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As one of the important means to digest inventory, the "national team" is accelerating its efforts to purchase and store commercial housing.

On July 30, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and deploy economic work in the second half of the year. The meeting emphasized that we must continue to prevent and resolve risks in key areas, implement new policies to promote the stable and healthy development of the real estate market, adhere to the combination of digesting existing stocks and optimizing incremental growth, actively support the acquisition of existing commercial housing for use as affordable housing, further do a good job in ensuring the delivery of housing, and accelerate the construction of a new model for real estate development.

Compared with the Politburo meeting on April 30, this meeting reiterated the need to digest existing stock and optimize incremental growth, ensure the delivery of housing, and build a new model for real estate development. It also mentioned for the first time the support for the acquisition of existing commercial housing for use as affordable housing. This statement was first formally proposed at the State Council Information Office policy briefing on May 17, when Tao Ling, deputy governor of the People's Bank of China, expressed support for local state-owned enterprises to purchase completed but unsold commercial housing at reasonable prices for use as allocated or rented affordable housing. In the following two months, this measure was repeatedly mentioned at multiple ministerial meetings.

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, told the China Times that purchasing existing new homes for sale for use as affordable housing can not only reduce inventory, but also improve the capital chain of real estate companies, help real estate companies fulfill their main responsibility for ensuring the delivery of houses, and at the same time raise funds for affordable housing. In the second half of the year, it is expected that the acquisition of existing homes may be fully implemented, but the actual effect of reducing inventory remains to be seen.

The Politburo meeting first mentioned the collection of houses

Recently, the purchase of existing commercial housing for use as affordable housing has been highlighted in many meetings of the People's Bank of China and the Ministry of Housing and Urban-Rural Development.

On June 12, the central bank held a meeting in Jinan to promote the re-lending of affordable housing, requiring financial institutions and relevant units to have a deep understanding of the people-oriented and political nature of real estate work, strive to promote the implementation of the re-lending policy for affordable housing, and accelerate the destocking of existing commercial housing.

A week later, on June 20, the Ministry of Housing and Urban-Rural Development held another video conference on the acquisition of existing commercial housing for use as affordable housing, proposing that the acquisition of existing commercial housing for use as affordable housing is an important decision and deployment made by the CPC Central Committee and the State Council, which is conducive to promoting the destocking of existing commercial housing, promoting the healthy development of the real estate market, revitalizing existing resources to increase the supply of affordable housing, coordinating the battle to ensure the delivery of housing and the "white list" mechanism, and preventing and resolving real estate risks. All localities should further enhance their sense of responsibility and mission, emancipate their minds, broaden their thinking, and steadily grasp and advance. It is also clear that cities at or above the county level will be promoted to effectively, orderly and effectively carry out the acquisition of existing commercial housing for use as affordable housing.

On June 28, the Central Bank held its regular meeting for the second quarter of 2024, and once again proposed to promote the implementation of newly established tools such as re-lending for scientific and technological innovation and technological transformation, and re-lending for affordable housing, increase financial support for the "market + security" housing supply system, and promote the accelerated construction of a new real estate development model.

At this Politburo meeting, the newly mentioned "acquisition of existing commercial housing for use as affordable housing" was the only new content added compared to the last time, and the expression "actively support" was used, which also shows the importance the central government attaches to this policy tool. Zhang Dawei, chief analyst of Centaline Property, analyzed to the reporter of China Times that if the "national team" directly enters the market with real money, it will undoubtedly inject new vitality into the property market, help local governments solve inventory problems, ease the capital chain pressure of real estate companies, and protect the housing rights and interests of low-income groups.

The price may be 50% off the commercial housing

Statistics from the China Real Estate Research Institute show that as of the end of July, more than 60 cities across the country have introduced policies for local governments or state-owned enterprises to purchase existing residential properties for use as affordable housing. These include megacities such as Guangzhou, Chongqing, Hangzhou, Zhengzhou, Changsha, and Tianjin, as well as counties or county-level cities such as Lujiang and Jiyuan.

However, funding remains the most important issue. Zhang Dawei pointed out to our reporter that the government's acquisition of existing housing can theoretically reduce inventory levels, ease the downward pressure on the real estate market, and achieve some of the goals of the "three major projects" by changing the use to affordable housing. But to play a role in supporting the market, the residential sales cycle needs to be reduced to less than 18 months. To reduce the housing sales cycle to less than 18 months, about 7.4 months of inventory needs to be removed, which corresponds to 770 million square meters of sales, accounting for about 29% of the broad housing inventory. The funds required are at the trillion level, so how to expand the source of funds will affect the role of this policy.

According to a research report by Huatai Securities, most local governments have put forward certain requirements for the acquisition and storage of housing sources. In addition to being built and unsold, the housing sources must have convenient transportation and relatively complete supporting facilities. Some cities require projects to be equipped with a certain proportion of parking spaces. In addition, most places require that the construction area of ​​a single unit of the acquired housing sources be less than 120 square meters, and give priority to projects with whole buildings or whole units that have not been sold and can be closed for management. In terms of price, many places have proposed to use the replacement price of affordable housing in the same area as the reference upper limit, and some regions have stated that they will be allocated at about 50% off the price of commercial housing in the same area. The research report believes that in the future, some cities may set the price upper limit of the acquisition and storage of housing sources at less than 50% of the price of commercial housing in the same area.

Li Yujia pointed out that after the strong policy relief in May and June, from the relevant data of the real estate industry in the first half of the year, although the decline has eased slightly, it is not obvious. It still maintains a double-digit decline under the low base of last year, and the pressure of contraction in the entire industry is still very high. Therefore, in addition to preventing risks in the second half of the year, more new models and incremental growth should be explored to hedge the downward trend of the industry, continue to reduce the reserve requirement ratio and interest rates, reduce mortgage rates, support old-for-new, stock acquisition, etc., and support rigid demand and housing improvement demand.

Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia