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Budget Developments Could Affect Prices, Experts Say

ALLOCATION of land plots in Shanghai downtown areas for the construction of budget homes might affect home prices as well as the future prospects of real estate development in neighboring communities, some industry analysts said.

In a recent announcement made by the city's Xuhui District government, three plots of land, all located within the Outer Ring Road, have been assigned for budget homes.

Under a previously released government plan, a total of 20 million square meters of budget homes, or about 300,000 units, will be built in the city between 2008 and 2012, most in suburban areas.

"House prices in residential communities near where budget homes are being built could possibly fall as the quality of such economy homes is inferior," said Ma Ji, head of research at Shanghai Centaline Property Consultants Ltd, which runs a brokerage chain in the city.

"As a result, it could be more difficult for those residential communities near budget developments to be sold as expensive homes and that might lead to a price drop."

New Jiangwan Town in Yangpu District and Binjiang in Xuhui District could be the most affected areas, Ma said, as these high-end communities are still in their early stages of development.

However, government officials said because only a small amount of budget homes will be built in downtown areas, the city's overall housing market won't be greatly affected.

The budget home program was launched by the city government to improve living conditions of middle and low-income families who could neither afford to buy their own homes nor are eligible for low-rent apartments.


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