An Islamic co-operative housing solution for China’s housing affordability issues

Abstract

Purpose This study aims to propose a new housing affordability solution by combining the Islamic finance concept of Musharakah Mutanaqisah (diminishing partnership) with a cooperative and crowdfunding model. The proposed alternative housing loan model is presented to experts in financing and real estate business, whose views and comments were solicited to evaluate the applicability of the proposed model in real world. Design/methodology/approach This is a qualitative study that uses semi-structured interviews to determine the initial thoughts of various stakeholders regarding the adoption and implementation of the proposed model. Findings The majority of experts (interviewees) agreed with and appreciated the model’s original ideas but expressed concern over the absence of community culture and trust in China, which could represent a serious threat to the model’s viability. It is anticipated that the suggested model will be implemented as pilot projects by the local government in places where Islamic culture and faith are more widespread, hence possibly impacting the model’s effective implementation. Research limitations/implications As there are insufficient Islamic financial specialists in China, the limitation of this qualitative study is the small sample size. If certain policymakers could participate, the outcomes would be more hierarchical and trustworthy. Originality/value This is, to the best of the authors’ knowledge, the first study of its kind to examine the viability of this innovative Islamic cooperative housing finance scheme within the context of a specific housing issue in China.