Yi Xianrong: Four major real estate models for China to learn from

Source: Global Times

What are the more typical real estate market development models in the world today?

In general, the development model of the real estate market depends on the positioning of the real estate market. For example, the United States positions the housing market as a market where every resident can have a safe and comfortable home. Therefore, the United States not only solidifies the positioning of the residential function of the real estate market in the Housing Law, but also implements this positioning into relevant systems, laws and policies, and implements a market-oriented housing security model. The living standard of residents is high, the housing ownership rate of residents is high, the housing rental market is relatively developed, and the proportion of affordable housing provided by the government is not high. It should be said that the overall operation of the US model is successful, but the proportion of affordable housing is not high, and the excessive emphasis on marketization is also easy to be used by speculators, making housing a money-making tool and triggering a financial crisis. This is the main flaw of the American model.

The positioning of housing and living functions in European countries such as Germany is even more absolute. The German Constitution clearly stipulates that guaranteeing the basic living conditions of the population is one of the primary policy objectives of the Federal Government. The purpose of the German real estate market is to build housing that meets the needs of the majority of residents in terms of area, layout and rent, and clearly stipulates that the German real estate industry is not a tool to promote economic growth, but an industry that guarantees the continuous improvement of residents' living welfare. The real estate market completely rejects speculation on real estate. The German model ensures that the real estate market has been stable for decades, house prices are stable (house price growth is much lower than the CPI increase), and the basic living conditions of residents are met. The German model is currently the most successful real estate development model.

Singapore and Hong Kong are very special in their positioning of the property market. Although the targets of the housing market positioning in the two places are not much different, and both hope that the government will fully intervene to ensure the basic living conditions of residents who do not have the ability to pay to enter the real estate market, the two places have different arrangement systems and their effects are also very different.

After the establishment of the Autonomous Government in Singapore in 1959, it was soon decided to give priority to housing construction, enacted the Housing Development Act, which first institutionalized the social function of housing, and in 1964 launched the "Home for Home" scheme, which aims to provide public housing for residents who do not have the ability to pay to enter the real estate market. Its real estate market development model is: housing is divided into "HDB flats" and private homes. HDB flats are low- and middle-income groups provided by the Government through the Housing and Development Board, accounting for more than 80% of the total housing, and private housing is invested by private real estate developers and supplied to affordable housing buyers at market prices, accounting for less than 20%. HDB flats emphasize the social and residential functions of housing, while private houses emphasize the economic function of housing, which can be consumed or invested. It is precisely because Singapore can use the law to strictly distinguish and define the attributes and functions of housing, and define the vast majority of housing in terms of residential functions, which makes Singapore's real estate market continue to develop steadily, and the housing welfare level of residents continues to improve. However, as Singapore is a city-state with a relatively affluent economy and a small population, the government is fully financially in a position to continuously provide more and better public housing for its residents.

The Hong Kong model is a rather unsuccessful case. The British government of Hong Kong has launched housing schemes such as the "Ten Years Housing Plan", hoping to help residents who do not have the ability to pay to buy housing in the real estate market through the full intervention of the government to provide public housing. Since the 1950s, a number of public housing estates have also been built in Hong Kong. But because Hong Kong's legal system has not given a clear orientation to the attributes of housing from the beginning. In the real estate market outside of public housing, housing can be both consumed and invested, and speculative speculation restrictions on housing only emphasize pre-emptive restrictions, rather than ex-post and ex post-mortem restrictions. This made the Hong Kong private housing market finally become a speculative market, the investment function of housing was also played to the extreme, and housing prices soared rapidly, which ostensibly ensured the government's land finance and stable economic growth, but at the expense of damaging the housing welfare level of Hong Kong residents.

In the early days of the mainland's real estate market reform, the development model mostly referred to Hong Kong, on the one hand, taking into account that the Hong Kong model could solve the housing crisis at that time to a certain extent, and also allowed the real estate market to become a tool to stimulate economic growth, on the other hand, it also took into account that the local government at that time lacked the financial capacity to build a large number of affordable housing. Today, with the economic and social changes and multiple rounds of policy adjustments, the development model of the mainland real estate market can be said to be three points of the world, that is, under the premise that the real estate market is positioned as a market dominated by residential functions, according to the attributes of the housing itself, the housing is strictly defined as 10% of the affordable housing, 70% of the residential consumer housing, and 20% of the investment and consumption of the combination of housing.

For such a real estate development model, the first is why it is necessary to establish 10% affordable housing. This is mainly due to the consideration of the government's financial capacity, if the proportion is too high, the government is not able to provide a higher proportion of public housing. Of course, affordable housing can also be a variety of ways. The second is why 20% should be excluded as an investment and consumption housing market. Because this housing market mainly includes three aspects, commercial housing, high-end housing and commercial rental housing. This is an integral part of the real market. The third is the 70% absolute consumer housing market. The purpose of this market is to enable the vast majority of residents to obtain housing that meets the basic living requirements through market-oriented means. This market is also multi-layered, from high-end to low-end; the way to obtain residential functions is diverse, such as purchase and leasing. The consumptiveness of living here is absolute, completely removing the money-making feature of housing transactions. Therefore, once the real estate market development model positioned as dominated by residential functions is established, it is necessary to clearly and comprehensively define before, during and after the event through land, finance, taxation, investment, etc., each with its own place and insurmountable. The policy of the real estate market also needs to be derived from this. Only in this way can China's real estate market take the road of sustainable development. (The writer is a professor at the School of Economics, Qingdao University)