The government work report proposes optimizing real estate policies and measures to stabilize the property market are expected to continue to be introduced this year.
This year’s government work report still lists resolving risks in the real estate industry as one of the government’s tasks, and proposes to optimize real estate policies, support the reasonable financing needs of real estate companies of different ownerships equally, and promote the stable and healthy development of the real estate market.
Analysts said that whether from the perspective of real estate companies or the demand side, real estate support policies are expected to continue to increase this year. If various policies are adjusted in time, the market is expected to see a trend recovery in the second half of the year, thus ending the downward cycle of the past three years.
When interpreting the government work report, Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, pointed out that this report overall continues the tone of the Central Economic Work Conference at the end of 2023 regarding risk prevention. The difference is that the Central Economic Work Conference at the end of last year proposed “continuously and effectively preventing and resolving risks in key areas”, while this report proposed “proper and orderly handling of hidden risks.”
Optimizing real estate policies
He said that this means that risks in the real estate field are spreading, and may spread to companies with stable operations and even the entire industry. “Risk points, especially the risk of debt default of real estate companies, must be dealt with in an orderly manner, including corporate self-rescue, debt restructuring, mergers and acquisitions, bankruptcy liquidation, etc., to avoid the outbreak of systemic risks.” He said.
Lian Ping, president and chief economist of Guangkai Chief Industry Research Institute, also said that the current real estate market risk is mainly the liquidity risk of real estate companies. Although the risks of some leading real estate companies have been improved, poor housing sales have reduced the operating income of real estate companies. The continued decline has made market-oriented financing more difficult. More than 40% of listed real estate companies have a cash-to-short-term debt ratio of less than 1, and the overall asset-liability ratio of real estate companies is at a high level of over 70%. The risks of real estate companies are still worrying.
It is worth noting that the statement “the reasonable financing needs of real estate enterprises of different ownerships must be supported equally” has been placed at the top of the list of optimizing real estate policies.
Zhang Bo, president of 58 Anjuke Research Institute, told Jiemian News that since this year, various support policies have been intensively implemented. Recently, cities at all levels and above have established regional financing coordination mechanisms to effectively coordinate on the basis of completing the “white list” push. Solve the difficult problems on the project financing side.
The government work report proposes optimizing real estate policies
On January 26, the Ministry of Housing and Urban-Rural Development held a deployment meeting for the urban real estate financing coordination mechanism, requiring all localities to promptly propose a list of real estate projects for financing support. As of February 28, 276 cities in 31 provinces across the country have established urban financing coordination mechanisms, and a total of about 6,000 real estate projects have been proposed. Commercial banks have quickly screened projects and approved loans exceeding 200 billion yuan.
The report also proposes to improve the long-term mechanism for risk prevention and control, adapt to new urbanization development trends and changes in the supply and demand relationship in the real estate market, and accelerate the construction of a new model of real estate development. Increase the construction and supply of affordable housing, improve basic systems related to commercial housing, and meet residents’ rigid housing needs and diversified improved housing needs.
“Currently, to stabilize the real estate (industry) and control the spread of industry risks, financing support and demand-side stimulation alone cannot solve the problem. We must rely on a long-term mechanism. And this long-term mechanism is the new model of the industry, which is to adapt to the needs of new cities and towns. In the process of globalization, we will create a new supply model to meet the demand of 300 to 400 million new citizens, young people, working-class people, and talent groups for low-cost, well-equipped, and well-located rental housing and property-rights housing,” Li Yujia said.
He said that for new urbanization, in addition to accelerating the urbanization of the agricultural transfer population, it is more about improving the quality of urbanization for people who have entered cities, including promoting the construction of “both leisure and emergency” public infrastructure, urban village renovation, old The installation of elevators and aging-friendly facilities in the community focuses on utilizing existing resources and making up for shortcomings in the existing structure.
Analysts pointed out that in addition to continuing to promote the urban real estate financing coordination mechanism and increasing financing support for private housing companies, the later policy “toolbox” still has considerable room for lowering the threshold for home purchase and lowering residential mortgage interest rates.
Chen Wenjing, market research director of the China Index Research Institute, pointed out to Jiemian News that it is expected that various regions will maximize their regulatory autonomy and implement policies according to cities and needs. First-tier cities are expected to continue to optimize purchase restriction policies, second-tier cities may fully liberalize purchase restrictions, and core cities are reducing There is still a lot of room for down payment ratio and lower mortgage interest rates.
Wang Qing, chief macro analyst of Oriental Jincheng International Credit Rating Co., Ltd., said that as marked by the separate reduction of the market prime rate (LPR) for loans with maturities of more than 5 years on February 20, real estate support policies are expected to be significantly increased this year. The focus of the next step is to lower the lower limit of interest rates for residents’ first and second home loans. Even if the policy interest rate remains stable in 2024, targeted interest rate cuts for real estate will continue to advance.