Until 1978, most people in urban China were housed by a welfare housing system in which the government or state-owned enterprises produced and allocated housing almost free of charge. Over the next two decades, only small-scale privatization of public housing took place. In March 1998, a major reform was announced that called for a rapid phasing out of the welfare housing system. This reform encouraged urban residents to buy their current homes from state-owned enterprises or purchase housing from the market.