Every Monday morning, Li Qiangqiang pays 10 yuan (US$1.2) for lottery tickets on the way to his office in downtown Beijing.

"I often daydream of becoming rich overnight," said Li, 31, a Hunan Province native earning a meager salary at an inefficient publishing house. "Then I can buy myself a good house and live a happy life with my girlfriend."

In the last six years, Li has lived in various rented houses in different parts of downtown Beijing.

To afford a relatively comfortable and well-equipped, rental unit, Li, who studied Chinese literature, has to freelance for a couple of magazines, newspapers and websites in addition to his job.

When the half-year or year-long contract is up, he has to move.

" 'When can we have a house of our own?' is the hardest question I have to face from my girlfriend," Li said. "I haven't figured out a satisfying answer yet. But I believe I will have a solid answer, maybe many years from now, maybe next year, or maybe tomorrow - if only a miracle happens for me."

On the move

Many young people like Li have left behind their home villages, towns and cities to pursue higher education in universities and then work and settle down in big Chinese metropolises like Beijing, Shanghai and Guangzhou. But something is missing: a house of their own.

Although a limited number of young lucky ones do get rich quickly and buy a lavish home, most young people have to wait a long, long time, said Hu Youcai, an author who chronicled his decade-long painful experience of living as a "lodger always on the move" with his wife.

"The housing prices in the big cities, especially Beijing, are abnormally high," Hu said. "It seems that the real estate developers ignore the existence of the vast number of 'poor' people who can just make ends meet.

In Beijing, the average price of a house has rocketed to about 6,000 yuan (US$720) per square metre, according to statistics from the Beijing Achievement Commerce & Investment Consultants Co Ltd, a local real estate consultant.

The World Bank said that rational housing prices should be three to six times a family's annual income. But the price of a housing unit of 60 square metres in downtown Beijing is more than 20 times a family's annual income.

Partly because of the housing shortage among many youths in big cities, "owning a house" gives a bachelor confidence and "bargaining power" when asking his dream girl to marry him, Li said.

"I am dying for a home," he said.

Old housing system

The good news is that the housing situation is improving dramatically now that China has accelerated its housing reform.

Since the 1950s, China had applied a system of distributing houses to workers at low rent. The welfare housing distribution system played a certain historical role in guaranteeing most workers residences at the time when salaries were low.

But the system was unable to meet people's increasing demands for housing, and the low-rent system meant that investment in housing was unable to be refunded for further construction.

In other words, building more houses meant that the government had to spend more on subsidies for maintenance, resulting in a bad circulation of funds, analysts said.

"The old housing system has seriously impeded the further development of housing," said Gu Haibing, an economics professor at Renmin University of China. "Therefore, it must be reformed."

Deng Xiaoping was the first in China to propose housing reform, in 1980. Pilot projects started in several cities in 1988. But it was not until the last three years that the reform spread in urban centres across the country. The traditional welfare allocations finally stopped at the end of last year.

Public servants and employees working in government-funded institutions can buy, at discount prices with government subsidies, an apartment big enough to reach the "comfort level" set by the United Nations, roughly 20 to 30 square-metres per family member.

If they choose to buy a bigger apartment flat than the guideline, they have to pay the market price, about 6,000 yuan (US$720) per square metres on average in Beijing, while the government discount price was 1,450 yuan (US$177) in 1997 and is now 1,560 (US$190).

The government agencies and institutes have also started a "housing fund," which is a reserve fund contributed partly by the employees and partly by their employers.

The fund usually accounts for 8 percent to 10 percent of a worker's monthly salary.

Government-owned housing, be it old or new, are sold rather than rented. Low-income residents can afford to rent because they get government subsidies. So far, 30 of China's 35 major cities have reportedly begun carrying out the new policy.

'Home mortgagors'

The latest trend among an increasing number of young urbanites is becoming "home mortgagors" - buying houses with loans from banks or the "housing accumulation fund. Many commercial banks in China, particularly China Construction Bank, have provided home-buyers a full package of loans.

And the home-buyers are even encouraged by some banks and real estate developers to try such novel services as the "zero down payment" loan programme in which the mortgagor doesn't have to make the down payment at the time the house is bought.

Many people choose the accumulation fund, which is a compulsory saving system. Because it is "taken from the people and used in the interests of the people," it has won general support from the people, said Zhao Renwei, a researcher with the Economic Research Institute of the Chinese Academy of Social Sciences.

Official statistics show that, with an average living space of only 9.6 square metres per capita in urban areas, Chinese people's housing is far below average world levels in terms of space.

During the past two years, China completed 100 million square metres of low-cost housing, which "makes owning a house no longer a luxury for residents with medium and low incomes," local media claimed.

Nonetheless, low-cost housing is still beyond the purchasing power of many buyers because China's overall salary level is still quite low.

China currently has 3 million millionaires, most of whom are self-made and beneficiaries of the reform and opening up policies. But they only account for 2.5 percent of the country's total urban population.

Seventeen percent of the urban population are classified as high income, but they are not very eager to buy since their annual income amounts to only one-sixth of the cost of a house.

And "owning a house of my own" is still out of reach for even the young home mortgagors in big cities.

Take Zhang Hui, for example.

She works for a computer software designing company in Beijing and her husband of two years is a master degree candidate at Peking University with virtually no income.

The couple bought a house with bank loans last year. They pay a monthly installment of 2,500 yuan (US$302). But Zhang earns less than 4,000 yuan (US$483) per month.

And since Zhang, in her late 20s, is planning to have a baby, they live on an especially tight budget.

For Yang Minghua, who used to work for a famous Internet company in Guangzhou, the housing issue means a heavier burden for him.

When he held his first job in the Internet company, Yang earned an average monthly salary of 7,000 yuan (US$843). He bought a good house with bank loans two years ago and pays off at least 2,000 yuan (US$241) in bank loans each month.

Problems began when the "Internet economy" cooled down last Autumn, and his company eventually closed down. Yang has not found a second job as good as the first one. His new job pays him just slightly more than 2,000 yuan (US$241) per month.

"I often regret I bought the house too early, but I will lose a large sum if I sell it right now because there is no potential for the house to revalue," Yang said. "I have to carry on with my life, with my teeth clenched and belt tightened."

(China Daily December 26, 2001)