There Is No "Fish Missing The Net" Under The Long-Term Mechanism Of Real Estate Market Regulation In Hot Cities

After a series of statements from the regulatory authorities, the regulation and control policies of the real estate market continue to upgrade.

On September 6, Shenyang real estate bureau and Shenyang Natural Resources Bureau jointly issued the notice on further promoting the stable and healthy development of the city's real estate market, stabilizing the market from both the supply side and the demand side, including prohibiting down payment loans, increasing the down payment ratio of second set of housing (from 40% to 50%), and increasing the threshold of VAT exemption (the exemption period is adjusted from 2 years to 5 years) It also proposed to strictly control the land premium rate, and put forward two kinds of land transfer rules, i.e. "limiting the price of housing, competing for land price" and "limiting the land price, competing for construction, and competing for self holding".

Since the end of August this year, Wuxi, Dongguan and Hangzhou have successively issued documents to increase the size of regulation.

At the "forum on real estate work" held on July 24 and the "Chamber of Commerce of real estate work in some cities" on August 26, Shenyang had relevant responsible participants. Therefore, the upgrading of Shenyang's regulation is not surprising to the outside world.

But analysts pointed out that this action is still highly representative. Under the framework of the long-term mechanism of real estate, the regulatory authorities can not only monitor the market of each city, but also implement "monthly analysis, quarterly evaluation and annual assessment" on local governments. According to this mechanism, the accuracy and timeliness of real estate market regulation are greatly improved. In the short term, in addition to Shenyang, other cities will join in the regulation in the future.

Shenyang regulation sample

Shenyang is not a typical northeast city in the imagination of the outside world. In recent years, Shenyang has been a net inflow of population. By the end of 2019, the permanent population of Shenyang was 8.322 million, an increase of 6000 over 2018. In China's second tier cities, Shenyang's population size is in the forefront.

In April this year, Shenyang further relaxed the residence restrictions, abolished age and social security restrictions, and introduced low threshold policies such as "technical schools, vocational colleges and above students and graduates (including previous ones) can settle down in Shenyang", "all residents with Shenyang household registration, their parents, spouses and children can settle down in Shenyang". The move was seen as good news for the property market in Shenyang.

With the increase of population size and the stimulation of Northeast Revitalization Strategy, in addition to the transaction decline caused by regulation in 2018, Shenyang property market has been warming up in recent years. According to the statistics of some organizations, the average transaction price of Shenyang property market in 2019 exceeded 10000 yuan for the first time.

Since this year, Shenyang's property market has also shown "brilliance". Since the end of March, some new housing projects in Shenyang have been selling well, and the overall market heat is still high.

According to the data of the National Bureau of statistics, in July this year, the prices of new houses in Shenyang rose by 0.8% month on month, 9% higher than the same period last year; the prices of second-hand houses rose by 0.5% on a month on month basis, up 10.3% year on year. In recent months, Shenyang's housing price has been rising at the top of 70 large and medium-sized cities.

In the land market, since the second quarter, a number of plots in Shenyang have been traded at high prices after fierce competition, which has stimulated the market expectations.

A local real estate enterprise in Shenyang told the 21st century economic report that the increase in the number of people who buy houses brought about by the new policy, the release of a large number of demand after the epidemic, and the "upside down" of the prices of new and second-hand houses in some regions are the main reasons for the warming up of the property market in Shenyang. "Shenyang's housing price level is not high in the provincial capital city, and (before the new deal) the down payment proportion of the second set of housing is only 40%, and the purchase threshold is relatively low."

He said that in the recent heating up process of Shenyang property market, the market sentiment is obvious, some buyers have "leverage" behavior. At the same time, due to the shortage of inventory and cost pressure, some projects are reluctant to sell and rise in price, which further stimulates the market sentiment.

In the new regulation and control policy issued by Shenyang, in addition to increasing the purchasing leverage on the demand side, the control measures on the supply side are also quite strict. For example, put forward requirements on the project construction progress, grasp the pace of entering the market, etc. In addition, in order to control house prices, Shenyang will also monitor the operation of house prices by taking projects as a unit, "for projects that cause great changes in prices without justifiable reasons, enterprises shall be ordered to correct within a time limit."

The above-mentioned personages of real estate enterprises believe that the new deal is more powerful and has strict wording, which is rare in recent years, and the market is generally optimistic about the effect of the policy. But for real estate companies, the pressure is gradually increasing. He pointed out that the regulation of "strictly examining the development and construction costs of commercial housing projects and housing decoration standards", if strictly implemented, will squeeze the project profits.

More cities will be added

Through the discussion or guidance of relevant responsible persons, it is not uncommon to urge the introduction of property market regulation measures.

An expert close to the Ministry of housing and urban rural development told the 21st century economic report that in the past, regulatory authorities used "directional guidance" to "guide" the regulatory trends of different cities. This kind of "guidance" is mostly issued in the form of departmental regulations, or only transmitted by documents within the Department, and there are few open package of regulatory measures.

Due to the gradual increase of regional and urban differentiation, in recent years, the real estate market regulation has bid farewell to the "one size fits all" model, and the dominant power of regulation and control is gradually "decentralized" to local governments. But then, there are the main responsibilities in the "three stabilities" (stable land price, stable house price and stable expectation). As a result, the pressure on local governments is increasing as they gain more authority.

From 2019, the long-term mechanism of real estate, the market monitoring and early warning mechanism began to operate. On April 19 and May 18 of the same year, the housing and construction department carried out two batches of early warning to the real estate market operation of 10 cities. Since then, most of the early warning cities have upgraded their regulatory policies.

The experts pointed out that this mechanism is very helpful to improve the accuracy of regulation. According to the information released by the government, the requirements of the long-term mechanism for local governments are "monthly analysis, quarterly evaluation and annual assessment". Once the land price and housing price fluctuate greatly, the early warning mechanism will operate. With reference to this mechanism, if regulatory measures are introduced in a timely manner, the market will quickly recover and stabilize.

However, since the beginning of this year, the emergence of new crown pneumonia and the impact of changing the growth mode on economic development have made the impulse of "real estate driving the economy" rising again, and some cities have directly or indirectly relaxed the regulation. The source believes that while repeatedly emphasizing "not to use real estate as a short-term means of stimulating the economy", the regulatory authorities held a discussion with relevant market entities to illustrate the importance they attach to this issue.

It is worth noting that in the "Chamber of Commerce of real estate in some cities" on August 26, in addition to the governments of six cities, the responsible comrades of the housing and Urban Rural Development Department of their provinces (autonomous regions) also participated in the consultation, which was regarded as the performance of further strengthening the main responsibility of the real estate market regulation.

The above-mentioned experts believe that although "forum" is not a normal means, the accuracy and timeliness of real estate market regulation are greatly improved when the long-term mechanism starts to operate. If it is strictly implemented, it will be very difficult to have a "fish caught in the net".

Most respondents pointed out that Shenyang's practice of upgrading the property market regulation is obviously not a case in point. Prior to this, Dongguan and Hangzhou have successively increased regulation. Among them, Dongguan is not even in the "forum" of the Ministry of housing and urban rural development.

Yan Yuejin, director of the think tank center of Shanghai E-House Real Estate Research Institute, pointed out that according to the existing policy keynote, there will be more urban upgrading regulation after Shenyang. Changchun, Chengdu, Yinchuan, Tangshan and Changzhou, which participated in the discussion with Shenyang, are the hot choices for further strengthening regulation and control. In addition, some third tier cities with larger house price increases may also upgrade regulation and control.

According to the data of the National Bureau of statistics, in July this year, new house prices in Chengdu, Yinchuan and Tangshan rose by 0.9%, 2.0% and 1.4%, respectively, higher than that of Shenyang by 0.8%. Changzhou is not included in the statistics of 70 large and medium-sized cities. Wuxi has just increased the price of new housing, up 1.3% month on month.

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