What other tricks does China have to save its housing market? Can the loosening of restrictions on home purchases “recognize the house but not the loan” prevent the market from collapsing | Past 24 hours | Corner International udn Global

【2023. 9. 18 China】

What other tricks does China have to save its housing market?Can the loosening of restrictions on home purchases, such as “owning a house but not a loan”, prevent a market collapse?

“Almost all the policies that can be used to rescue the housing market are running out. If we don’t run, there will be no chance…?” The Chinese government launched a series of policies to boost the housing market in September in order to revive the buying sentiment of the real estate market that has been sluggish for a long time – —The real estate industry accounts for a quarter of China’s economy. In the past few decades, it can be said to have driven China’s annual double-digit economic growth figures. However, as many of China’s domestic real estate leaders are burdened with debt, the real estate industry The sluggishness has also made the overall Chinese economy weak. On September 1, Beijing, Shanghai, Guangzhou and Shenzhen implemented the policy of “recognizing houses but not mortgages” to loosen mortgage restrictions, ushering in a short-term housing market boom. However, in the half month since the policy was implemented, the number of newly listed houses for sale has far exceeded the transaction volume. Is the policy correct? It seems not optimistic to bring a positive boost to China’s real estate market.

The Chinese government still hopes to rescue the declining real estate market. Since late August, the government has successively introduced policies to stimulate the housing market, including the complete elimination or relaxation of housing purchase restrictions in many second-tier cities, and the introduction of a “house purchase but not loan” policy. ——According to this policy, as long as the home buyer does not have a property in the local area where he or she is purchasing the home, he or she can enjoy preferential interest rates and higher loans for the “first home purchase” (first purchase) regardless of whether he or she has ever had a mortgage loan across China. proportion (that is, the down payment proportion is reduced).

Beijing, Shanghai, Guangzhou, and Shenzhen announced on September 1 the implementation of the “recognition of houses but not loans” policy. The changes in housing market policies in first-tier cities have also brought about an increase in market popularity. According to data from the Chinese real estate investment consulting agency “China Index Research Institute”, After the implementation of the “recognize a house but not a loan” policy, China’s willingness to buy property increased by 15%. After Beijing and Shanghai followed up on September 1, “Recognize a house but not a loan”, the willingness to buy a property increased by more than 20%. The number of people looking at houses has increased significantly. In Shanghai alone, the number of “second-hand houses” listed for sale surged by thousands, an increase of 160%, on September 2. However, the increase in transaction size has been limited, and the actual policy results still need to be achieved in the longer term. observe.

The mortgage and interest rate adjustment policies launched by the Chinese government are intended to stabilize housing prices in big cities. John Lam, head of China and Hong Kong real estate research at UBS, pointed out in a relevant research report:

“The country’s easing policies may help restore home buyers’ expectations for housing prices, especially in first-tier cities.”

Nomura Securities’ view is more conservative and pessimistic, pointing out that the Chinese government’s relaxation of housing loan policies may bring a “short respite” to the real estate market. However, since there are still various restrictions on housing transactions and land in large cities, the impact of the policy may be limited, and other Environmental factors, including China’s declining exports, geopolitics, weak market confidence, etc., will also continue to impact China’s overall economic environment and consumer confidence. Therefore, Nomura Securities analyzed:

On China’s Weibo, there are more pessimistic voices about China’s real estate market. Some netizens believe that the sudden increase in the number of second-hand houses listed for sale means that “recognizing the house but not the loan” is bad, and is regarded by real estate speculators as “the last escape.” opportunity, thus triggering a wave of selling,“The available policies are almost exhausted. If we don’t run, we will have no chance.”

Another netizen said:

“It is said that once the policy of recognizing a house but not a loan became popular, it was not real estate that became popular, but divorce registration. Because house prices were too high and they could not be sold, especially in first-tier cities, some people divorced by agreement and divided the house to one of the parties. The party who owns the house then sells the house to his former spouse at a high price. Of course, the former spouse obtained a loan from a bank to purchase the house. The house is sold and the risk is transferred to the bank.”

The real estate industry accounts for a quarter of China’s economy. However, in recent years, large leading companies (such as Evergrande) have fallen into debt default difficulties, unfinished buildings have continued to emerge across the country, and the housing market has declined. Such unstable conditions have prompted the Chinese government to After issuing the “Notice on Carrying out Current Financial Support for the Stable and Healthy Development of the Real Estate Market” (referred to as 16 Measures) in November to rescue the market, a number of stimulus policies will be released in 2023.

Frederic Neumann, chief Asia economist at HSBC, commented:

“These are the most powerful measures to target the real estate market so far, and they do show that Beijing is taking action… but how much influence it will gain remains to be seen.”

Looking at China’s economy, it was originally expected that China would usher in a strong economic recovery in 2023 when the epidemic control was “fully relaxed”. However, in the second quarter, real estate sales, export trade and industrial production all declined, and in August, More bad news swept the market, including that Country Garden, China’s largest private real estate developer by sales, almost defaulted on its U.S. dollar bond interest payments (Country Garden was supposed to pay in early August, but did not pay the total price until just before the 30-day grace period was about to expire. Concerns intensified as a result of a $1 billion bond paying $22.5 million in interest) and the sudden cancellation of official youth unemployment data, which hit 21.3% in June.

In the recent legislative planning of China’s 14th National People’s Congress Standing Committee, the “real estate tax” legislation that originally attracted much attention from Chinese public opinion did not appear. The outside world interpreted this to mean “the suspension of real estate tax legislation.” China’s “Securities Times” reported that the suspension The reason for the legislation is “Considering the domestic economic situation, any measures to increase burdens must be introduced with extreme caution at this time.” Netizens’ comments on China’s Weibo expressed no mercy:

“I’ve thought of everything I should think of, and now I just have to cancel the purchase restrictions in first-tier cities.”

“The postponement of the real estate tax shows that we did not expect that the property market would cool down so quickly, and that investment and the economy would suddenly become so bad.”