Meng Xiaosu, former head of the national housing reform research group, responded to ten questions about real estate.
From July 24th in Politburo meeting of the Chinese Communist Party to the recent entrepreneurs’ forum held by the Ministry of Housing and Urban-Rural Development, the multiple positive news about stimulating the real estate market frequently aroused social concern. Among them, topics such as how to ensure the delivery of housing pre-sale, when to reduce the interest rate of stock houses, and the adjustment of restrictive housing purchase policies in first-and second-tier cities have been hotly debated, and there are also many misunderstandings.
With all kinds of questions about these hot topics, the reporter from Chengdu Business Daily-Red Star recently had an exclusive conversation with Meng Xiaosu, the former chairman of China Housing Group and the former head of the national housing reform research group, who has the title of "the father of affordable housing in China", and made an in-depth interpretation of the top ten hot real estate topics.
"The relationship between supply and demand in China real estate market has undergone major changes"
On July 24th this year, the Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting to analyze and study the current economic situation and plan economic work in the second half of this year. When talking about the real estate market, it was clearly stated at the meeting for the first time: to adapt to the new situation that the relationship between supply and demand in the real estate market in China has undergone major changes, adjust and optimize the real estate policy in a timely manner. Make good use of the policy toolbox because of the city’s policy, better meet the rigid and improved housing needs of residents, and promote the stable and healthy development of the real estate market. At the macro level, what new features does China’s real estate market present? Facing the new development situation, how can we boost the confidence of the real estate market?
One question: "housing and not speculating" is no longer applicable to the present?
The positioning of "housing and not speculating" has not changed.
Q: How should we understand the current supply and demand situation of the real estate market?
A: The real estate market has indeed undergone major changes, but we can’t simply say that "the supply of real estate exceeds demand" because we all look at the market under the state of restricted purchase. It’s like counting traffic on a closed road and counting passengers in a closed shopping mall. How can it reflect the real supply and demand situation? In my opinion, to accurately judge the real relationship between supply and demand in the real estate market, we must wait until after "opening roadblocks" and "reopening shopping malls". Only by releasing the restrictive conditions can we judge the normal relationship between supply and demand.
Q: Compared with Politburo meeting of the Chinese Communist Party on April 28th, there was no mention of "staying and not speculating" at the meeting on July 24th. Some people thought that this meant that "staying and not speculating" had changed?
A: The positioning of "housing and not speculating" has not changed. The central government emphasizes that "houses are for living, not for speculation", which not only emphasizes the residential property of houses, but also does not deny the wealth value property of real estate. What we should guard against is real estate speculation and curb real estate speculation. However, it should be pointed out that there have been some misunderstandings about "living in a house without speculation", and at least three wrong interpretations have been formed by over-exerting it — — First, it is interpreted as "the house is for living, not for ‘ Buy ’ ",restricting residents from buying houses; The second is interpreted as "the house is for living, not for ‘ Sell ’ ",restricting the development of enterprises to sell houses; Third, it is interpreted as "the house is for rent, not for sale", which violates the policy of "both rent and sale". I think we should return to the origin, adhere to the positioning of "houses are for living, not for speculation", and promote the stable and healthy development of the real estate market.
Second question: Will the adjustment of purchase restriction and loan restriction be a trend in more cities?
Restrictive requirements shall be stipulated separately in the "Policy for the City"
Q: According to the statistics of the Central Finger Research Institute, in the first half of 2023, more than 100 places have introduced real estate control policies over 300 times. According to the current situation of the real estate market, there is a voice that "first-and second-tier cities should completely cancel the restrictions on purchases and loans"?
A: The current situation of the real estate market is mainly due to restrictions. In some places, "policy fallacy of composition" and "policy decomposition fallacy" are formed, resulting in insufficient market confidence, which is a comprehensive effect of mutual influence. "Restricted purchase" was implemented when the real estate was overheated, and now the situation in the property market has changed. According to the requirements of "city-specific policy", restrictive requirements can be stipulated separately in some cities and certain sections.
Three questions: When will the series of favorable policies be effective?
"Real estate policy adjustment usually has a lag period of 9 months"
Q: From lowering interest rates to lowering down payment to liberalizing purchase restrictions in some areas, how did the property market react after many favorable policies for real estate were frequently laid out?
A: The real estate policy is different from other economic policies, and it takes a long time. Experience tells us that the lag period of real estate policy is generally around 9 months.
Q: Is there still resistance to the recovery of the real estate market?
A: "The property market economy is a confidence economy". Now the requirements of the central government to adjust the real estate policy have not been put in place in some places. Many restrictive measures issued during the "overheating" period of real estate have not been adjusted, which is the biggest obstacle to the recovery of the real estate market. Although the financial sector has launched a number of preferential credit policies at present, they are all "non-core policies" in the property market policy and belong to auxiliary policies.
How to make people dare to buy a house and live in a down-to-earth manner?
"Promoting the stable and healthy development of the real estate market" has been mentioned by the central authorities many times. In recent years, property buyers also have a loud voice to resolve the risk of buying a house and cancel the pool area. How to make ordinary people dare to buy a house and live in a down-to-earth manner is also an important part of boosting confidence in buying a house.
Four questions: Should the pool area of commercial housing be abolished?
"It’s useless to cancel the pool."
Q: In recent years, there has been a loud voice from the people to cancel the pool of commercial housing. In July this year, Hefei, Anhui Province also said that it would "explore the pricing of commercial housing sales according to the interior area". In your opinion, should the market cancel pooling?
A: I have always been indifferent to the idea of canceling the pool. What really benefits the people is to improve the dual-track housing system and provide affordable housing for low-income families. The pool area is the difference between the building area and the usable area, including outdoor corridors, public stairs, public halls, elevators, etc., which are all parts of the house. Cancelling the pool is just to change the building area before the pool into the usable area after the pool, and change the pool from "dominant existence" to "invisible existence". It is impossible to cancel it, but the algorithm is different.
Q: Can exploring pricing by interior area be implemented in multiple cities?
A: What people want is to cancel the pool area. But the pool area can’t be without, and houses can’t exist alone. The cancellation of the pool will not reduce the total house price, and the spread price should be included in the remaining usable area. Property buyers may not get any benefits, but the room area is much smaller and the unit house price has increased a lot. Personally, I think it’s useless to cancel the pool. Just mark the pool area clearly. It’s a common practice in China to measure the construction area, and all statistical data are based on the construction area. Of course, the pool area involves building codes and cannot be changed at will, and the design and construction should be more reasonable.
Five questions: Should the pre-sale system of commercial housing be stopped?
"House prices may rise, and the development capacity of housing enterprises will decrease"
Q: In order to prevent the uncompleted development of real estate, there is a great call from the public to cancel the pre-sale system of commercial housing. Many areas have also begun to pilot the existing home sales system. In your opinion, should the pre-sale system of commercial housing be cancelled?
A: The "pre-sale system" is an effective practice formed by drawing lessons from overseas experience in the process of commercial housing development in China. Through the early intervention of house buyers, the problem of project construction funds can be solved, and at the same time, house buyers can buy houses in advance at preferential prices. It is possible to carry out the "existing home sales" pilot on some projects, but the house price will definitely be higher than the pre-sale.
In my opinion, it is not feasible to "completely cancel the pre-sale system", which means that development enterprises have to bear more capital costs and risk costs, and these costs have to be borne by buyers through sales, and house prices will rise and development risks will increase. For housing enterprises with less abundant self-owned funds, if there is no pre-sale system, it will be difficult to turn over funds. Both "existing home sales" and "pre-sale system" should be allowed.
Q: For consumers who buy faster houses, what aspects of system construction need to be improved to reduce the risk of buying houses?
A: There is not much problem with the pre-sale system itself. The problem lies in the management and use of the pre-sale housing funds. There are unfinished buildings in the pre-sale houses, which are all problems with supervision. At present, the pre-sale of houses is supervised by a third-party organization, but some supervision is weak, and the housing enterprises have moved the pre-sale to other places; Others are too dead, so that the project construction does not use the advance payment. Both tendencies will make it difficult to "guarantee the delivery of the building" I think a more reasonable way is for the group of property buyers to conduct second-party supervision. Property buyers have a direct interest in the timely delivery of houses, which can avoid illegal misappropriation of funds by real estate enterprises.
Six questions: Will reducing the down payment ratio lead to financial risks?
"It is reasonable to make a down payment of around 20%"
Q: Ni Hong, Minister of Housing and Urban-Rural Development, stressed at the enterprise symposium held at the end of July that policies and measures such as reducing the down payment ratio and loan interest rate for purchasing the first home should be further implemented. If the total house price remains unchanged, will lowering the down payment ratio lead to financial risks?
A: When the housing mortgage loan was designed in that year, the down payment ratio matched the bank risk. However, in the later real estate regulation and control, mortgage loan, a financial lever convenient for ordinary families to buy houses, became a means to regulate the purchasing power of the property market, which deviated from the origin of this loan to some extent. The normal proportion of down payment for housing mortgage loan is 20%. The down payment ratio should follow the principle of matching with the bank risk. If the down payment is too low, the bank risk will increase. However, if the down payment is set too high, it will increase the pressure on residents and make it difficult to help ordinary families buy houses.
How to protect the housing rights and interests of people who have bought houses and low-income groups?
To promote the stability and health of the real estate market, it is necessary to boost the confidence of new home buyers. The adjustment of the interest rate of existing houses and the housing rights and interests of low-income groups have also attracted much attention.
Question 7: When and how much will the interest rate of the stock house be lowered?
"It should be adjusted to the current level required by the central bank"
Q: On July 14th, Zou Lan, director of the Monetary Policy Department of the Central Bank, said that he supported and encouraged commercial banks to negotiate with borrowers to change their contractual agreements independently, or to issue new loans to replace existing loans. On August 1, the central bank made another statement at the working meeting in the second half of 2023: guiding commercial banks to adjust the interest rate of existing individual housing loans in an orderly manner according to law. Should the central bank issue a mandatory document to reduce the interest rate of stock houses?
A: According to the central bank’s policy, there are only two ways to lower the interest rate of the stock house, either the two parties directly modify the contract or reissue the loan to replace the original loan. In fact, the essence of these two practices is the same. It is the simplest to modify the contract directly, and there is no problem of violating the contract. In the past, the adjustment of the interest rate of stock loan banks was synchronized in accordance with the provisions of the central bank. It is enough for the central bank to encourage and support commercial banks to reduce interest rates on existing mortgages, and banks will have to accept market-oriented choices in the future.
Q: If the interest rate of stock houses is lowered, how much is appropriate?
A: I personally think that the interest rate should be lowered according to the current regulations. No matter what the loan interest rate was in the past, it should be lowered to be consistent with the interest rate stipulated by the central bank.
Eight questions: Why is the new round of urban village reconstruction concentrated in mega-cities
"The population gathering and the shortage of affordable housing are more prominent."
Q: In the past three months, the transformation of villages in cities has been mentioned by the central authorities many times. Why is the new round of reconstruction of villages in cities concentrated in mega-cities and mega-cities?
A: The transformation of villages in cities is actually a special business in the transformation of old cities. The reason why we should concentrate on mega-cities is because there is a general shortage of houses in those cities, especially the demand for affordable housing is in short supply. For example, in Shenzhen, many migrant workers rent in low-cost villages in the city, and the government is trying to increase the construction of affordable housing, but the relationship between supply and demand is still tense. In third-and fourth-tier cities, this contradiction between supply and demand is not so obvious.
Q: Will this round of urban village reconstruction boost housing prices? Will it give birth to "get rich overnight"?
A: There is no need to confuse the real intention of shed reform and urban village reform. These two policies are not necessarily related to pushing up housing prices. The change of the real estate market is not a linear transmission, and it will not directly promote the rise of housing prices because of shed reform and village-in-city transformation.
The vast majority of people who still live in villages in cities are farmers with poor economic conditions. The valuable land was originally owned by the villagers, but it was the transformation of the village in the city that released the wealth value. The so-called "phenomenon of getting rich" is extremely individual, and most of them just improve their living conditions. Improving farmers’ living standards and narrowing the income gap between urban and rural areas are the goals we should pursue.
How to draw the blueprint of "Home Ownership"?
So far, many cities have gradually relaxed all kinds of purchase restriction measures, but many first-and second-tier cities have not adjusted their purchase restriction and loan restriction policies. How to let buyers get the "admission ticket" to enter the property market and how to ensure the realization of the blueprint of "home ownership" are also problems that need to be solved to maintain the stability of the real estate market.
Nine questions: Why has "recognizing the house but not the loan" not yet landed in more cities?
"Some urban mortgages ‘ Recognizing the house and the loan ’ Unreasonable "
Q: Following the statement made by the Ministry of Housing and Urban-Rural Development that individual housing loans are "housing but not loans", Zhengzhou issued a relevant notice on August 3, proposing 15 measures to stabilize the real estate market, and said that it would implement the policy of "housing but not loans" and suspend the implementation of the sales restriction policy. However, more first-and second-tier cities outside Zhengzhou have not yet implemented policies. Do you think there is resistance?
A: The competent authorities have sent a positive signal that there is no resistance from higher authorities for all localities, and the reason why the policy has not yet been implemented is mainly because the idea of restricting real estate development in the past is deeply rooted, and now the relaxation is afraid that the achievements of past restrictions will be "wasted." In fact, adjustment does not mean that the past policy was wrong, but it needs to be adjusted and optimized according to the new situation. It is unreasonable for some first-tier cities to "recognize housing and loan" and need to be adjusted.
Question 10: How to draw the blueprint of "Home Ownership Scheme"?
"Local governments play a leading role, and state-owned enterprises and central enterprises play a main role."
Q: China started the reform of urban housing system 25 years ago, but today, the central government still emphasizes the construction of affordable housing. What is the problem?
A: The design made by our housing reform research group 25 years ago is: "the market supplies commercial housing and the government provides low-rent housing", and it is proposed that affordable housing should cover 50% of urban families in China. From 2000 to 2007, the investment in the development of affordable housing in China only accounted for 3%-5% of the housing investment, which was obviously too little. Since 2011, China has promoted the transformation of shanty towns and provided 30 million sets of affordable housing. However, in terms of the total amount, the construction of affordable housing in China is insufficient, especially in big cities, where the contradiction between supply and demand is prominent.
Q: How can we better achieve the goal of "home ownership"?
A: I suggest that local governments play a leading role in the construction of affordable housing, and state-owned enterprises and central enterprises play a main role. First of all, the land for the construction of affordable housing cannot be charged with land transfer fees, and only basic taxes and fees can be charged. At the same time, state-owned enterprises and central enterprises should withdraw from the competitive real estate field and return to the construction of affordable housing. People can’t just focus on commercial housing when solving housing problems, and low-income groups can enjoy affordable housing. Chengdu Business Daily-Red Star Journalist Yang Yuqi