Transcript of Housing Department Press Conference and Key Takeaways
China announces an additional 1 million urban village renovations and dilapidated housing renovations
Today, the Ministry of Housing and Urban-Rural Development held a press release announcing measures to boost the Chinese housing market.
Several Key Takeaways:
Officially, It announced “4 Reductions“
Lower interest rates on housing provident fund loans
Reduced down payment requirements for home loans
Lower interest rates on existing loans
Tax reductions for those selling their old home to buy a new one
However, from my perspective, there’s another one announced in the Q&A part; the Vice Minister of Natural Resources said:
在控新增方面，我们指导各地合理控制新增商品住宅用地供应，对于去化周期过长的城市我们暂停供应商品住宅用地；对于去化周期较长的城市，实行“盘活多少、供应多少。
Regarding controlling new supply, we guide localities to reasonably control the supply of new land for commercial housing. For cities with excessively long digestion periods, we temporarily suspend the supply of land for commercial housing. For cities with relatively long digestion periods, we implement a policy of “supply as much as is revitalized.”
This also suggests lowering the housing land supply for regions that can’t sell their reserved house.
In terms of “Two Added.”
First, I think the most significant policy announced today, from my perspective, is the initiative for an additional 1 million urban village and dilapidated housing renovations. This scale is smaller than the previous wave of urban village renovations, known in Chinese as "棚户区改造" (pénghu qū gǎizào) or simply "棚改" (péng gǎi), which took place between 2015 and 2018. In 2018 alone, China initiated renovations for 6.26 million housing units, with a staggering total investment of 1.74 trillion yuan.
It's important to note that the previous wave of urban village renovations had a significant consequence: it rapidly drove up housing prices in smaller cities. This occurred primarily due to the monetization policy of the renovation program, which provided residents with funds to purchase new homes, thereby stimulating demand in the local real estate markets.
The second policy expands the range of whitelisted real estate projects, with the goal of increasing bank lending by 4 trillion yuan. This measure aims to provide crucial financing to developers, enabling them to complete unfinished housing projects.
Below is the full transcript translated by myself with the help of AI:
Source: https://www.mohurd.gov.cn/xinwen/jsyw/202410/20241017_780414.html
Minister of Housing and Urban-Rural Development Ni Hong:
The Central Committee of the Communist Party of China attaches great importance to the stable and healthy development of the real estate market. On September 26, the Politburo meeting emphasized the need to promote stability in the real estate market, strictly control new supply, optimize existing stock, and improve quality. It also stressed the importance of responding to public concerns, urgently improving land, fiscal, and financial policies, and promoting the construction of a new model for real estate development. On September 29, the State Council held an executive meeting to study and deploy specific implementation work.
The Ministry of Housing and Urban-Rural Development, together with the Ministry of Finance, Ministry of Natural Resources, People's Bank of China, Financial Regulatory Administration, and other departments, has guided local governments to act quickly, implementing existing policies and introducing new ones, creating a "combination punch" to promote market stabilization.
How is this "combination punch" executed? In summary, it consists of four cancellations, four reductions, and two increases.
The four cancellations involve fully empowering city governments with independent regulatory authority. City governments should implement policies based on local conditions, adjusting or canceling various restrictive measures on housing purchases. This mainly includes canceling restrictions on purchases, sales, prices, and the standards for ordinary and non-ordinary housing.
The four reductions are: reducing the interest rate on housing provident fund loans, which everyone knows has been reduced by 0.25 percentage points; lowering the down payment ratio for housing loans, unifying the minimum down payment ratio for first and second home loans to 15%; reducing interest rates on existing loans; and reducing the tax burden for "selling old and buying new" when exchanging houses. By implementing these already-introduced policies, we aim to lower the cost of home purchases for residents, reduce the pressure of loan repayments, and support residents' essential and improved housing demands.
The two increases are: First, through methods such as monetized resettlement, implementing an additional 1 million urban village renovations and dilapidated housing renovations. Urban villages have many safety hazards and poor living environments, and residents have an urgent desire for renovation. According to relevant surveys, in just 35 major cities nationwide, there are 1.7 million urban village units that need renovation. Looking at other cities across the country, this number will be even larger, and it can be said that other cities also have renovation needs. We've also conducted a survey on dangerous and dilapidated houses that need renovation in cities nationwide, and there are 500,000 units. The proposed additional implementation of 1 million units this time is mainly for projects that are relatively mature and can be started earlier with increased policy support. We can start these projects early and work on them urgently. This time, we're mainly adopting the method of monetized resettlement, which is more conducive for people to choose suitable houses according to their wishes and needs, reducing or eliminating the need for temporary housing, allowing them to move directly into new homes. At the same time, it's also beneficial for absorbing existing commercial housing stock.
Second, by the end of the year, the credit scale for "whitelist" projects will be increased to 4 trillion yuan. Urban real estate financing coordination mechanisms should strive to include all qualified real estate projects in the "whitelist", providing loans to all eligible projects to meet reasonable financing needs.
It can be said that since the release of relevant policies, policy effects have begun to show. The decline in major indicators such as real estate development investment and new commercial housing sales continues to narrow. Especially since the end of September, there has been a significant increase in viewings, visits, and signings for new homes, and a continuous rise in second-hand housing transactions. The market is showing positive changes.
Some media have reported that many places have increased their support for real estate policies, and the property market in first-tier cities is warming up across the board. In the next step, we will work with relevant departments to resolutely implement the decisions and deployments of the Party Central Committee and the State Council, implementing policies one by one, fully releasing the policy effects, and benefiting more of the people.
Q&A
21st Century Business Herald reporter:
As we understand, since the establishment of the urban real estate financing coordination mechanism, it has played a significant role in supporting real estate project financing and ensuring housing completion and delivery. The recent Politburo meeting proposed to increase loan disbursement for "whitelist" projects. What specific measures will the Financial Regulatory Administration take to advance this work? Thank you.
Xiao Yuanqi, Deputy Director of the Financial Regulatory Administration:
Thank you very much for your question and for your concern about this work. The CPC Central Committee and the State Council attach great importance to real estate work and have made a series of important decisions and deployments. Since the beginning of this year, we have worked with the housing and construction departments to guide the establishment of urban real estate financing coordination mechanisms, including compliant real estate projects in the "whitelist", and promoting financial institutions to strengthen financing support for "whitelist" real estate projects.
On September 26, as you mentioned, the Politburo meeting required increasing loan disbursement for "whitelist" projects. We are currently implementing this in accordance with the spirit of the Politburo meeting. We mainly focus on these aspects:
First, all commercial housing project loans should be included in the "whitelist", achieving "inclusion of all eligible projects". The "whitelist" and urban financing coordination mechanism have been established for more than six months. After efforts from all parties, we now have good experiences and practices. A relatively complete system has been explored in terms of government coordination and promotion, financial support, and judicial execution guarantee. After being included in the "whitelist", the management of real estate projects becomes more standardized, and financing becomes more convenient and faster, playing a very important role in the completion and delivery of projects and protecting the legitimate rights and interests of home buyers. Let me give you an example. In Zhuhai, Guangdong, there was a residential project that had sold some houses initially but later stopped construction for various reasons. After the establishment of the urban financing coordination mechanism, several levels, including provincial and municipal, established corresponding financing coordination mechanisms. Under the coordination and promotion of these mechanisms, the project met the conditions for inclusion in the "whitelist". Eventually, it was included, and a large state-owned bank provided a new loan of 600 million yuan. The project quickly resumed construction and was completed, along with its supporting facilities. It soon became a best-selling property in Zhuhai. Many people, seeing the completed project with excellent supporting facilities, came to buy houses in this project.
Currently, after careful study, we have determined that conditions are met to include all commercial housing real estate development loan projects in the "whitelist". In the future, real estate projects that meet the "whitelist" standards should be managed according to the "whitelist", achieving "inclusion of all eligible projects". The specific process will adopt two forms: review and filing. For review, the current urban financing coordination mechanism for "whitelist" projects will continue to play its role. At the same time, real estate project companies can also discuss with banks, and banks can finance real estate projects according to credit standards, file through the "whitelist" mechanism, and include them in "whitelist" management. As I mentioned earlier, after being included in the "whitelist", project management becomes more standardized, and financing becomes faster and more convenient, which is conducive to housing completion and protecting the legitimate rights and interests of all parties.
Second, for projects included in the "whitelist", commercial banks should achieve "lending to all eligible projects". We have guided all banks to further increase efforts on the basis of existing task force mechanisms, implementing loan disbursement progress for each project, appropriately delegating approval authority, improving approval and loan disbursement efficiency, and disbursing loans in a timely manner according to project construction progress. Each urban coordination mechanism should also actively coordinate with relevant parties, increase efforts to repair problem projects, implement loan disbursement conditions, and cooperate with financial institutions in loan review and disbursement. In principle, if relevant conditions and requirements have not changed, banks should achieve "lending to all eligible projects" for projects included in the "whitelist".
Third, optimize the method of loan fund disbursement, achieving "as early as possible". Currently, as everyone knows, commercial banks disburse loan funds to real estate project companies in batches according to the project construction progress, and directly entrust payments to upstream and downstream enterprises such as material suppliers and construction companies. In the future, commercial banks can, with the agreement of real estate project companies, disburse all loans in advance to the project fund supervision account opened by the real estate project company based on the fund usage plan provided by the company. Subsequently, based on actual fund usage applications, entrusted payments will be made from the supervised account to the fund recipients. This advances the timing of fund disbursement; as soon as the credit approval is passed, all loans can be disbursed to the real estate project company's fund supervision account. The advantage of this approach is that loan funds can be quickly and early disbursed to the accounts of "whitelist" real estate project companies, allowing earlier payments to upstream and downstream enterprises, such as cement and steel companies upstream, and construction companies, etc. This ensures that real estate projects and housing projects can start construction earlier or even ahead of schedule. At the same time, because these loan funds enter the project fund supervision account of the real estate project company, they are earmarked for specific purposes and managed in a closed manner, preventing misappropriation by the project company. The loan funds will be used solely for building this project and its supporting facilities, ensuring complete use for project completion and delivery, thus protecting the legitimate interests of home buyers.
Let me share a statistic with you: As of October 16, we have calculated that approved loans for "whitelist" real estate projects have reached 2.23 trillion yuan. It is expected that by the end of 2024, the amount of approved loans for "whitelist" projects will double, exceeding 4 trillion yuan. To better facilitate real estate project financing and ensure housing completion and delivery, we will further optimize and improve the financing mechanism for "whitelist" real estate projects, ensuring that eligible projects are "included to the fullest extent", approved loans are "lent to the fullest extent", and funds are disbursed "as early as possible".
Reuters reporter:
First-tier cities like Beijing, Shanghai, Shenzhen, and Guangzhou have recently relaxed housing purchase restrictions. Some data shows that during the National Day Golden Week, the number of property viewers and house sales in these cities increased significantly, but housing sales in some smaller cities still didn't improve much during the holiday. Will the Ministry of Housing and Urban-Rural Development lift all housing purchase restrictions in these mega-cities? What impact will this "siphon effect" in the property market - people flocking to big cities to buy houses - have on the overall stability of China's real estate market? Thank you.
Ni Hong:
First, regarding housing purchase restrictions. As I mentioned in my opening remarks, since last year, we have fully empowered cities with autonomous control over real estate regulations. City governments make independent decisions based on their economic and social development and the current state of their real estate markets. You mentioned four first-tier cities, so let me provide some details. The four first-tier cities adjusted their housing purchase restriction measures at the end of September, but not in exactly the same way. Beijing and Shanghai "relaxed the conditions for purchase restrictions", Guangzhou "completely cancelled" them, and Shenzhen "cancelled them in certain area” This fully demonstrates that each city is implementing policies tailored to its specific situation, making independent decisions, and adopting a city-specific approach.
Second, you mentioned the "siphon effect". From a regularities perspective, the "siphon effect" is a common phenomenon in the process of urban development worldwide. In terms of impact, the "siphon effect" has both advantages and disadvantages, and it produces different effects in different cities and at different stages of urban development. In the process of urbanization, the Chinese government focuses on guiding the coordinated development of large, medium, and small cities as well as small towns. The city-specific approach in the real estate market is also an institutional arrangement to prevent the negative effects of the "siphon effect" in the real estate sector.
CMG reporter:
Minister Ni Hong just mentioned that there will be an additional implementation of 1 million urban villages and dilapidated urban housing renovations. Could you please explain how this is being arranged?
Ni Hong:
As I mentioned in my opening remarks, our "combination punch" includes two new additions. Deputy Director Xiao Yuanqi has already explained the 4 trillion yuan loan support issue to everyone. Now, let me introduce the considerations for the 1 million urban village and dilapidated housing renovations.
I've already introduced this demand in my opening remarks. As cities develop, new houses become old houses, and some old houses become dangerous buildings. This demand exists. We've done statistics on key cities: 35 large cities have a demand for 1.7 million units, and there are 297 prefecture-level cities nationwide. As you can imagine, this demand is very real and there will be even greater demand.
This time, we've chosen to add another 1 million units on the basis of previous urban village and dilapidated housing renovations, and to increase policy support through monetization. This is mainly because some projects are relatively mature, residents have an urgent desire for renovation, and preliminary work has been done quite solidly. The advantages are: First, for residents, monetized resettlement can better meet their needs for independently choosing housing types and locations. Second, they can move directly into new homes, unlike before when they had to wait for a transition period of more than ten months for resettlement housing to be built. Third, for cities, it can eliminate safety hazards, improve living environments, and enhance urban functions. Fourth, given the current major changes in the supply-demand relationship of real estate, it's also conducive to absorbing existing commercial housing stock. It's a win-win situation.
So, what kind of projects can receive policy attention and support? I think there are two points. First, the project must be one where residents have a strong desire for renovation and where there are prominent safety hazards. Second, two plans for the project should be relatively mature: one is that the expropriation and resettlement plan should be solid, ensuring smooth progress of the expropriation work and effectively protecting the legitimate rights and interests of the people; the other is that the overall financial balance plan should achieve overall project balance, avoiding new local debt risks.
What are the main policies? I think there are five. First, we focus on supporting cities at or above the prefecture level. Second, development and policy-oriented financial institutions can provide special loans. Third, local governments are allowed to issue special bonds. Fourth, tax and fee preferences are given. Fifth, commercial banks can also provide commercial loans based on project evaluation.
With these five policies in place, local governments can further plan and select mature projects in combination with urban renewal, and implement them in advance. As long as the preliminary work is done well, we can continue to increase support beyond the 1 million units. Thank you.
Shenzhen TV Direct News reporter:
The Ministry of Finance previously announced policies to support land reserves through special bonds, as well as acquiring existing housing stock for use as affordable housing. What are the detailed measures and considerations for this? Thank you.
Song Qichao, Assistant Minister of Finance:
To promote the stable and healthy development of the real estate market, the Ministry of Finance plans to implement policies for using special bonds to acquire land reserves and existing commercial housing stock in conjunction with relevant departments. These two policies focus on bottleneck issues in the real estate market. They are not only important measures to stabilize the real estate market, but also important content in implementing the decisions and deployments of the Third Plenary Session of the 20th CPC Central Committee, expanding the scope of special bond support and using them as project capital. These policies are conducive to promoting supply-demand balance in the land market, easing liquidity and debt pressure on local governments and real estate enterprises, and also helpful in increasing sources of affordable housing and improving people's livelihoods.
In terms of specific operations, regarding the use of special bonds for land reserves, we mainly support local governments to, based on their actual situations, reasonably determine acquisition prices with owner enterprises of existing land, properly handle debt relationships involved in recovering existing land, reasonably determine the content of special bond projects and the scope of land plots, arrange bond issuance and expenditure in a timely manner, and improve the utilization efficiency of land resources and the use effectiveness of bond funds.
Regarding supporting local governments to make good use of special bonds to acquire existing commercial housing stock for use as affordable housing, this policy is mainly decided and implemented voluntarily by local governments. Following the principle of rule of law and operating according to market mechanisms, local governments can arrange special bonds to acquire existing commercial housing for use as affordable housing on the basis of ensuring project financing and revenue balance. This policy will work in synergy with other related support policies to further broaden local funding sources. It can effectively absorb existing stock, promote supply-demand balance, and is also conducive to optimizing incremental supply and raising affordable housing through multiple channels.
In the next step, we will work with relevant departments to quickly clarify the detailed rules and requirements of the policy and promote its prompt implementation.
Beijing Youth Daily reporter:
I'd like to ask about housing issues. For some new urban residents and young people, if they want to buy a house, they often face significant economic pressure. Does the Ministry of Housing and Urban-Rural Development have any considerations or arrangements to help solve their housing problems? Thank you.
Ni Hong:
I believe that for a city, if young people have hope, the city has hope; if young people have a future, the city definitely has a future. Solving the housing problems of new urban residents and young people, allowing them to live and work comfortably in the city, is an inescapable responsibility of the city government and an important means to improve the city's competitiveness.
Regarding solving people's housing problems, the national policy is to focus on both guarantee and market. With the government taking the lead, we ensure people's basic housing needs through guarantees and meet their diverse needs for improved housing through the market.
There are two ways of providing guarantees: one is through rental, and the other is through purchase. Regarding rental, for new urban residents and young people, we are vigorously developing guaranteed rental housing and public rental housing, providing "a bed, a room, a house" to allow new urban residents and young people to come in, stay, live safely, and succeed. For low-income families with housing difficulties in cities, governments at all levels pay high attention and have implemented public rental housing guarantees. Low-income families with housing difficulties have basically achieved full coverage of guarantees. Public rental housing guarantees also have two forms: one is physical rental, and the other is monetary subsidies. Regarding purchase, for those with certain economic ability who currently find it difficult to buy commercial housing but can afford to buy guaranteed housing, we mainly build or purchase based on demand. There are also two ways to obtain housing sources: one is new construction, and the other is purchasing eligible commercial housing for use as guaranteed housing. In our work, we've also considered new situational changes. To adapt to the needs of families with two or more children, we require and support local governments to moderately increase the area of guaranteed housing based on local conditions.
I also want to emphasize that while city governments optimize and improve real estate policies based on local conditions, they must increase guarantee efforts and secure the bottom line of housing guarantees. I'd like to share some data with you: from January to September this year, we have built and raised 1.48 million units of guaranteed housing, and by the end of the year, 4.5 million new urban residents and young people will be able to move into guaranteed housing.
In the next step, we will work with relevant departments to guide local governments to increase the construction, raising, and supply of guaranteed housing, focusing on solving housing problems for people in difficulty, and striving to achieve housing for all.
Southern Metropolis Daily N Video reporter:
On September 24, the People's Bank of China announced a package of real estate financial policies, including lowering interest rates on existing mortgages and unifying down payment ratios for home loans. Could you please introduce the current progress? Thank you.
Tao Ling, Deputy Governor of the People's Bank of China:
The People's Bank of China, based on its responsibility for financial macro-prudential management, formulates and implements financial policies to support the stable and healthy development of the real estate market. To help stabilize the real estate market and promote the construction of a new model for real estate development, on September 24, Governor Pan Gongsheng announced five package real estate financial policies at a press conference. It's been three weeks now, and the social response has been positive, playing a positive role in boosting market expectations and confidence. On September 29, the People's Bank of China published relevant policy documents on its website. Since everyone is so concerned, let me introduce the implementation situation in detail.
The first policy is to lower interest rates on existing mortgages. Mortgage rates concern millions of households. Lowering interest rates on existing mortgages is a concrete measure to implement the decisions and deployments of the CPC Central Committee, stand firm on the people's position in financial work, and benefit people's livelihoods. Regarding the progress, on September 29, the People's Bank of China issued an announcement to improve the pricing mechanism for commercial personal housing loans. On the same day, the People's Bank of China guided the market interest rate pricing self-regulatory mechanism to issue a self-regulatory initiative, and commercial banks also issued announcements. On October 12, major commercial banks released operational details. Currently, commercial banks are working overtime to modify contracts and systems, making all preparations. It is expected that most existing mortgages will complete batch adjustments on October 25, meaning that everyone can check the adjustment results through the designated channels of their lending banks on October 26. Some small and medium-sized banks may complete the adjustments slightly later, but it is generally expected to be completed by October 31.
To facilitate the process, the vast majority of borrowers don't need to visit bank branches. For those with floating-rate mortgages, borrowers don't need to apply; commercial banks will make batch adjustments uniformly. This accounts for over 90% of existing mortgages. For fixed-rate mortgages, borrowers can handle it through the bank's online or mobile banking, without visiting a branch. For those who obtained mortgages from small and medium-sized banks, due to some of these banks' less comprehensive online systems, borrowers may need to visit a branch. For specific details, please pay attention to the announcements from your lending bank.
Borrowers are generally concerned about what the specific mortgage rates will be after the policy adjustment. We've seen many calculations and discussions in society, so I'll make a brief explanation. As you know, mortgage rates consist of the Loan Prime Rate (LPR) and the basis points added. According to this policy requirement, we're adjusting the added basis points. For existing mortgages with added basis points higher than -30, the added points will be uniformly reduced to -30. For example, in Beijing, the previous minimum added points for first-home mortgages was 55 basis points, which will now be reduced to -30 basis points, meaning a reduction of 85 basis points in mortgage rates. For second-home mortgages in Beijing, the previous minimum added points was 105 basis points, which will now be reduced to -5 basis points according to the city's rate lower limit requirement, resulting in a 110 basis point reduction in mortgage rates. The reduction will be even greater in areas outside the Fifth Ring Road.
After adjusting existing mortgage rates, how much can be saved on mortgage payments? It's estimated that existing mortgage rates will decrease by an average of about 0.5 percentage points, which will save about 150 billion yuan in interest payments overall, benefiting 50 million households or 150 million residents. For individuals and families, according to commercial banks' calculations, taking Beijing as an example, if the original mortgage rate was 4.4%, it will be adjusted to 3.55%. For a 1 million yuan, 25-year mortgage with equal principal and interest payments, this means 469 yuan less in monthly payments, saving over 140,000 yuan in total interest payments. Because the operational details of adjusting existing mortgage rates are quite complex and involve different borrowers in different regions, please refer to the policies and operational guidelines for specific procedures.
The second policy is to unify the minimum down payment ratio for mortgages to 15%. The purpose of this policy is to better support rigid and improved housing demands. After the policy was announced on September 24, the People's Bank of China headquarters guided its local branches to implement policies based on local conditions in cooperation with city governments. Currently, except for Beijing, Shanghai, and Shenzhen, which have independently adopted differentiated arrangements, most cities in the country no longer distinguish between first and second homes, and have uniformly adjusted the minimum down payment ratio to 15%. We've also noticed that many cities have simultaneously adjusted real estate control policies such as purchase restrictions and taxation, and market confidence and sales have shown improvement.
The third policy is to extend the duration of two real estate financial policies. This policy adjusts two previously issued policy documents. On September 29, the People's Bank of China and the Financial Regulatory Administration jointly issued an adjustment notice. First, it adjusts the "16 Financial Measures" from November 2022. The original regulation allowed a one-year extension for development loans and trust loans of real estate companies due within the next six months, without adjusting loan classification. This policy helps stabilize real estate company financing and improve industry funding conditions. Originally set to expire at the end of 2024, we've now extended it to the end of 2026. Second, it adjusts the commercial property loan management notice from January 2024. The original regulation allowed national commercial banks to issue commercial property loans to well-operated real estate companies with good development prospects, which could be used to repay real estate-related loans and bonds of the company and its group. This policy relaxed loan usage and helped real estate companies improve their financial situation. Originally set to expire at the end of 2024, we've now also extended it to the end of 2026.
The fourth policy is to optimize the re-lending policy for guaranteed housing. Guaranteed housing re-lending is a structural monetary policy tool. If you remember, on May 17, the People's Bank of China announced the establishment of 300 billion yuan in guaranteed housing re-lending to incentivize banks to issue commercial loans, supporting the acquisition of unsold completed commercial housing for use as subsidized sales-type or rental-type guaranteed housing. The purpose of this policy is to promote the destocking of existing commercial housing. In terms of implementation, the People's Bank of China has cooperated with the Ministry of Housing and Urban-Rural Development to establish a task force, promoting local governments to increase their efforts under the urban real estate financing coordination mechanism.
On September 24, based on previous practical needs, to further enhance market-based incentives for banks and acquiring entities, we improved the policy by increasing the proportion of re-lending funds provided by the People's Bank of China from 60% to 100%, thereby further supporting the willingness to acquire existing commercial housing and accelerating the destocking of the real estate market. On September 29, the People's Bank of China officially issued a notice, and commercial banks will apply for re-lending starting in October. Recently, some commercial banks have already made declarations. We believe that with the joint efforts of all parties, the acquisition of existing housing will make further positive progress.
The fifth policy is to support the acquisition of real estate companies' existing land. The People's Bank of China, together with relevant departments, is urgently studying allowing policy banks and commercial banks to issue loans to qualified enterprises to acquire real estate companies' existing land, with the People's Bank of China providing necessary special re-lending support.
Overall, the People's Bank of China has recently introduced a package of financial policies including reserve requirement ratio cuts and interest rate reductions. These policies, along with the aforementioned real estate financial policies, will continue to play a positive role in boosting confidence and stabilizing expectations.
Poster News reporter:
The Politburo meeting held on September 26 proposed that the construction of commercial housing should strictly control new supply, optimize existing stock, and improve quality. What specific considerations and arrangements are there to support the revitalization of existing idle land?
Liu Guohong, Vice Minister of Natural Resources:
The revitalization of existing idle land that you're concerned about is also a focus of our current work. The Ministry of Natural Resources is implementing the Politburo meeting's requirements to strictly control new supply, optimize existing stock, and improve quality. In terms of residential land supply, we're working on controlling new supply on one hand and revitalizing existing stock on the other.
For controlling new supply, we're guiding local governments to reasonably control the supply of new commercial residential land. For cities with excessively long digestion periods, we've suspended the supply of commercial residential land. For cities with relatively long digestion periods, we're implementing a "revitalize as much as supply" policy.
For revitalizing existing stock, as you may have noticed, on October 12, the Ministry of Finance announced allowing special bonds to be used for land reserves, which Assistant Minister Song Qichao just elaborated on. This policy mainly provides financial support for local governments to revitalize existing land through repurchasing. To make good use of this policy, we're guiding local governments to standardize procedures and clarify standards, focusing on "how to repurchase" to promote implementation. We're considering prioritizing the repurchase of residential and commercial service land that enterprises are unable or unwilling to continue developing and haven't started construction on, timely matching special bond funds and other resources. We'll also work with relevant departments to study the establishment of special loans for acquiring existing land as a supplement to special bonds, with the People's Bank of China providing special re-lending support. Deputy Governor Tao Ling also just explained this.
For the repurchased land, if it's to be re-supplied for real estate use, we will strictly control it. Only if there's a definite market demand can we optimize conditions and precisely allocate, but it must be controlled within a certain proportion of the total repurchased amount.
Revitalizing existing stock through land repurchasing can have three effects: First, it reduces the scale of existing land in the market, better playing the role of land reserves as a "reservoir" and regulating supply, stabilizing market expectations. Second, it increases liquidity, helping real estate companies concentrate funds on ensuring housing delivery. Third, after repurchasing, it forms "clean land" and "prime land", which is beneficial for improving public service facilities and the environment to meet residential needs, and can also free up space to support the development of the real economy and promote effective investment.
In the policy measures for revitalizing existing land, besides supporting local governments in repurchasing idle existing land as mentioned above, there are two other approaches. One is to encourage enterprises to optimize development. For enterprises willing to develop and where market demand exists, we allow phased certification, deferred payment of transfer fees, and reasonable exemption from breach of contract liabilities to ease enterprises' financial pressure. The other is to promote market circulation and transfer. For enterprises unable to develop, we guide local governments to stimulate market vitality through building trading platforms, supporting pre-registration and "transfer with mortgage", and promoting judicial disposal and cooperative development.
China News Service reporter:
Now, some people's housing demand has shifted from "having or not having" to "good or not good". What measures will be taken in the next step to meet people's new expectations for better housing? Thank you.
Ni Hong:
Thank you for your question. China's housing development has entered a new stage, shifting from "having or not having" to "good or not good". People have new expectations for the function and quality of housing.
As for what constitutes a "good house", I think opinions may vary. In summary, there are four characteristics: First, a good house should embody green concepts, allowing people to live healthily in it. Health and comfort are the most important aspects of "green". Second, it should reflect low carbon. I understand this low carbon to mean that throughout the house's entire lifecycle, it can save money for everyone, saving on electricity, water, and energy use, benefiting both the individual and society. Third, it should be intelligent. Through modern technology and digital means, it should make life more convenient for residents. For example, curtains that used to require standing up to pull can now be controlled remotely, and in the future, one might just lie in bed and say, "Xiaodu, open the curtains," making life more convenient through intelligent applications. Fourth, it should be safe, making residents feel secure and at ease.
In promoting the construction of "good houses," we mainly focus on creating models, establishing standards, building systems, and strengthening technology. Most importantly, we aim to apply new-generation information technology, green and low-carbon technology, new construction technology, as well as new products, materials, and processes to housing construction, promoting the development of "good houses" of different sizes and price points.
I want to emphasize that local governments should first build guaranteed housing as "good houses." Government projects and projects for the people's welfare must take the lead. At the same time, we need to put in effort to find ways to transform old houses into "good houses" in conjunction with urban renewal.
For this work, seeing is believing. A few days ago, I visited the "Good House" technology exhibition by China State Construction Engineering Corporation at Shougang Park. There were over 160 new technologies, more than 130 new products, and over 70 new achievements on display. They had model rooms for both new houses and renovated old houses, which you can experience. Especially for those who need home renovations, there are indeed many good things to see, such as adjustable cabinets, sensor faucets, sliding wardrobe doors, all of which are very practical technologies. The principle is to build "good houses" in ways that are convenient and comfortable for people to live in.
Here, I also want to emphasize that for real estate and construction companies, future development will compete on high quality, new technology, and good service. Those who can seize the opportunity for transformation and development, who can build "good houses" for the people and provide good services, will have a market, development, and a future.
Securities Times reporter:
I have a question about financial support policies for real estate. What specific policy measures does the financial sector have in promoting the healthy development of real estate in the next step? Thank you.
Xiao Yuanqi:
Thank you for your question. In promoting the stable and healthy development of the real estate market, financial policies are a series of comprehensive policies. In addition to the further strengthening of the urban real estate financing mechanism work I just introduced, and the several financial policies introduced by Deputy Governor Tao Ling of the People's Bank of China, we have some other policies that I'd like to highlight.
First, we need to implement a "combination" of various real estate financing tools, forming an integrated scale effect and enhancing precise adaptability. There are actually many real estate financing tools. From the banking perspective, there are development loans, which increased by over 400 billion yuan by the end of September this year compared to the beginning of the year. There are personal mortgage loans, commercial property loans, merger and acquisition loans (which are loans provided by banks to support real estate project companies or enterprises in acquiring other targets), and housing rental loans. Additionally, there are bond investments, such as financial institutions investing in bonds issued by real estate enterprises, and insurance companies can also make equity investments using insurance funds. The financing channels and tools are diverse. We need to leverage the unique advantages of different financing tools, as these various tools are highly targeted, addressing different needs. On the other hand, we need to tailor personalized financial products according to the financing needs of different real estate enterprises and projects at different stages, improving the precision, timeliness, and effectiveness of financing support.
Second, we are actively researching specific measures for policy banks and commercial banks to support the revitalization of idle existing land, together with relevant departments. As this policy is comprehensive, the Ministry of Housing and Urban-Rural Development, Ministry of Natural Resources, Ministry of Finance, and People's Bank of China have all discussed it, forming a joint force to revitalize idle existing land. We are studying allowing policy banks and commercial banks to issue a certain proportion of loans for the acquisition of this idle existing land, mainly aiming to promote more efficient use of idle land while improving and releasing cash flow in the real estate industry.
Third, regarding the extension of policies such as the "16 Financial Measures" and commercial property loans to the end of 2026, as well as adjusting existing mortgage rates and down payment ratios for first and second homes, we are working together with the People's Bank of China on these matters.
Fourth, we fully leverage the professional advantages of financial institutions in information and financial management to help real estate enterprises and projects by providing some financial advisory consulting, solution design, and other specialized financial services. This helps real estate companies and project companies strengthen asset-liability management and improve financial stability and sustainability.
Yicai reporter:
Regarding policies linked to the cancellation of standards for ordinary and non-ordinary housing, what considerations do we have for promoting implementation in terms of taxation?
Song Qichao:
Thank you for your question from Yicai. The Third Plenary Session of the 20th CPC Central Committee clearly stated that relevant cities are allowed to cancel the standards for ordinary and non-ordinary housing. Currently, the Ministry of Finance is urgently studying and clarifying tax policies that align with the cancellation of ordinary and non-ordinary housing standards, mainly including value-added tax (VAT) and land value-added tax.
The current policy is as follows: Regarding VAT, except for the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen, in other cities, VAT is uniformly exempted for individuals selling residential properties purchased more than two years ago, without distinguishing between ordinary and non-ordinary housing. In Beijing, Shanghai, Guangzhou, and Shenzhen, VAT is exempted for individuals selling ordinary residential properties purchased more than two years ago, while VAT is levied on non-ordinary residential properties sold by individuals after more than two years of purchase. Regarding land value-added tax, it is exempted for ordinary standard housing with a value-added rate of less than 20% in construction and sales. According to the relevant provisions of the implementation rules for the Provisional Regulations on Land Value-added Tax, the standards for ordinary housing are specified by each province.
Recently, we are making further adjustments to the above-mentioned tax policies. There are three main considerations:
Comprehensively grasp the pace of real estate regulation in relevant cities and the situation of local fiscal revenue to make scientific and reasonable arrangements;
Grant certain autonomy to local governments, maintaining policy stability and fairness;
Effectively reduce the burden on real estate enterprises and home buyers, promoting the stabilization and recovery of the real estate market.
We are urgently going through relevant procedures for the specific policies, and will promptly announce them to the public once approved.
MNI reporter:
Recently, major cities have reported increases in property visits and purchase intentions. How does the Ministry of Housing and Urban-Rural Development assess the overall trend of housing sales in October? What subsequent policies will be implemented to promote stabilization and recovery of the real estate market?
Ni Hong:
On September 26, the Politburo meeting emphasized the need to promote stabilization and recovery of the real estate market, releasing positive signals for stabilizing the market. Relevant departments have introduced a series of fiscal, tax, and financial policy measures, while local governments have implemented city-specific policies, canceling or reducing restrictive measures to support residents' rigid and improved housing demands. It can be said that these measures have effectively boosted market confidence. From market feedback, many cities and projects have seen significant increases in property viewings and visits, with sales volumes growing to varying degrees. The main indicators of the real estate market have notably improved. Particularly in first-tier cities, there has been an across-the-board stabilization since October.
We also observe that under the effect of a series of policies and after three years of adjustment, China's real estate market has begun to bottom out. Our foreign media friend asked about the October data. We judge that the October data will show positive and optimistic results.
Regarding policies to promote stabilization and recovery of the real estate market, I've already introduced them in my opening remarks. Today, various participating departments have also introduced highly valuable and operable policies with significant impact. Moving forward, we need to work together to effectively implement these "combination punch" policies, ensuring their full effect and allowing the public to enjoy the policy benefits. We can say that we are full of confidence in the stabilization and recovery of the real estate market.
The Paper reporter:
There is widespread concern about the campaign to ensure the delivery of pre-sold homes. How can we ensure the quality delivery of pre-sold commercial housing under construction? What measures has the Ministry of Housing and Urban-Rural Development taken, and what specific measures are planned for the future? Thank you.
Ni Hong:
Thank you for your question. On May 17 this year, the State Council deployed the campaign to ensure home delivery, and it has been exactly five months to date. Currently, we see that local areas are making strong progress in this campaign, with 2.46 million units already delivered, showing significant results. This campaign has given homebuyers peace of mind and has also brought noticeable changes to market expectations.
We, along with relevant departments, are earnestly implementing the decisions and deployments of the CPC Central Committee and the State Council, forming a joint force to implement a "combination punch". We've established a task force, working together with financial regulation, development and reform, finance, natural resources, audit, public security, courts, banks, and other departments and units. We're focusing on two main aspects: one is the "whitelist", solving the funding issues for project construction; the other is the progress of construction and delivery, enforcing the responsibilities of local governments, real estate enterprises, financial institutions, and other parties. Following market-oriented and law-based principles, we're implementing "one policy for one building" and promoting classified progress for early delivery.
For normally operating projects, we're advancing according to market-oriented and law-based principles. For insolvent projects, we're accelerating bankruptcy reorganization or liquidation based on legal and market-oriented principles, effectively protecting the legitimate rights and interests of homebuyers. Here, I want to emphasize that for those who violate laws and regulations and harm the interests of the masses, we will resolutely investigate and punish, and must not allow them to escape responsibility.
How do we implement this work? Together with the Financial Regulatory Administration and relevant departments and units, we're strengthening the linkage of credit, land, judicial, and other measures, focusing tightly on delivery targets, and continuing to vigorously implement various tasks. First, we're focusing on progress. Through the national home delivery information system, we're establishing records for each delivery task, marking off each unit as it's delivered. Second, we're focusing on quality. We're making the home delivery projects a focus of strengthened housing quality supervision, ensuring that houses are not only built but built well, delivering qualified houses to buyers. Third, we're focusing on coordination. We're making good use of the linkage mechanism of national, provincial, and municipal task forces to coordinate and solve difficulties and problems in cross-regional fund withdrawal, legal issues, asset disposal, and other aspects.
We believe that with the credit support of the "whitelist", the close cooperation of various departments, the resolute action of local governments, and the active efforts of real estate enterprises, we will surely win this campaign to ensure home delivery, complete the task given to us by the CPC Central Committee and the State Council, and allow the vast number of homebuyers to receive their houses as soon as possible.