SHANGHAI, CHINA - After months of anxious waiting, Wang Jinxia finally obtained a coveted spot in Shanghai's trial affordable-housing programme, but now the former factory worker is scrambling to pay for it.

The 53-year-old divorcee, who took early retirement years ago, is desperate to move after living eight years in a 60-square-metre Shanghai apartment with her octogenarian parents and two other relatives.

'I've been stressed out recently. I have many new grey hairs. I will have to pour all of my 70,000 yuan (S$14,000) savings into this,' Ms Wang said outside a makeshift centre for mortgage applications at a local school.

She is among the first batch of about 1,940 families selected to buy low-cost housing that is selling for about a third of market prices, as part of a new affordable housing campaign in the city of more than 20 million.

However, Ms Wang and others are finding even 'affordable' housing out of reach due to limited financing options for low-income buyers - a hurdle for government efforts to quell public concern over skyrocketing prices.

China's public housing programmes have been neglected for years as local governments sought to cash in on spiralling property prices with more upmarket developments.

But a growing outcry over the past year has put affordable housing back on Beijing's agenda.

The stakes in China's housing programme are high not only for low-income people such as Ms Wang, who have been left behind by China's explosive growth, but for the economy itself.

It grew 10.3 per cent in the second quarter of this year - slowing from a blistering 11.9 per cent in the first quarter - as Beijing took steps to cool soaring property prices.

'The social housing programme is on track and will constitute an important cushion for any potential slowdown in private, market-based residential property construction,' Morgan Stanley economist Qing Wang wrote in a note. Beijing's ambitious target to build 5.8 million affordable housing units this year is aimed at preventing a hard landing for property investment growth and propping up demand for basic materials such as cement and steel, Mr Wang said.

If it succeeds, the programme could boost China's economic growth by up to a percentage point or more, according to Bai Hongwei, a property analyst at China International Capital Corp.

Only limited and fuzzy official data have been available, however, and the push has been blemished by reports of insufficient land and high-income earners exploiting loopholes to take social housing spots.

Analysts estimate only 40 per cent of the housing local governments pledged to build last year materialised, as they continued selling land to developers at market rates, and that amount might rise to 50 per cent this year, at best. In May, Beijing told local officials that affordable housing would be part of their performance appraisals.

To qualify for Shanghai's trial project, the family's average annual income per capita must be less than 27,600 yuan, while each member's share of floor space in their current residence must be under 15 square metres.

Some participants have likened the process to winning a lottery. To discourage fraud and corruption, the names and addresses of those selected are published online.

Yet once chosen, participants must still find a way to pay for the home. 'No bank wants to do this. It's not a profitable business,' said a mortgage officer at the makeshift mortgage outlet set up by China Construction Bank.

'We are here because the government instructed us,' he said, punching a calculator to work out monthly repayments, the biggest concern for low-income families.

For Ms Wang, a mortgage for the newly built 70 sq m home on the outskirts of the city to which she has won rights would cost 2,200 yuan a month. That's 43 per cent of her and her parents' combined pension, payable over 16 years, the longest period the bank offers.

'For me, a mortgage is out of the question. I just can't afford the interest payments,' she said.

This article was first published in The Business Times.