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This week, the State Council issued theDeeply implement the five-year action plan for the people-oriented new urbanization strategyThe plan provides guidance for urbanization in the next five years.Plan to push China's urbanization rate to 70% within five years, and cultivate a number of modern urban agglomerations with strong radiation and driving force.

As the first major policy proposed in the real estate sector after the Third Plenary Session of the 18th CPC Central Committee, what are the highlights of the Five-Year Action Plan for the New Urbanization Strategy?What specific policy trends are indicated in the plan?？

We invited experts fromUrbanization rate target, relaxation of household registration, urbanization of agricultural population, metropolitan area, three major projectsStarting with five questions, we will dismantle the five-year plan for new urbanization and explore the guidance for the real estate industry behind the plan.Potential investment opportunities。

- The urbanization rate of 70% means that the slowdown of urbanization in the future is inevitable

hostholdpeople:

The "New Urbanization Strategic Plan" clearly proposes to increase the urbanization rate to 70% within five years. This is the first time that the government has set a clear target for China's urbanization rate. Do you think this 70% figure is the official urbanization rate ceiling? How will we break through the ceiling in the future?

1丨70% urbanization rate is the limit of natural development in five years

By 2023, China's urbanization rate is 66.16%, and the average annual increase in urbanization rate in the past six years has been less than 1 percentage point. According to the five-year plan for the new urbanization strategy, China's urbanization rate will reach 70% by 2029.It implies that the future slowdown in urbanization is inevitable.。

Figure: Changes in China's urbanization rate in recent years

Data source: Wind, Songshan Market Research

2丨70% is also the ceiling of urbanization rate for China's natural development

To a certain extent, China's own development trend, coupled with China's complex geographical conditions, actually limitsThe natural ceiling of China's urbanization rate。

andThe vast area west of the Hu Huanyong Line has limited natural conditions and lacks population concentration., it will be more difficult to achieve the increase of urban area and the increase of new urban population.

In 2023, China's urbanization rate has reached 66%, and the subsequent upward trend of urbanization shows signs of slowing down.According to the cases of Japan and South Korea, East Asian neighbors, after the urbanization rate reaches 75%, there will be a significant slowdown and reach a bottleneck.Some investor friends may say that Japan's urbanization rate has increased from about 75% to 90% since 2000, but this is actually due to Japan's "merger of cities, towns and villages", which directly absorbed some rural areas into cities.Urban population concentration rate DID indexIt has always been around 70%. However, South Korea's urbanization rate reached a bottleneck after the 1988 Seoul Olympics and has remained at around 80%. See the figure below for details.

picture:Comparison of urbanization rates in China, Japan, and South Korea (the yellow circle represents the nominal increase brought about by the merger of cities, towns, and villages in Japan)

Data source: Wind, Songshan Market Research

Figure: Changes in Japan's urbanization rate and DID rate

Data source: Wind, Songshan Market Research

3丨Four strategies to break through the ceiling

If we want to approach or even break through the 70% urbanization rate ceiling, the five-year plan for the new urbanization strategy also provides a direction:Relaxation of settlement in megacities, urbanization of rural population, metropolitan areas, and three major projects。

Figure: Four major directions to break through the urbanization rate ceiling

Next we will discuss them separately.Starting from the five-year plan, we will analyze the following four major directions in detail.。

- First-tier cities will lift purchase restrictions and significantly relax household registration, which is a medium- to long-term trend

hostholdpeople： 

The five-year plan for the new urbanization strategy points out that the requirement to cancel the restrictions on settlement in cities with a permanent urban population of less than 3 million will be fully implemented.Comprehensively relax the settlement conditions for cities with a permanent urban population of 3 million to 5 million. Improve the point-based settlement policy for megacities with a permanent urban population of more than 5 million, and encourage the removal of annual settlement quota restrictions.

In your opinion, will the settlement policies in first-tier cities be greatly relaxed or even cancelled?

1丨There is an urgency to relax the settlement policy in first-tier cities

The current aging rate of first-tier cities is close to the level of Japan around 2010. Overall, it is difficult for the vitality of the city and the increase in the labor force to rely on endogenous growth, but it is necessary to moderately relax the settlement policy. Overall, the point-based settlement policy in first-tier cities will be further improved, andThe actual threshold for settling down will be relaxed to a certain extent。

Even if first-tier cities will not fully relax purchase restrictions soon in the future, settlement in first-tier cities will be further opened up, which is expected to become the policy direction guided by the macro-policy toolbox.After all, the endogenous population growth in first-tier cities has already had some difficulties.。

picture:Aging rate in key regions (the red line is Japan's aging rate in 2007, 21.49)

Data source: Wind, Songshan Market Research

2丨Relaxing the settlement policy will help break through the urbanization rate ceiling

As China's urbanization process deepens, the growth of the urbanization rate of permanent residents has begun to show signs of slowing down, which indicates that urbanization may be approaching a turning point. Faced with this challenge, policymakers have taken key measures, namely, relaxing or even abolishing restrictions on settlement.In order to break through the so-called "ceiling" of urbanization rate。

This strategic shift has expanded from focusing on attracting highly skilled talent to embracing a wider population.Aims to promote population mobility and accelerate the improvement of urbanization level。

There is still an 18 percentage point difference between the urbanization rate of China's total population and the urbanization rate of registered populationThe only way forward is for large cities to further relax their settlement policies and absorb rural population into new urban population. This naturally leads toNext question: Urbanization of rural population。

picture:Target and actual value of new urban employment in China

- The core focus of the urbanization of the agricultural population should be the transfer of homesteads

hostholdpeople:

　The five-year plan for the new urbanization strategy also emphasizes improving the employment of migrant workers and promoting the transfer of agricultural population to urban areas. However, we know that the transfer of employment and urbanization of agricultural population is a difficult project. What obstacles do you think will exist in the subsequent urbanization of agricultural population?

1丨Gap between agricultural population and registered urbanization

At present,There is still an 18 percentage point difference between the urbanization rate of China's total population and the urbanization rate of registered populationThe only way forward is for large cities to further relax their settlement policies and absorb rural population into new urban population.

On the basis of deepening the reform of the household registration system,China's future trend will be to further strengthen the concentration of population in large cities, and the transfer of agricultural population to towns for employment.In the future, the trend of population outflow from a large number of third- and fourth-tier cities may not be reversed, but developing county economies well and further promoting the development and expansion of large cities are not contradictory.

picture:China's total population urbanization rate and registered population urbanization rate

Data source: Wind, Songshan Market Research

2丨Obstacles to the transfer of agricultural population to employment: the flow of factors behind it

The core obstacle behind the transfer of agricultural population to employment is the flow of factors. This view can be understood from the following aspects:

First, the land factorLand is an important resource for agricultural production. However, in rural areas, the land transfer mechanism may not be perfect.It is difficult for farmers to transfer their land to non-agricultural industries.For example, some regions lack standardized land transfer markets and intermediary services, resulting in high land transfer transaction costs and low efficiency.

Secondly,Funding elementsThe transfer of agricultural population to employment often requires certain financial support for training, transportation, accommodation and other aspects.However, rural financial services are relatively weak, and it is difficult for farmers to obtain credit funds. They lack start-up funds for entrepreneurship and employment.For example, some financial institutions do not have a sound credit assessment system for farmers, which makes it difficult for farmers to obtain loans.

Furthermore,Labor FactorThe cultural quality and professional skills of the agricultural population may be relatively low, making it difficult for them to adapt to the job requirements of urban non-agricultural industries.Information asymmetry in the labor market makes it difficult for farmers to obtain accurate employment information, leading to missed employment opportunities.For example, some remote rural areas lack effective channels for disseminating employment information, and farmers have limited knowledge of employment conditions in cities.

at last,Institutional elements. The household registration system and its relatedDifferences in social security, education, medical care, etc.This makes it difficult for migrant workers from rural areas to enjoy the same public services and welfare as urban residents, and increases the costs and risks of their living and employment in cities.

Songshan Market has always been concerned"Unemployment rate of migrant workers with non-local household registration" indicatorIn previous years, the unemployment rate of migrant workers was synchronized with the real estate cycle. When real estate investment declined, the unemployment rate of migrant workers would increase. However, after entering 2023, this trend has been reversed.While the growth rate of real estate investment continued to decline and the decline widened, the unemployment rate of migrant workers was effectively controlled。

The reason is that in the process of momentum switching, infrastructure within the old momentum began to hedge against real estate.Maintaining the growth rate of infrastructure investment at around 7% will also keep the unemployment rate of migrant workers below 5%.。

picture:Changes in infrastructure investment, unemployment rate of migrant workers and land acquisition costs

Data source: Wind, Songshan Market Research

3丨Core issue: Transfer of homestead land

If the transfer of rural housing land in China is opened up in the future, it will bring new changes to the real estate industry.From 2000 to 2016, my country's rural permanent population decreased from 808 million to 589 million, a decrease of 27.1%. However, during the same period, the area of ​​rural housing land increased from 247 million mu to 298 million mu., an increase of 20.6%. It is imperative to open up the transfer and exit mechanism of homesteads in the future.

my country's rural collective construction land currently covers 190,000 square kilometers, which is more than twice the urban construction land., of which more than 70% are homesteads, while the current permanent population in rural areas is less than 40%, and tens of millions of mu of homesteads are idle or inefficiently used. If the transfer of homesteads is further liberalized, the scope of homestead transfer can be expanded, and farmers' income can be increased.Promoting the influx of rural population into cities will also create both new supply and demand for the real estate industry.Moreover, this reform is different from the three major projects and the purchase and storage of new houses. It is equivalent to releasing the value of land factors and requires less external financial support.It is equivalent to starting a round of reforms that “costs nothing or less”, with long-term effects.。

Recently, Nantong, Jiangsu, Fengyang, Anhui and other places issued notices.Rural residents are encouraged to withdraw from legal homesteads and move into cities to buy houses., provide certain housing purchase subsidies. Although the intensity is not strong in the short term, it can also guide future policy trends.

Overall,The key factor in promoting the urbanization of agricultural migrant population and urbanization in the future is the reform of homestead transfer.

Figure: China's rural land transfer situation

Data source: Wind, Songshan Market Research

- The strategic thinking of metropolitan areas and urban clusters is quite different

hostholdpeople:

　Expert: Your view has always been to emphasize urban agglomerations rather than urban clusters. In this five-year plan, urban agglomerations are not mentioned at all, but there is a lot of emphasis on expanding urban agglomerations, which is different from the previous statements of China's urbanization strategy. Why do you think this is the case? Will the urban agglomeration strategy completely replace urban agglomerations in the future?

For a long time, the policy on the development strategy of urban spatial pattern was closer to urban agglomeration, hoping to achieve regional common prosperity through the flow of capital, population and other factors between cities. However,After nearly a decade of development, we have found that it is difficult for resource elements in core cities and megacities to flow between cities., but the big citiesSiphon effectObvious.

Taking Zhengzhou as an example, the current permanent population of Henan Province is 98.83 million, but the permanent urban population is only 55.79 million., the growth rate of Henan's urbanization rate has slowed down. Except for Zhengzhou, which is a medium-level second-tier city, all cities in Henan are third- and fourth-tier cities, which in itself represents the situation of the sinking market.

In the context of monetization of shantytown renovation from 2015 to 2018,The Central Plains urban agglomeration has achieved rapid development. However, the subsequent slowdown in growth has triggered pressure for Zhengzhou to suspend construction and unfinished projects.The bottleneck of growth, the pressure of delivering the task of ensuring people's livelihood, and the relatively slow progress of urbanization have given rise to a series of policy openings and innovations.

From this point of view,Further development of urban agglomerations is not conducive to the flow of urban and rural factors.The slowdown in the development of such urban agglomerations is a strategic challenge for development.Over-emphasizing the flow of resources and factors between cities will make it difficult to break through the urbanization ceiling in the current context.。

Different from the city cluster thinkingThe urban agglomeration concept is based on the expansion of core cities. Core cities should continue to expand their commuter networks, expand urban coverage, and actively provide land supply., combined with urban renewal, to expand the actual urban area, rather than mechanically linking with other cities. The expected policy direction is that the metropolitan area strategy will fully replace the urban agglomeration strategy and become the main direction of national regional development.

By further developing metropolitan areas and promoting urban-rural integration, we can better promote the coordinated development of cities and rural areas., improving the overall development quality and efficiency. This will help solve the imbalance and insufficiency in the current urbanization process and promote the high-quality development of China's economy and society.

Figure: Compared with urban agglomerations, the metropolitan area development strategy is more suitable for promoting urban-rural integration

Data source: Songshan Market Analysis

- The focus of the three major projects is the allocation of affordable housing

hostholdpeople:

　The five-year plan for the new urbanization strategy specifically mentions the need to further implement urban renewal and improve urban safety, with an emphasis on the three major projects of "urban village renovation, affordable housing construction, and emergency and emergency facilities construction." This is consistent with the direction proposed at the Political Bureau meeting in July last year.

However, in this year, judging from the funding, the three major projects have not been implemented effectively and have not met market expectations. What do you think about this issue?

1丨Three major projects are being promoted: funding sources still need to be resolved

The core bottleneck of the three major projects has always been the source of incremental funds they need。

First, the PSL release, which the market had high hopes for, showed no signs of additional increases after reaching the 500 billion yuan quota. Much of the 500 billion yuan of PSL release was used to repay past loans after entering three major engineering projects.Therefore, the 500 billion PSL did not promote the implementation of more physical assets in the three major projects.。

Figure: New PSL issuance and existing quotas

Data source: Wind, Songshan Market Research

On the other hand, the highly anticipated special loan for urban village reconstruction has already received support from a large number of banks.However, due to the long project cycle and the problem of repayment source, the actual loan amount still did not meet market expectations.. See the table below for details.

Table: Special loans for urban village renovation in key cities

Data source: Local government websites, compiled by Songshanlunshi

I would also like to emphasize that the Politburo meeting announcement in April this year did not emphasize the three major projects as much as it did in July last year, although it was a downplaying of theBut it definitely does not mean that the importance of the three major projects has decreased.The central government's tone of downplaying the three major projects is also an adjustment to the policy release on the supply side.The goals of the three major projects, must be to meet the people's living needs,Ultimately solving the problem on the demand side, it is definitely not the supply side that drives the economy through “large-scale demolition and construction”.

2丨Three major project obstacles: supply-side convergence makes it difficult to stimulate investment

In addition to the source of funds, the high inventory cycle of residential properties will also affect the effectiveness of the three major projects.After all, the three major projects involve the reconstruction of urban villages, which is likely to generate new residential supply. Emergency and dual-use facilities and affordable housing are also incremental supply. The "passive accumulation" of the market itself limits other incremental supply tools.

According to the plan of the Ministry of Natural Resources, the supply-side increment of the three major projects should give priority to meeting security needs rather than increasing the transfer of market-oriented residential land.Therefore, many analysts believed that the reconstruction of urban villages would help local governments restore their "land finance", which was also a misunderstanding.。Click to learn more about Digital Affordable Housing

In fact, the original intention of the three major projects is not to put all the chips on the supply side. The transformation of urban villages can fully release the housing purchase potential of the original residents of urban villages.. It is only because of the high inventory and limited funding sources, coupled with the increasing financial pressure on local governments, that all regions generally promote housing voucher resettlement and physical resettlement, and do not have the same strength as the monetary resettlement of shantytown renovation in the 2014-2018 cycle.

3丨The focus of the three major projects shifted from urban village reconstruction to affordable housing

Originally, after the Politburo meeting in July last year, the most concerned of the three major projects was the renovation of urban villages. However, after more than a year of promotion, this yearThe April Politburo meeting and the subsequent work plan of the Ministry of Natural Resources both reflected the downplaying of urban village renovation.So in my opinion, the focus of the three major projects in the future will shift from urban villages to affordable housing construction.

andAffordable housingThe profits are also small, lacking the premium of the land itself and financing, so the promotion of affordable housing is bound to be tied to the transformation of urban villages from the beginning., jointly use funds with strong public welfare attributes such as fiscal funds, China Development Bank funds or special bond funds to complete the construction, and actively guide social capital to complete the financing and construction of benchmark projects.

4丨Allocated affordable housing will become the hub for “digesting stock and optimizing growth”

In the construction of affordable housing, affordable rental housing and allocated affordable housing are two different options.In my opinion, the potential of allocated affordable housing in the future is greater, and it can become a hub for “digesting existing stock and optimizing incremental growth”.。Digital affordable housing, small profits and sustainable development, click to learn more

first,There is not much room for affordable rental housing in 2024-2025During the 14th Five-Year Plan period, the country plans to build 8.7 million affordable rental housing units. Among them, 940,000 and 2.36 million units will be built in 2021 and 2022 respectively, and 2.04 million units will be built in 2023. At present, from 2024 to 2025, there are only 3.36 million units left in the construction plan for affordable rental housing.If the target is exceeded by 5%, there will be limited room for preparations in 2024-2025.. See the figure below for details.

Figure: Affordable rental housing fundraising plan and space

Data source: Ministry of Housing and Urban-Rural Development, Songshan Market Review

The latest policy statement is also "The land for affordable housing is allocated, and the land that has been approved but not built and recovered according to law, the commercial housing and land disposed of by bankrupt real estate enterprises, and idle housing should be fully utilized to build and raise funds for affordable housing.” “Cities with large inventories of commercial housing can appropriately renovate or purchase existing commercial housing for use as affordable housing in accordance with market-oriented and rule-of-law principles, and actively revitalize and utilize idle land and houses.”

In my opinion, the three major engineering priorities are:It is a property-based, allocated affordable housingAt present, many large cities have also disclosed plans to build or purchase distribution-type affordable housing. Songshan Market Research Institute quotes the results of the compilation here. Please see the table below for details.

Table: Supply plan of allocated affordable housing in some cities

Data source: China Index Academy, Songshan Market Research

Click on the image below for details