According to previous years’ practice, analyzing the current economic situation, Politburo meeting of the Chinese Communist Party, which will deploy economic work in the second half of the year, is expected to be held in the near future, and what attitude it will make on the regulation of the property market, or set the tone for the market trend in the second half of the year.
Some insiders believe that the differentiation characteristics of the domestic real estate market are increasingly obvious, and policy control tends to be strengthened in some areas. It is expected that the policy will adhere to one city and one policy in the third quarter, and some areas may continue to tighten, which will have an inhibitory effect on market transactions in some overpriced cities. Housing enterprises need to flexibly formulate strategies for destocking.
Five of the seven meetings involved real estate.
Since July 2017, Politburo meeting of the Chinese Communist Party, with economy as the main topic, has been held seven times. Except for the two meetings on October 31, 2018 and December 13, 2018, the other five meetings made important statements on the real estate market.
For example, on July 31, 2018, Politburo meeting of the Chinese Communist Party made up his mind to solve the real estate market problem, adhere to the policy of the city, promote the balance between supply and demand, reasonably guide expectations, rectify the market order, and resolutely curb the rise in housing prices. Accelerate the establishment of a long-term mechanism to promote the stable and healthy development of the real estate market.
The latest one was April 19th, 2019, when Politburo meeting of the Chinese Communist Party demanded that the house be used for living, not for speculation, and that a long-term regulation mechanism of "one city, one policy, one policy according to the city and the main responsibility of the city government" should be implemented.
This is also the second half of 2018, after failing to mention the real estate content twice in a row, Politburo meeting of the Chinese Communist Party revisited the slogan of "housing and not speculating". In the industry’s view, this move is also expected.
In the first quarter of 2019, due to the expectation of policy relaxation, the actual easing of funds and the actual downward trend of credit interest rates, the real estate market showed a warming state, and the property market "Xiaoyangchun" started to increase, and the wave of land grabbing in hot cities resumed.
In this context, Politburo meeting of the Chinese Communist Party once again mentioned that housing is not speculation, which shows that he is paying close attention to the warming of hot cities’ markets, breaking the previous expectation that hot cities will relax restrictions on purchases and loans, and also to prevent risks such as rising prices in the real estate market.
After Politburo meeting of the Chinese Communist Party set the tone of property market regulation in April this year, the regulation policies of subsequent ministries and local governments followed.
Zhang Dawei, chief analyst of Zhongyuan Real Estate, said that in the first half of 2019, the national real estate regulation and control policies reached 251 times, up 31% year-on-year compared with 192 times in the first half of 2018.
"Real estate regulation and control policies have shown a significant tightening trend since mid-April. In the past two months, real estate has been regulated for nearly 100 times, and the density is at the highest stage in history. " Zhang Dawei said.
On the day of Politburo meeting of the Chinese Communist Party (April 19th), according to the requirements of monthly analysis, quarterly evaluation and annual assessment determined by the scheme of long-term real estate mechanism, the Ministry of Housing and Urban-Rural Development gave early warning tips to six cities with large fluctuations in house prices and land prices in the first quarter of 2019.
One month later, on May 18th, in order to further implement the main responsibility of the real estate market in regulating cities, the Ministry of Housing and Urban-Rural Development gave early warning tips to Foshan, Suzhou, Dalian and Nanning, four cities where the price index of newly-built commercial housing and second-hand housing has increased greatly in recent three months.
The Ministry of Housing and Urban-Rural Development requires all localities to resolutely implement the decision-making arrangements of the CPC Central Committee and the State Council, always adhere to the positioning that houses are used for living, not for speculation, further strengthen market monitoring and analysis, solve problems in market operation in time, and earnestly implement the requirements of stabilizing land prices, housing prices and expectations to ensure the stable and healthy development of the real estate market.
Suzhou, which was warned by the "yellow card" of the Ministry of Housing and Urban-Rural Development, upgraded its real estate control measures twice in a row on May 11th and July 24th this year.
Why should Suzhou continuously upgrade its regulation? The Supplementary Opinions on Further Promoting the Sustainable and Healthy Development of the City’s Real Estate Market issued by Suzhou Municipal People’s Government emphasizes that the regulation and upgrading of the property market is based on "persistence ’ A house is for living, not for speculation ’ Positioning, the implementation of stable land prices, stable housing prices, stable expectations, curb speculative real estate speculation, and reasonably guide market expectations.
The one-day tour of Kaifeng property market policy sends a signal to the outside world that regulation will not be relaxed easily. On July 19th, Kaifeng Housing and Urban-Rural Development Bureau issued a document to adjust the property market sales restriction policy, which was considered as a loose regulation implemented by third-and fourth-tier cities due to the downturn of the property market. However, one day later, Kaifeng Housing and Urban-Rural Development Bureau itself announced the cancellation of the document.
On July 20th, Kaifeng Housing and Urban-Rural Development Bureau said that due to its decision to "adjust the trading time limit of newly purchased commercial housing and cancel the filing restrictions", it did not conduct sufficient market research and demonstration, and lacked sufficient pre-judgment and evaluation of the possible market impact, so it revoked this decision and withdrew the relevant letter.
Suzhou’s upgrading regulation and one-day tour of Kaifeng’s loosening policy have different measures, but the logic behind them tends to be the same: the current property market regulation is easy to tighten but difficult to loosen.
Yan Yuejin, research director of the think tank center of Yiju Research Institute, said that Suzhou’s policy overweight is similar to Kaifeng’s policy of loosening restrictions on sales, that is, housing and not speculating is the policy logic in the second half of this year, and there is no possibility of relaxation. Relevant market participants must fully realize the importance of stabilizing the market at present. The introduction of similar policies has also formed good conditions for the subsequent control of investment speculative demand and stable expectations.
In the second half of the year, housing enterprises will reduce prices and promote sales?
The fluctuation of the real estate market in China is closely related to the policy adjustment, and it also provides a basis for the next policy adjustment.
Guo Shiying, an analyst at Zhuge Housing Search Data Research Center, told CBN that if we want to predict the follow-up policy direction, we should first pay attention to the changes in the two major indicators of real estate prices and transaction volume. "Stabilizing land prices, stabilizing housing prices and stabilizing expectations" will still be the main tone of regulation.
According to the data of the National Bureau of Statistics, from January to June, the sales area of commercial housing nationwide was 757.86 million square meters, down 1.8% year-on-year, and the decline rate was 0.2 percentage points higher than that in January to May. Among them, the residential sales area decreased by 1.0%. The sales volume of commercial housing was 7,069.8 billion yuan, up by 5.6%, and the growth rate dropped by 0.5 percentage point.
In 2018, the national sales area of commercial housing exceeded 1.7 billion square meters, a record high. Even though the sales area in the first half of 2019 decreased by 1.8% year-on-year, the total volume was still at a high level in recent years.
On July 15th, Mao Shengyong, director and spokesperson of the National Statistics Department of the National Bureau of Statistics, said at the press conference of the State Council Office that the current real estate market is generally stable in terms of housing price, real estate investment, real estate sales, construction area and land transaction. From the next stage, on the one hand, urbanization is still advancing, and there is still a need for improvement, which is a support. On the other hand, the concept of "housing without speculation" is more and more deeply rooted in people’s hearts, emphasizing "policy based on the city" and emphasizing the main responsibility of the city government. These two factors are combined, and it is possible to stabilize land prices, house prices and expectations in the real estate market in the next stage.
Yan Yuejin said that the first half of this year is an important stage to actively implement the policy of "stabilizing housing prices and stabilizing expectations", and the phenomenon of high housing prices in some cities has also been well curbed. Of course, in the actual process, some supporting houses such as well-occupied school districts still have speculation, and some sales that seem to have reduced prices also have illegal charges. Similar situations require continued strengthening of house price control, especially in the third quarter of this year. The policy is further tightened. For related housing enterprises, they may take the initiative to reduce prices and promote sales in the third quarter.
He believes that the policy in the third quarter is mainly tight, which may also have an inhibitory effect on market transactions. Judging from this, the possibility of rising residential inventory will increase, and some housing enterprises also need to flexibly formulate strategies for destocking.
Although the overall sales decline has narrowed, which is close to the same period last year, the regional differences in the domestic real estate market have gradually increased. From the sales area of commercial housing, the local property market is uneven, with some doubling (Beijing) and some falling by more than 50% (Hainan).
According to the data provided by Zhuge’s housing search, from the perspective of the new housing market, cities at all levels have different performances, with the first line rebounding, the second line stabilizing and the third and fourth lines cooling down. In the first half of 2019, the total transaction volume of commercial housing in three first-tier cities in Beishang and Shenzhen was about 12.54 million square meters, a year-on-year increase of 43.89%. The transaction area of second-tier representative cities was about 114.1 million square meters, up 0.71% year-on-year, and the overall transaction scale remained stable. The transaction area of the third-tier representative cities in the first half of the year was about 55.77 million square meters, down 16.07% year-on-year, and the year-on-year decline was the most significant among all cities.
In addition to the decline in transactions, the current decline in the real estate market in third-and fourth-tier cities is also reflected in the reduction of land transfer. For some third-and fourth-tier cities that rely heavily on land transfer, the pressure to develop the economy is increasing, and the impulse to adjust the property market regulation policy may become stronger.
Guo Shiying said that although the central government has always emphasized "one city, one policy, one policy for each city", the local dominance and the regulation direction of local cities have always been guided by the central goal. Under the guidance of the central goal, cities can fine-tune the current urban policies in order to stabilize the development of the real estate market. As for the types and degrees of policy adjustments, they need to be determined according to the development characteristics of current cities.