event
On May 17, 2024, at the regular policy briefing held by the Information Office of the State Council, the Ministry of Housing and Urban Rural Development, the Ministry of Natural Resources, the People's Bank of China and the State Financial Supervision and Administration jointly announced a series of major policy adjustments for the real estate market.
Comments
The introduction of these policies aims to cope with the complex situation of the current real estate market, ensure the smooth completion of the task of "ensuring the delivery of housing", promote the high-quality development of the real estate industry, meet the housing needs of the masses of the people, and help the economy recover. Comments are as follows:
1、 Key points of policy
Financial support and loan policy adjustment: The People's Bank of China has launched four core measures, including the establishment of 300 billion yuan of affordable housing refinancing to encourage banks to support local state-owned enterprises to purchase unsold commercial housing and turn it into affordable housing at a low cost interest rate of 1.75%; At the same time, the down payment ratio of the first set of housing was reduced to 15%, the down payment ratio of the second set of housing was reduced to 25%, the lower limit of the national housing loan interest rate was cancelled, and the interest rate of provident fund loans was reduced by 0.25 percentage points. This shows that the government is reducing the threshold for housing purchase and increasing market liquidity through both fiscal and monetary policies.
Safeguarding the rights and interests of house buyers: The Ministry of Housing and Urban Rural Development emphasizes that the protection of the legitimate rights and interests of house buyers should be put in the first place to ensure that the house is delivered according to the contract. For the uncompleted tail problem that is difficult to solve, it will be solved through legal means, giving priority to protecting the interests of buyers, which reflects the government's high concern for people's livelihood.
Optimized allocation of land resources: The Ministry of Natural Resources proposed to support local governments to recover and purchase idle residential land at a reasonable price, optimize the allocation of land resources, encourage enterprises to adjust their development strategies, promote the circulation of land market, respond to market changes, alleviate the pressure of real estate enterprises, and promote the healthy development of the industry.
Financial supervision and support mechanism: The State Administration of Financial Supervision and Administration has made it clear that it will treat the reasonable financing needs of different ownership real estate enterprises equally, establish green channels, optimize the loan process, implement the loan due, ensure that the funds are used to guarantee project delivery, and at the same time strictly supervise the project funds to prevent fund misappropriation.
2、 Market impact
Demand side stimulation: the reduction of down payment ratio and loan interest rate directly reduces the initial investment and long-term interest burden of house buyers, which will significantly stimulate the potential house purchase demand, especially the release of first-time house buyers and improvement demand, which is expected to increase market activity and accelerate inventory reduction.
Supply side adjustment: The policy encourages local state-owned enterprises to purchase unsold commercial housing at a reasonable price and turn it into affordable housing, which not only provides new sales channels for real estate enterprises, reduces inventory pressure, but also promotes the structural adjustment of the real estate market, which is conducive to balancing the supply and demand of different types of housing sources.
Improved market expectations: the positive signals of policies help to restore market confidence and stabilize expectations. On the one hand, buyers will be more willing to enter the market when they see the government's firm commitment to ensuring the delivery of houses; On the other hand, with financial support, developers can also obtain breathing opportunities, adjust strategies, avoid blind price reduction and promotion, and stabilize market prices.
3、 Industry impact
The industry reshuffle is accelerating: with the support of policies, real estate enterprises with tight capital chain but good project quality can get a break to continue operation or restructuring; The real estate enterprises with high debt and inefficient operation face greater challenges, accelerate market clearing, promote industry integration and optimize resource allocation.
Mode change: The efficient use of land and the circulation of stock housing market encouraged by the policy urge real estate enterprises to explore diversified development models, such as the transfer to the rental market, small family development, etc., to adapt to market demand, and promote the industry to transform from a single sales model to a diversified profit model.
Standardized operation: strict financial supervision and capital flow management requirements force real estate enterprises to improve financial transparency and compliant operation, which is conducive to the standardized and professional development of the industry in the long run, reducing illegal operations and enhancing market reputation.
4、 Economic and social impacts
Power of economic growth: the real estate industry is associated with many upstream and downstream industries. Policies to stabilize the real estate market will help stimulate the demand of building materials, decoration, household appliances and other related industries, and become an important power to promote economic growth.
Social stability and livelihood security: Strengthening the protection of the rights and interests of house buyers and ensuring the implementation of the "guaranteed delivery" policy are of great significance to maintaining social stability. Avoid the social contradictions caused by a large number of uncompleted residential buildings, ensure the safety of residents' property, and improve people's happiness.
Construction of long-term mechanism in the real estate market: The implementation of this series of policies is a key step in building a long-term management mechanism in the real estate market, balancing the need for short-term market rescue and long-term healthy development, and laying the foundation for the mature and stable development of the real estate market.
On the whole, this new real estate policy can not only activate the market in the short term and alleviate the plight of the industry, but also promote the structural adjustment and standardized development of the real estate market in the medium and long term, contributing an important force to economic and social stability. This policy easing is also rare in China's real estate history. The country's determination to promote the real estate industry and economic recovery has exceeded market expectations. The central government is very firm in its determination to stabilize the real estate market. If the real estate is unstable in the future, more policies may still be adopted. However, it should be noted that the relaxation of the real estate policy does not mean that the real estate will usher in a new round of prosperity. China is currently in the period of economic transformation, and the new driving force of the economy should come from the new quality productivity representing scientific and technological innovation, rather than the real estate and political credit system. Therefore, the relaxation of real estate this time may be closer to "trust rather than lift", so as to avoid excessive drag on economic development in real estate related fields and help the economy recover. To realize the transformation of economic momentum, the fundamental lies in scientific and technological innovation, the development of new quality productivity, and the construction of a modern industrial system and a new pattern of high-quality development.
Risk warning
1. Macroeconomic growth is less than expected;
2. Policy implementation was not as expected.
3. The recovery of the real estate was less than expected.
