The central bank's monetary policy implementation report talks about house rents: the core variable affecting housing value
2024-08-10
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On August 9, the central bank released the second quarter monetary policy implementation report. In the column "Supporting the sustainable development of the housing rental industry", the report pointed out that rent is the core variable affecting housing value, and emphasized that rent is the core determinant of property value.
According to authoritative sources, the second quarter report explains the necessity and feasibility of financial support for the housing rental industry through a special column, which is conducive to balancing the current and long-term.
"From a short-term perspective, the current real estate market is also in a special period of adjustment. Many new houses cannot be sold and second-hand properties are vacant. Increasing support for the housing rental industry will help to revitalize existing stocks and destock, balance supply and demand in the real estate market, and stabilize expectations." The person pointed out that in the long run, my country has "no shortage of houses" in terms of total volume, but there is still room for adjustment in structure. New citizens and young people want to rent "good houses"; insist on renting and selling at the same time, support more and more high-quality housing rental companies to enter the market, and develop the housing rental industry. These are all important directions for future new real estate models.
Emphasize that rent is the core determinant of property value
The report believes that the value of housing mainly comes from the discount of future rent, which determines the base price and foundation of real estate. The "rent-to-sale ratio" indicator often mentioned in the market has generally rebounded in recent years, and the impact of future rent growth will gradually become apparent.
The "rental-to-sale ratio" is the ratio between rent and sale price. It is a simplified indicator to measure the value of housing. It has generally rebounded in recent years. Some market institutions have calculated that the current rent-to-sale ratio in first-tier cities is close to 2%, and in second- and third-tier cities it has risen to around 3%. However, this indicator is static, assuming that rents will remain unchanged in the future.
Market analysts believe that for a given housing purchase cost, the sum of the rental-to-sale ratio and the future rental growth rate can reflect the total rate of return on rental housing. Currently, many cities and areas with relatively strong rental demand have reached more than 3%, which is higher than the return on most assets.
From an international comparison, after excluding property taxes, the rental-to-sale ratios in the US and Japan are both above 4%, and in the UK around 3.5%. With the in-depth development of the domestic housing market and the diversification of housing concepts, there will be more choices for renting, and there is still room for improvement in my country's rental yields.
In addition, the report also pointed out that under the new situation of profound changes in the supply and demand relationship in the real estate market, the scale of my country's existing housing stock is already very large, and the housing rental industry is an important direction for the future new real estate development model.
From the demand side, in recent years, the rental demand for "good houses" has been increasing not only among low-income groups, but also among new citizens or young people who have just graduated and started working. Some market institutions estimate that in the future, the population in my country that needs to rent houses will exceed 200 million, and the market potential is relatively large.
From the supply side, in the past, it was mainly individuals who provided rental housing in my country. In recent years, with the recovery of the rental-to-sale ratio and the decline in financing and operating costs, the commercial sustainability of the housing rental industry has been enhanced. More and more housing rental companies have entered the market, and large-scale and intensive operations will help provide better-quality and more stable rental housing services.
New central bank tools help kick-start housing rental industry
The report believes that my country's housing rental business is still in its infancy and the market development model is still in the exploratory stage. The central bank has timely introduced a new tool for affordable housing refinancing to support enterprises to purchase existing housing in batches for use as affordable housing, which can form economies of scale relatively quickly. At the same time, many places have also provided policy support in terms of finance, taxation, land, and supporting facilities, which can help reduce corporate costs and enhance the commercial sustainability of the industry.
It is understood that recently, the ashtray has improved and launched the affordable housing re-loan based on the original rental housing loan support plan. Through market-oriented methods, it promotes the construction of a new real estate development model and supports the development of the housing rental industry. Enterprises purchase existing housing in batches to form group purchasing power, and the purchase price discount will further increase the investment return of the housing rental industry and the willingness of enterprises to participate.
This will also increase the supply of affordable housing. The acquired commercial housing can be used for distribution or leasing as affordable housing, which will meet the demand for affordable housing while accelerating the activation of existing stock and destocking the market.
In addition, the plan also forms a synergy with the guaranteed housing delivery and "white list" mechanisms to reduce the risk level of the real estate market. Real estate companies participate voluntarily, and the funds recovered must be used for guaranteed housing delivery projects and other projects under construction, which will promote more projects to meet the "white list" conditions and improve the financial situation of real estate companies.
According to the data from the central bank, as of the end of June, financial institutions had issued 24.7 billion yuan in rental housing loans, and the balance of guaranteed re-loans was 12.1 billion yuan. Subsequent loan issuance is expected to accelerate further. At the same time, local governments have also provided support policies in terms of finance, taxation, land, and supporting facilities, which can help reduce corporate costs and enhance the commercial sustainability of the housing rental industry.
"With the support of these financial and local fiscal policies, the housing rental market will usher in broader space in the future as the operating capabilities of housing rental companies improve and the market commercialization operates effectively. In the long run, it will also promote the orderly transformation of the real estate industry's development model." An authoritative source pointed out.
In addition, the report also pointed out that in the future, as real estate market pricing becomes more rational, rental demand will be further released, the rental-to-sale ratio will continue to improve and rebound, and the operational capabilities of housing rental companies will continue to improve, there will be a foundation for the housing rental market to achieve commercial and sustainable development.
"In the next stage, we must continue to give full play to the role of supporting policies in promoting the housing rental industry and improve the financial support system for housing rental." The report revealed that the central bank will fully mobilize the enthusiasm of market-oriented institutions, establish a sustainable business model through the investment of more social funds, support the destocking of existing commercial housing, and help promote the transformation and development of the real estate industry.
Beijing News Shell Financial Reporter Jiang Fan Editor Chen Li Proofreader Liu Baoqing
