Since the “930” policy in 2016, in order to curb the overheated real estate market, all localities have continuously increased the regulation of real estate, exhausted administrative means such as purchase restriction and price restriction, as well as financial means such as loan restriction, and finally stabilized the operation of the real estate market.
Since 2022, affected by internal and external factors, the real estate market has been cold, land auction and real estate enterprise debt crisis have occurred one after another. On April 29, 2022, the Politburo meeting clearly proposed to “support all localities to improve real estate policies based on local conditions and support rigid and improved housing needs”. It is imperative for all localities to adjust real estate policies in time according to market conditions.
What will be the different policy adjustment path this time? This paper reviews the adjustment and effect of previous real estate policies for reference.
The impact of the “real estate crisis” in 2008
With the outbreak of the international financial crisis in 2008, in order to ensure economic growth and avoid the decline of the real estate market, the policy began to turn to stimulating housing consumption, introducing credit support, increasing the supply of affordable housing and tax relief policies. On November 5, 2008, the executive meeting of the State Council decided to invest 4 trillion yuan in the next two years to stimulate the economy; On October 27, 2008, the central bank issued a new policy, which lowered the lower limit of loan interest rate to 0.7 times and the down payment ratio to 20%; In December 2008, the State Council issued several opinions on promoting the healthy development of the real estate market to encourage housing consumption from the aspects of credit support and tax preference.
In effect, the economy stabilized and house prices rose sharply. The GDP growth rates in 2008 and 2009 were 9.6% and 9.2% respectively. The goal of maintaining growth was achieved. A large amount of funds flowed to real estate, and the market bottomed out and recovered. In 2009, the average sales price of commercial housing in China increased by 23.2% year-on-year.
2014 “930” real estate relaxation: stimulate real estate under the pressure of “destocking”
With the economic downturn, real estate inventory increased rapidly. In 2014, the economy was under pressure again, with a year-on-year GDP growth rate of 7.3% and a year-on-year decline of 0.6 percentage points. In 2014, the year-on-year growth rate of national commercial housing sales area and amount was negative for consecutive months. In May, the price of new commercial housing in 70 large and medium-sized cities fell month on month for the first time. Weak sales have led to rapid inventory accumulation and pressure.
Relax purchase and loan restrictions. In June 2014, Hohhot was the first city to officially release the purchase restriction. Since then, the cancellation of the purchase restriction showed a “domino effect”. By the end of September, only five cities in Beijing, Shanghai, Guangzhou, Shenzhen and Sanya had not been cancelled. In addition to liberalizing purchase restrictions, all localities have also introduced other preferential policies such as preferential housing loans, remote use of provident funds and relaxation of settlement, and the emergency rescue of non first tier cities has been carried out in an all-round way.
The “930” new deal opened a national relaxation. On September 30, 2014, the central bank and the CBRC issued the notice on further improving housing financial services, proposing that the recognition standard of the second house should be changed from “recognizing the house and recognizing the loan” to “recognizing the loan but not recognizing the house”; The minimum down payment ratio of the first set of commercial loans is 30%, and the lower limit of interest rate is 0.7 times of the benchmark interest rate; Support real estate enterprises to carry out debt financing in the inter-bank market.
Loose monetary policy and liberalize the financing of real estate enterprises. (1) On November 21, 2014, the central bank restarted the interest rate cut, and on February 5, 2015, it restarted the interest rate cut; (2) In October 2014, the Ministry of housing and urban rural development and other three ministries and commissions issued a document to relax the application conditions for provident fund loans to six consecutive months; (3) In January 2015, the new regulations on corporate bonds were issued, and the main body of bond issuance was expanded from listed companies to non listed companies. At the same time, private placement bonds and other record issuance varieties were launched, which significantly reduced the threshold for real estate enterprises to issue bonds.
In effect, the real estate market in first tier cities took the lead in recovering. After the “930” new deal and interest rate cut, the dividends of monetary easing first poured into the first tier cities with low supply-demand ratio. The housing market in the first tier cities took the lead in recovering and led the national commercial housing sales to hit the bottom. However, the sales in the second and third tier cities have not improved, and the inventory continues to accumulate. In March 2015, the year-on-year growth rate of commercial housing sales area in the second and third tier cities continued to decline to the low of – 9.6% and – 2.2%.
2015 “330” overweight and relaxation: strengthening the effect of early-stage policies
Real estate investment continued to decline, dragging down the economy. With the “L” trend of the economy, the real estate market weakened again in 2015, mainly reflected in investment. The year-on-year growth rate of real estate investment continued to be lower than the GDP growth rate from March 2015 to February 2016, dragging down the economy.
“330” new deal, five ministries and commissions jointly rescue the city. On March 30, 2015, the central bank, the Ministry of housing and urban rural development and the CBRC issued a notice to reduce the down payment ratio of commercial loans for second homes to 40%; At the same time, the Ministry of Finance and the State Administration of Taxation also announced that the exemption period of business tax on external sales of houses was shortened from five years to two years. The “five ministries and commissions” jointly rescued the market and exceeded market expectations.
Relax loan restrictions and continuously cut interest rates and reserve requirements. On August 31, 2015, the Ministry of housing and urban rural development, the Ministry of Finance and the Central Bank jointly issued a notice stipulating that the minimum down payment proportion of provident fund loans should be reduced to 20% for households with one house and the corresponding house purchase loans have been settled; From “330” in 2015 to the eve of “930” in 2015, the central bank cut interest rates three times and comprehensively lowered reserve requirements twice.
The proportion of monetized resettlement in shed reform has increased significantly. In August 2015, the Ministry of housing and urban rural development and CDB issued a document requiring all localities to determine the monetized resettlement target of shed reform in accordance with the principle of no less than 50%, and increase loan support for monetized resettlement projects. The monetized resettlement of shed reform has become an important driving force for the inventory digestion of subsequent third and fourth tier cities.
In terms of effect, the real estate fully recovered after “330” in 2015. In September 2015, the year-on-year growth rate of commercial housing sales area in the first, second and third tier cities was 22.8%, 7.7% and 6.0% respectively, and the year-on-year growth rate of house prices was 12.0%, – 1.6% and – 3.5% respectively, which was significantly improved compared with March 2015.
In 2015, “930” increased again: comprehensive easing and renewed financial stimulus
High level set the tone of “de inventory”. In November 2015, the general secretary proposed “to resolve the real estate inventory and promote the sustainable development of real estate” at the meeting of the central financial leading group; Since then, “destocking” has been repeatedly mentioned at the central economic work conference and the National Conference on housing and urban rural construction, which has become the main tone of regulation.
The “930” policy was relaxed more than expected. On September 30, 2015, the central bank and the CBRC issued the notice on issues related to further improving differentiated housing credit policies, which made it clear that in cities where purchase restrictions are not implemented, the minimum down payment ratio of the first house shall be adjusted from no less than 30% to no less than 25%. At the same time, the Ministry of housing and urban rural development, the Ministry of Finance and the central bank issued the notice on effectively improving the use efficiency of housing provident fund, requiring to increase the loan amount of housing provident fund and comprehensively implement the loan business in other places. The four ministries and commissions issued two new policies in a row to further upgrade the efforts to rescue the market.
Real estate financial easing followed up again. First, relax the loan restrictions. In February 2016, the central bank and the CBRC issued a document to reduce the down payment ratio of the first set of commercial loans to 20% and the down payment ratio of the second set of commercial loans to 30% (the second set is recognized as “recognizing loans but not houses”). Second, cut interest rates and reserve requirements. In October 2015, the central bank cut interest rates and reserve requirements once again, and the benchmark interest rate of medium and long-term loans fell to a historical low of 4.9%. With low down payment and low interest rate, credit is in an unprecedented loose state.
“217” deed tax preference. On February 17, 2016, the Ministry of finance, the State Administration of Taxation and the Ministry of housing and urban rural development jointly issued the notice on adjusting the preferential policies for deed tax and business tax in real estate transactions, which stipulates that “the deed tax on the purchase of houses below 90 square meters shall be reduced to 1%, and the first and second suites above 90 square meters shall be reduced to 1.5% and 2% respectively”.
The effect is that the national real estate market is hot. The period from “330” in 2015 to “217” in 2016 is the period with the strongest policy easing, in which financial policy is the absolute main force. Under the measures of monetization resettlement of shed reform and lenient monetary policy, the non hot second and third tier cities that have been depressed have also begun to pick up.
Risks suggest that the economic downturn exceeded expectations, the adjustment of real estate regulation policies was less than expected, and the covid-19 epidemic exceeded expectations.
