In 1998, the Chinese government abandoned the danwei (“work-unit”) housing allocation system and fully privatized the housing market. Since then, the residential price has never stopped increasing despite the past financial crisis worldwide. In April 2011, statistics show that the average sales price of new residential apartments in 10 major metropolitan cities of China reached RMB 15,802 per square meter (approximately USD 226 per square feet). In Shanghai, the price is about RMB 26,356 per square meter (above USD 376 per square feet), much higher than that in many big cities in developed countries. More and more Chinese urban dwellers, especially those who earn low salaries and live in metropolitan areas such as Shanghai are challenged by escalating housing prices. Each year the central government introduced several housing policies in order to solve the nationwide housing affordability problem.

Recently, the Chinese Premier announced that China aims to build 36 million affordable housing units by 2015. Despite severe housing affordability problems in Shanghai, the municipality has been lagging behind many other cities or provinces in terms of affordable housing programs. Last year, the municipal government finally started to experiment with affordable housing programs in selected districts. This thesis serves as a starting point to discuss the effectiveness of affordable housing programs in Shanghai by using five major criteria, provide and expand the supply of good-quality housing units; make housing more affordable and readily available;  promote economic diversity in a residential neighborhood; help households build wealth; and promote balanced metropolitan growth. According to the preliminary observation and assessment, the newly released affordable housing programs in Shanghai have been effective by incorporating both supply and demand approaches and successfully targeting the extremely low-income group. Despite the achievements, there is still some room for further improvement. Hopefully, by introducing more varieties of housing programs such as inclusionary housing, the Shanghai Affordable Housing Programs will benefit more households in the coming years.