Current real estate development situation frontline observation

New policies are being implemented: the market responds positively, and demand is released at an accelerated pace

On May 17, a national video conference on ensuring the delivery of housing was held. On the same day, multiple departments launched a policy “combination punch”, taking comprehensive measures in finance, land, and the digestion of existing commodity housing, canceling the national mortgage interest rate floor, and lowering the down payment ratio and provident fund loan interest rate.

A package of policies was quickly implemented. According to statistics, more than 200 cities have followed up on the implementation of real estate financial policies and lowered the minimum down payment ratio for first and second mortgages. First-tier cities such as Shanghai, Guangzhou, and Shenzhen have introduced policy measures to optimize and adjust the real estate market, and many cities have introduced policies to support the reasonable housing needs of families with many children.

During the interview, the reporter found that the implementation of the new policy has a significant impact on market sentiment, the market has responded positively, and the activity has increased a lot.

In Jiading District, Shanghai, the reporter came to the first project launched after the implementation of the “Shanghai Nine Articles” real estate new policy on May 28. Xiao Xianxing, the project’s marketing director, introduced that within 24 hours after the new policy was introduced, the project added more than 50 groups of potential customers. Affected by the new policy, customers have obvious improvement demand trends such as “small to big” and “one set to two sets”. Nearly 85% of the houses were sold on the opening day, and 1.58 billion yuan was collected.

In Changzhou, Jiangsu, Mr. Si, a nurse of a kindergarten after-school class, bought his first house in Zhonglou District after the housing provident fund interest rate was lowered. “After buying the house, I plan to move my household registration here to make it convenient for my children to go to school. The total house price is 1.33 million yuan. As a flexible employment depositor, I applied for a housing provident fund loan of 840,000 yuan. The loan term is 30 years, which can save 40,700 yuan in interest compared with before the housing provident fund interest rate was lowered.” Mr. Si said.

According to statistics from GF Securities, as of May 29, the transaction volume of second-hand housing intermediary stores in 74 cities has increased by 31.1% year-on-year since May; after the “combination punch” of real estate policies was launched on May 17, the average daily transaction volume of second-hand housing intermediaries increased by 15% month-on-month, and the average daily visit volume of stores increased by 15% month-on-month.

“Adjusting housing finance policies from the two aspects of down payment ratio and mortgage interest rate will help lower the threshold for home purchases and reduce the burden of housing consumption for residents.” said Yu Xiaofen, dean of the China Housing and Real Estate Research Institute of Zhejiang University of Technology.

At the same time, the People’s Bank of China set up 300 billion yuan of affordable housing refinancing to support local state-owned enterprises to purchase completed but unsold commercial housing at reasonable prices for allocation or rental of affordable housing. This is a favorable measure to support the construction of a new model of real estate development, which will help achieve multiple goals such as accelerating the destocking of existing commercial housing and accelerating the supply of affordable housing through market-oriented methods.

Behind the policy adjustment, we must see the necessity of clearing industry risks and rebalancing supply and demand, as well as the inevitability of the industrial development cycle and the driving force supporting the long-term development of the industry. We must adapt to the changes in the relationship between housing supply and demand and adjust real estate policies according to the times and circumstances. In the long run, the still increasing urbanization rate is an important supporting condition for the development of my country’s real estate market.

Real estate financing coordination mechanism: “All that should be done should be done” and “All that should be loaned should be loaned”

In Zhengzhou, Henan Province, the reporter saw that the facades and outdoor landscapes of some buildings in the “Qianxiang Yunqi Shangyuan” under construction in the High-tech Zone have been completed, and the workers are doing the final finishing work.

“At the beginning of March, this project was on the ‘white list’, and CCB quickly approved a loan of 400 million yuan, and at the end of March, a loan of 123 million yuan was received. This loan has enabled the construction to proceed smoothly.” Lou Ziran, executive president of Qianxiang Group, said that the current stage is the sprint stage for the delivery of quasi-ready-to-move-in houses, and credit funds are of great significance for the smooth delivery of projects and the sale of ready-to-move-in houses.

The “white list” mentioned by Lou Ziran is an important tool for stabilizing real estate financing, promoting the completion and delivery of projects, and protecting the rights and interests of buyers. In January this year, the Ministry of Housing and Urban-Rural Development and the State Administration of Financial Supervision and Administration deployed the establishment of an urban real estate financing coordination mechanism, and proposed a “white list” of real estate projects that can be given financing support in batches and pushed it to commercial banks.

At present, all cities at the prefecture level and above in the country have established this coordination mechanism. As of May 16, commercial banks have approved 935 billion yuan in loans for “white list” projects according to the internal approval process.

Dong Jianguo, vice minister of the Ministry of Housing and Urban-Rural Development, said that the role of the urban real estate financing coordination mechanism should be further played to meet the reasonable financing needs of real estate projects. City governments promote projects that meet the “white list” conditions to “enter as much as possible”, and commercial banks “lend as much as possible” to compliant “white list” projects to meet the reasonable financing needs of projects under construction.

Whether or not to be selected into the “white list” depends on the quality of the project. The reporter found that a considerable number of the “white list” projects that have received support are projects developed by private enterprises, and there are also some real estate projects that, although affiliated with real estate companies that have defaulted on their debts, were eventually selected for review due to their good project quality.

“The coordination mechanism organizes regular consultations among all parties to coordinate and solve financing problems, and effectively promotes the precise connection between real estate projects and financial institutions.” A relevant person in charge of China Construction Bank introduced that in order to implement the “white list” projects as soon as possible, China Construction Bank has established a relevant credit approval green channel, and the approval time limit has been greatly shortened. As of the end of May, CCB has connected with nearly 4,000 projects, approved more than 400 projects, and approved an amount of more than 90 billion yuan.

Reporters learned that relevant departments have accelerated the implementation of the urban real estate financing coordination mechanism, requiring active financial support for compliant projects that meet the “white list” requirements, and “lending as much as possible”; for projects that do not meet the “white list” requirements, timely and targeted solutions should be put forward.

Progress of the “three major projects”: orderly advancement to create quality life

Planning and building affordable housing, urban village renovation, and “dual-use” public infrastructure construction “three major projects” are important starting points for building a new model of real estate development.

2024 is the “starting year” of the construction of allocated affordable housing. Planning and building affordable housing is a major decision and deployment made by the CPC Central Committee and the State Council. It is a major reform to improve the housing system and supply system and reconstruct the market and security relationship.

“There are more than 10 million college graduates in my country every year, and a large number of rural migrant workers move to cities.” Liu Lin, a researcher at the Chinese Academy of Macroeconomics, said that increasing the construction and supply of affordable housing will help better meet the basic housing needs of wage-earning groups and stabilize housing expectations.

It is understood that as of now, 65 cities across the country have submitted plans and projects for the construction of affordable housing in 2024. Relevant cities have also formed some good experiences and practices in clarifying the standards for the target of protection, building according to demand, building a waiting pool, land guarantee, fund supervision, and allotment prices.

In terms of the target of protection, affordable housing focuses on wage-earning groups with housing difficulties and low incomes, as well as scientific and technological personnel, teachers, medical staff, etc. who need to be introduced into the city. In terms of allotment prices, adhere to the principle of “break-even and small profits”.

As one of the “three major projects”, the transformation of urban villages has also pressed the “accelerator”. Beijing, Xiamen, Chengdu and other cities announced the implementation of special loans for urban village renovation. Guangzhou issued the first urban village renovation regulations in the country. Shenzhen and other places issued implementation opinions on promoting urban village renovation. At present, 756 urban village renovation projects have been implemented in major cities, and they are being promoted and implemented in three categories according to the requirements of the Ministry of Housing and Urban-Rural Development.

“Actively and steadily promoting urban village renovation will help effectively solve the prominent problems of public health and safety risks, housing safety and fire safety hazards, backward supporting facilities, dirty and messy environment, etc. in urban villages, and continuously improve the living environment of urban village residents.” Zhang Hengzhi, second-level inspector of Jinan Housing and Urban-Rural Development Bureau, said.

Liu Lin said that the “three major projects” are important tools for driving investment and consumption at present and in the future. From the perspective of investment, it can form a large amount of direct investment and drive investment in related upstream and downstream industries; from the perspective of consumption, it can directly drive consumption of decoration materials, furniture and home appliances, tourism and leisure, etc.

Ni Hong, Minister of Housing and Urban-Rural Development, said that we must firmly grasp the basic point of ensuring that the people have a place to live, and make it the goal for the people to live in better houses. We should move from good houses to good neighborhoods, from good neighborhoods to good communities, and from good communities to good urban areas, and then plan, build, and manage the cities well to build livable, resilient, and smart cities, and strive to create high-quality living spaces for the people.