Recently, the mainland government has made a new round of adjustments to the regulation and control policies of the real estate market to promote the healthy development of the real estate market. The latest tone set by the central government, the real estate destocking war has begun, which is to achieve the stability and sustainable development of the real estate market and ensure the housing needs of the people.
Under the current economic situation, the mainland government attaches great importance to the regulation and control of the real estate market. On the one hand, the government encourages all localities to adopt targeted policies and measures according to local conditions to increase the supply of the real estate market, improve the quality of housing supply, and meet the housing needs of people at different levels. On the other hand, the government has strengthened the supervision of the real estate market, curbed speculation and speculation, maintained market order, and ensured the smooth operation of the real estate market.
In order to effectively destock, the mainland government has taken the following measures:
- Optimize the structure of land supply, rationally arrange the supply of housing land, improve the efficiency of land use, and meet the diversified housing demand.
- Increase investment in the construction of affordable housing, expand the coverage of affordable housing, and ensure that the basic housing needs of families in difficulty are met.
- Support the development of the housing rental market, encourage enterprises and individuals to invest in rental housing, and provide diversified rental housing options.
- Improve housing finance policies, reasonably guide housing consumption, reduce housing costs, and improve residents' ability to purchase houses.
- Strengthen the supervision of the real estate market, crack down on violations of laws and regulations, maintain market order, and protect the rights and interests of consumers.
Through the implementation of these measures, the mainland government hopes to effectively destock and promote the healthy development of the real estate market. At the same time, the government will continue to pay attention to the changes in the real estate market and adjust policies according to the actual situation to ensure the stability and sustainable development of the real estate market.
In short, the latest tone set by the central government, the real estate destocking war has begun, which reflects the great importance that the mainland government attaches to the real estate market and cares about the housing needs of the people. We believe that under the strong regulation and control of the government, the mainland real estate market will usher in a healthier and more stable development.
On April 30, the meeting of the Political Bureau of the CPC Central Committee was held as scheduled.
There are two points worth paying attention to when it comes to real estate:
The meeting emphasized that it is necessary to continue to prevent and resolve risks in key areas, continue to adhere to city-specific policies, consolidate the responsibilities of local governments, real estate enterprises and financial institutions, and do a good job in ensuring the bottom line to protect the legitimate rights and interests of home buyers.
To put it simply, for the delivery of buildings, it may be necessary to "accountability" in the future, requiring local governments, real estate enterprises, and financial institutions to shoulder the responsibility, implement specific policies, and avoid "performative resumption of work".
This is a new formulation, so it has attracted a lot of attention. To digest the stock of real estate, simply put, is to destock. The term "destocking" first appeared at the 2015 Central Economic Conference, and now it is being re-proposed, what is the impact on the real estate industry?
Let's analyze it in detail.
Real estate inventories hit new highs
A new round of destocking wars is coming
The central government clearly proposed to destocked this time because the current real estate inventory has reached a new high, exceeding 718.53 million square meters in 2015.
The data shows that property inventory has been growing since 2020.
As of the end of February 2024, the inventory of commercial housing (including residential, office buildings, shops, etc.) nationwide reached 759.69 million square meters, a year-on-year increase of 15.9%. At the end of March, there was a slight decline, with an inventory of 748.33 million square meters, a year-on-year increase of 15.6%, of which residential inventory was 3,945.8 billion square meters, a year-on-year increase of 23.9%.
Comparison of the inventory of commercial housing in China over the years, data source: National Bureau of Statistics
Not only is the inventory high, but the destocking cycle is also getting higher.
According to the statistics of Shanghai E-House Research Institute, as of March, the inventory-to-sales ratio of newly built commercial residential buildings in 100 cities across the country was 25.3 months. Among the sample cities of 100 cities, 41 cities have a decommissioning period of more than 36 months, and most of them are third- and fourth-tier cities.
Source: Shanghai E-House Research Institute
On the whole, real estate destocking is already a last resort. It is expected that a series of policies will be introduced around destocking in the future.
For example, on April 30, the day of the Politburo meeting, the Ministry of Natural Resources issued the "Notice on Doing a Good Job in the Supply of Residential Land in 2024". The "Notice" requires reasonable control of the supply of new commercial residential land:
"If the de-conversion period of commercial housing exceeds 36 months, the transfer of new commercial residential land should be suspended, and at the same time, great efforts should be made to revitalize the stock until the de-conversion period of commercial housing falls below 36 months;
Cities with a period of 18 months (exclusive) to 36 months for the decommissioning of commercial residential buildings shall, in accordance with the principle of "how much to revitalize and how much to supply", dynamically determine the upper limit of the area of newly transferred commercial residential land according to the area of existing commercial residential land (including completion and resumption) that has been revitalized in the current year".
As mentioned above, there are now 41 cities with a de-conversion period of more than 36 months, but this is not an official standard, but the gap should not be too big, at least many cities may have to suspend land supply in the future, so as to avoid the old inventory not being depleted, and creating a bunch of new inventory.
In fact, as early as 2019, the Ministry of Natural Resources launched similar measures, but the implementation effect is not very obvious. However, this time the document is of great significance, and it is estimated that it will be mandatory, but the specific statistical standards have not yet come out, and it is estimated that more detailed standards will be introduced in the future.
But how to digest the stock of housing?
First, the state-owned assets will be withdrawn, and the stock of housing will be acquired and converted into rental housing and affordable housing.
For example, Zhengzhou will begin to acquire stock housing for talent apartments in 2022, but there are not many cities in the country to follow up, and other cities are expected to follow up after this blockbuster meeting sets the tone.
In addition to bulk acquisitions, for second-hand housing, many cities have been led by the government to launch the "old for new" model, such as Jiangsu, where many cities have launched this policy.
Taking Taicang City as an example, citizens can sell eligible second-hand houses to designated state-owned companies, and then replace them with new houses designated by state-owned companies, and the old houses purchased are used for talent apartments and affordable housing supply.
In general, one is to directly purchase new houses in the hands of developers in batches, and the other is to purchase second-hand houses in the hands of citizens. Because the government also wanted to vigorously build affordable housing, now there is a ready-made stock of housing, which is directly transformed into affordable housing after acquisition, which is more efficient and can well solve the current high inventory problem.
The only thing that this policy has to address is the issue of funding sources. However, now that the state has proposed to vigorously destock, it is believed that it will still provide funds for local governments through bond financing.
Second, it is necessary to remove all kinds of restrictive measures and speed up market circulation.
After the Politburo meeting, the Beijing Housing and Urban-Rural Development Commission immediately issued a document to relax the purchase restrictions outside the Fifth Ring Road, which is the first adjustment since Beijing's housing restriction policy.
In addition to Beijing, Tianjin also announced the lifting of the purchase restriction of more than 120 square meters. The hot city of Chengdu officially announced the full relaxation of purchase restrictions. Up to now, among the first- and second-tier cities, Guangzhou, Tianjin, Suzhou, Chengdu, Suzhou and many other cities have canceled or partially canceled purchase restrictions.
It is expected that Shanghai and Shenzhen will also follow suit, and it is expected that the purchase restrictions will be lifted either by region or by unit size.
Previously, Ming Yuanjun analyzed in the article "Cancellation of Purchase Restrictions, Real Estate is Really Turning!", the first and second-tier cities will greatly accelerate the speed of market circulation by breaking the purchase and sale restrictions. On the one hand, the lifting of purchase restrictions in the first and second tiers will encourage cross-regional/cross-city housing demand. On the other hand, the lifting of purchase restrictions has encouraged the demand for buying multiple suites, and the core is to encourage rich people to buy more.
In addition to the liberalization of purchase restrictions, more policies are also worth looking forward to in the future, including a significant reduction in mortgage interest rates and further reductions in the cost of buying a house.