenure. In addition, this action serves as a policy to disperse demand for housing throughout the country; therefore, the HPF would not be expected to trigger a house price rise.

In light of above-mentioned factors, the HPF would not be expected to have a direct impact on house price appreciation at this stage; since its initial aim is to reduce housing difficulties, enabling households to achieve homeownership, as per the government’s aims.