On May 17th, the blockbuster new real estate policies were introduced one after another! Lower down payments, lower mortgage interest rates, support government collection and storage, promote the financing white list of real estate enterprises, and revitalize idle land...... A series of new policies have been implemented at both ends of real estate supply and demand.
Among them, the "300 billion yuan of affordable housing re-lending to support government collection and storage" as an important measure of the central bank to support the construction of a new model of real estate development, has attracted attention from all walks of life.
As the focus of real estate regulation policy shifts to "destocking", can the government's mode of purchasing and storing commercial housing be rolled out on a large scale in the future and truly alleviate the pressure on cities with high inventory in the property market? In addition to the central bank's 300 billion, what are the possible sources of funding? Will large-scale acquisition and storage of commercial housing increase local debt risks?
300 billion funds to help "destocking"
At present, the focus of real estate regulation policy has shifted to "destocking".
On May 17, in the national video conference on the work of ensuring the delivery of housing, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, emphasized: "In cities with more commercial housing inventory, the government can order and purchase some commercial housing at a reasonable price as appropriate. ”
On the afternoon of the same day, the State Council Information Office held a regular briefing on the policies of the State Council, at which it explained in detail the detailed plan to help destocking through the government's acquisition model.
Tao Ling, deputy governor of the People's Bank of China, said that 300 billion yuan of affordable housing refinancing will be set up to encourage and guide financial institutions to support local state-owned enterprises to purchase completed and unsold commercial housing at reasonable prices in accordance with the principles of marketization and rule of law, and use them as affordable housing for sale or rent, which is expected to drive bank loans of 500 billion yuan.
Specifically, the interest rate of 300 billion yuan of affordable housing refinancing is 1.75%, with a term of 1 year and can be extended 4 times, and the issuance objects include 21 national banks, which can issue loans in accordance with the principle of independent decision-making and risk.
Tao Ling emphasized that the commercial housing acquired is strictly limited to the commercial housing that has been completed but not sold by real estate enterprises, and real estate enterprises with different ownership systems are treated equally. The city government shall select a local state-owned enterprise as the acquisition entity, and the state-owned enterprise and its affiliated group shall not be involved in the hidden debts of the local government, and shall not be a local government financing platform, and shall be promptly placed or leased after the acquisition.
Tao Ling said that this policy is an important measure issued by the People's Bank of China to support the construction of a new model of real estate development, which can not only promote the destocking of the commercial housing market and accelerate the supply of affordable housing, but also help ensure the delivery of buildings and the "white list" mechanism - after real estate enterprises sell completed commercial housing, the funds can be used to continue the construction of projects under construction and improve the financial situation of housing enterprises.
At the meeting, the person in charge of the relevant department also said that the role of the urban real estate financing coordination mechanism will be further played to meet the reasonable financing needs of real estate projects, and the city government will promote the projects that meet the conditions of the "white list" to "go all in", and commercial banks will "borrow as much as possible" for the compliant "white list" projects to meet the reasonable financing needs of projects under construction. As of May 16, 297 cities at and above the prefecture level across the country have established a real estate financing coordination mechanism, and commercial banks have approved the "white list" project loan amount of 935 billion yuan in accordance with the internal approval process.
The Ministry of Natural Resources said that it will strictly dispose of idle land in accordance with the law, and increase support for the revitalization and utilization of stock land, and intends to support local governments to recover stock idle land from three aspects: funds, taxes and fees, and allocation processes.
Chen Li, a real estate industry analyst at Huafu Securities, told Yicai that the policy statement has played a positive role in both supply and demand in the real estate industry, and the minimum down payment ratio has been lowered and the lower limit of mortgage interest rates has been cancelled, and a more relaxed policy environment is expected to further boost the demand for home purchases; On the supply side, the central bank has set up a 300 billion yuan re-loan for affordable housing, effectively digesting the market stock and increasing the supply of affordable housing through the acquisition of completed and unsold commercial housing.
At least 14 cities have collected and stored commercial housing
The government's purchase and storage of commercial housing is regarded as a new "big move to stabilize the property market", but Yicai noticed that some local governments or state-owned enterprises have been collecting and storing commercial housing in batches for public rental housing, which has been carried out for more than two years.
According to Yicai statistics, from 2022 to the present, the government or local state-owned enterprises in at least 14 cities (or districts and counties under prefecture-level cities) have purchased and stored commercial housing for affordable rental housing or talent apartments.
These areas include Jinan, Wenzhou Lucheng, Luoyang, Fuzhou, Changsha, Suzhou, Nanyang, Hohhot, Qingdao, Tianjin, Zhengzhou, Shaoxing Yuecheng, Hangzhou Lin'an and Dali.
As early as 2022, a number of cities have issued documents proposing the public acquisition of commercial housing or commercial housing for use as affordable rental housing, resettlement housing, etc.
Urban Development Group, a local state-owned enterprise in Lucheng District, Wenzhou City, issued the "Notice on the Acquisition and Raising of Affordable Rental Housing Housing" several times in 2022, completed the raising of 243 units in the first half of that year, and successfully completed the raising and online signing of 295 units before September 30.
In September 2022, Jinan Urban Development Group also announced that it would acquire 3,000 commercial houses in the city for rental reserve housing, and the project will be funded by self-raised funds. In March 2023, Guosheng Group, a local state-owned enterprise in Luoyang, also announced the raising of 5,000 commercial houses for rental housing, exploring the implementation of a new model of rent-to-sell and rent-purchase at the same time, moderately revitalizing the stock of commercial housing, and solving the housing problems of new citizens, young people, low-income people and other groups.
In October 2022, Suzhou announced plans to "repurchase some new housing projects in a targeted manner", involving about 10,000 units of commercial housing in 6 districts and 4 counties. At that time, the relevant person in charge of a project in Suzhou Poly told the first financial reporter that part of the project was collected and stored as a whole and used as a talent apartment.
At the beginning of 2023, the People's Bank of China created a 100 billion yuan rental housing loan support program to promote the development of the housing rental industry. At the briefing on the afternoon of the 17th, the relevant person in charge of the People's Bank of China also mentioned the rental housing loan support plan, saying that the plan will be incorporated into the affordable housing refinancing policy for management.
At that time, the plan selected Chongqing, Jinan, Zhengzhou, Changchun, Chengdu, Fuzhou, Qingdao, Tianjin 8 cities for pilot, financial institutions can be in accordance with the principle of independent decision-making, bear their own risks, issue rental housing loans, loan interest rate in principle does not exceed 3%, for loans that meet the requirements, the People's Bank of China according to 100% of the loan principal to provide financial support, the interest rate is 1.75%.
Yihan Think Tank believes that these pilot cities have a common feature - the urban population is large, the inventory of new houses is large, and the urban energy level is not bad, but it is also a fact that the property market has been "sluggish" in recent years.
From the perspective of the projects that have been collected, in the past, the acquisition and storage of state-owned assets mainly solved the acquisition of projects in areas with high stock and difficult to de-industrialization in new towns and suburbs, so as to improve their market perception of high stock, low de-industrialization and high risk.
The use of state-owned assets to store commercial housing, in addition to public rental housing, there are also cities for "old for new", the model is that after the local state-owned assets purchase commercial housing, residents who want to change houses through the official platform designated by the government, register the old house, select the new house, wait for the valuation, and make follow-up payments if they are satisfied, and the purchase and sale are completed through the official platform, which improves the efficiency of replacement.
The issue of funding may be useful for learning from foreign experience
The advantages of the government's commercial housing model are obvious: it can reduce inventory levels, alleviate the downward pressure on the real estate market, and put these houses into affordable housing, but also achieve some of the goals of the "three major projects".
But can this model be rolled out on a large scale in the future, and where will the money come from?
Recently, Tianfeng Securities said in its research report "Is it feasible for the government to collect and store houses", it is estimated that the policy of collecting and storing houses needs to be reduced to 770 million square meters and the residential cycle to less than 18 months in order to play a role in supporting the market, and the funds required for this are about 7 trillion.
The reporter counted the sources of funds for the collection and storage of commercial housing in the past 14 cities, and found that in addition to the "100 billion yuan rental housing loan support plan" from the central bank, many cities chose to work hard to raise funds by themselves.
For example, in the past, Zhengzhou's acquisition funds were 20% of the project capital and 75% of the bank loans, and the remaining shortfall came from financial subsidies and national policy special loans. The source of funds for the acquisition in Suzhou is the funds of local state-owned enterprises in various districts and counties; Changsha used the CPF appreciation income.
CRC Research Center believes that in the past cases of government acquisition and storage of commercial housing, local finance, rental housing loan support plan, and self-raised funds of urban investment platforms are the three major sources of funds, but the scale is limited after all, and now, the central bank has set up a 300 billion yuan affordable housing reloan, which will become a new source of funding supplement.
"However, it should be pointed out that the scale of 100 billion funds is still not enough to implement large-scale government collection and storage across the country, and it is estimated that the funds needed to achieve this goal may exceed 5 trillion yuan." CRIC believes that the government's storage model may not be rolled out on a large scale, and it is likely that it will only be implemented in cities and regions with high inventory and large affordable housing gaps, and the effect of destocking is difficult to achieve the monetization of shantytown reform in the year.
Tianfeng Securities Research Report said that the collection and storage funds will most likely be obtained by continuing to borrow, but the collection and storage will directly increase the asset-liability ratio of local governments or urban investment platforms, and may also reduce the capital turnover rate of local governments or urban investment platforms, resulting in a further decline in the return on assets of local governments or urban investment platforms.
"At present, it is true that some local governments are facing financial difficulties. Generally speaking, first-tier and strong second-tier cities have relevant funds or financial allocations for the construction of public rental housing every year, and these cities will originally use the money to acquire land for the development and construction of rental housing through state-owned platforms, and there is no need to start from scratch in the future, and part of the money can be used to acquire existing stock housing. However, this is limited to first-tier cities and strong second-tier cities to have such financial support. Zhang Hongwei, founder of Jingjian Consulting, told Yicai.
Zhang Hongwei said that in the future, the issuance of special treasury bonds can also be considered, its interest rate is very low, banks can invest funds in the purchase of stock housing in various cities, and local governments are responsible for reporting the target of purchasing stock housing and summing it up to relevant departments.
"In fact, this is similar to the foreign 'affordable housing bank', in the past, many countries, including some developed countries, in the face of economic crisis pressure, real estate inventory and other problems, have been at the national level to buy the stock of housing in the market, to achieve the goal of destocking, there is still a lot of experience to learn from." Zhang Hongwei told the first financial reporter.
In the field of "public housing banks", Japan, the United States, India, Brazil and other countries have developed their own models to solve the housing problems of low-income families The most fundamental starting point for public housing banks. In addition to promoting housing and livelihoods, public housing banks are also used to regulate real estate volatility and calm economic cycles, and are often used by governments as a financial tool to implement monetary policy in the real estate sector.
Guojin Securities said that the key point of the government's storage model is still the problem of funds, the current local government bond issuance space is limited, only some developed areas can continue to increase leverage, the storage model needs a larger scale of funds, and the follow-up is expected to PSL, special bonds, special treasury bonds, etc. will be the source of funds for this round of inventory.
The operation and management capacity of rental housing needs to be improved urgently
Another major problem faced by the government's commercial housing model is the operation and management of the post-acquisition model, and how the revenue covers the cost to test whether the model can be sustained.
CRIC believes that the current rental return rate in most cities is only about 2%, and even with low-cost capital, it is not easy to balance the balance of income and expenditure considering the operating costs. If this problem cannot be solved, then the large-scale purchase and storage of commercial housing will only transfer the inventory risk from the real estate enterprise side to the government side, and will not substantially resolve the risk.
Zhang Hongwei also pointed out that in the operation and management of rental housing, most local urban investment platforms have never set foot in this field, and their capabilities are lacking.
"The rental housing market has experienced a round of thunderstorms, and now the market is gradually returning to normal, and many companies have grown up and have rich operational experience. Moreover, many private real estate enterprises are now vigorously developing their asset-light business, including agent construction, rental housing escrow, etc., and the rental housing business of some enterprises has actually expanded rapidly in the past two years, mainly asset-light. Therefore, in terms of the operation and management of rental housing, local urban investment platforms can first rely on external forces and find professional companies to operate on their behalf. After two to three years of gradual growth, you can also operate yourself. Zhang Hongwei suggested.
Bai Wenxi, chief economist of IPG China, believes that in the acquisition process, it is necessary to establish a sound supervision and management system to ensure transparency and fairness, and strengthen the supervision and review of the decision-making process through public bidding and bidding for the acquisition of existing houses. In the follow-up asset management, the local government should formulate specific implementation rules and management procedures in accordance with the guiding principles and methods for the management of state-owned assets, so as to ensure that the rental housing project can effectively serve the goal of housing security while maintaining good operating conditions.
Zhang Hongwei said that in the selection of projects, state-owned assets should be selected as much as possible to choose projects with good location conditions, convenient transportation and surrounding industrial foundation, so that there will be fewer problems in subsequent operations.
(This article is from Yicai)
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