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Our reporters Wu Jing and Lu Zhikun report from Beijing

Since the beginning of this year, "risk prevention" and "inventory reduction" have become the main tasks in the real estate sector.

On July 30, the Political Bureau of the CPC Central Committee once again proposed to actively support the purchase of existing commercial housing for use as affordable housing. Combined with the destocking measures taken by various regions this year, the purchase of existing commercial housing for use as affordable housing has become the "destocking" method promoted by current policies.

According to statistics from market institutions, more than 60 cities have issued relevant housing purchase and storage policies. Especially since the "May 17" new real estate policy, many places have accelerated the introduction of policies to encourage state-owned enterprises to purchase and store newly built but unsold houses.

What are the standards for state-owned enterprises to purchase and store? What problems may they encounter? All parties are very concerned about the progress of purchase and storage. The industry believes that if the next destocking policy can be implemented as soon as possible, it will help ease the operating pressure of real estate companies and stabilize market expectations.

Many cities release storage details

A reporter from China Business News learned that unlike the method of destocking through monetary resettlement of shantytown renovation in the previous round of market downturn, with the increase in my country's urbanization rate and the change in the supply and demand relationship of real estate, the focus of this round of destocking policy is on state-owned enterprises' purchase and storage of unsold new houses, old for new, and non-residential conversion to residential. Among them, "state-owned enterprises' purchase and storage of unsold new houses" is the main policy driving force and the measure with the most direct destocking effect.

The so-called "state-owned enterprises purchasing and storing unsold new houses" is that local state-owned enterprises directly purchase the unsold commercial housing units that have been built by developers and convert them into allocated or rented affordable housing.

On April 30 this year, the Political Bureau of the Central Committee meeting proposed "comprehensive research on policy measures to digest existing real estate and optimize incremental housing", setting the tone for this round of destocking policies.

In the "May 17" new real estate policy, the central government issued a series of policies and determined the specific implementation ideas for destocking, including: setting up 300 billion yuan of affordable housing re-loans; allowing land regulation adjustments, supporting the recovery and acquisition of idle residential land that has been sold, and helping real estate companies with financial difficulties to overcome difficulties.

On June 20, the Ministry of Housing and Urban-Rural Development held a video conference on the acquisition of existing commercial housing for use as affordable housing, which clearly promoted cities at or above the county level to carry out the work of acquiring existing commercial housing for use as affordable housing in a strong, orderly and effective manner.

On June 28, the People's Bank of China mentioned at its second quarter regular meeting the need to effectively implement various existing structural monetary policy tools and promote the implementation of affordable housing re-loans.

On July 30, the Political Bureau of the CPC Central Committee meeting continued to emphasize the need to "actively support the acquisition of existing commercial housing for use as affordable housing."

Zhang Dawei, chief analyst of Centaline Property Research Institute, said that state-owned enterprises' purchase and storage will not only help accelerate the destocking of commodity housing and bring significant benefits to economic development, but also be an important step for the policy side to actively adjust supply and demand and promote the stabilization of housing prices. It can not only help local governments solve inventory problems, but also ease the capital chain pressure of real estate companies, and protect the housing rights and interests of low-income groups.

According to statistics from Centaline Property Research Institute, as of the end of July, more than 60 cities across the country have issued relevant policies, including Guangzhou, Hangzhou, Suzhou, Zhengzhou, Fuzhou, Changsha, Tianjin, Hohhot, Qingdao, Chongqing, Jinan, Kunming, Shijiazhuang, Guiyang, Huizhou, Dali, Changzhou, Guilin, Lincang, Luoyang, Nanyang, Jiangmen, Jiangshan, Jiyuan, Yueyang, Huaibei, Huainan, Lujiang, etc.

It is understood that since the "May 17" new policy for the real estate market, many places have accelerated the introduction of policies to encourage state-owned enterprises to purchase and store completed but unsold new houses. According to monitoring by the China Index Academy, more than 10 cities have issued notices to collect commercial houses for use as affordable housing, clarifying the scope, conditions and prices of housing collection.

In terms of the scope of solicitation, most cities require completed and unsold commercial housing projects within the administrative area, and some cities require them to be in central areas, or near rail transit stations and industrial parks.

Judging from the use of state-owned enterprises’ stockpiling of properties, the core policy of each city is to convert existing properties into affordable housing, including allocated affordable housing and allocated rental affordable housing.

Among them, not many have been converted into allocated affordable housing, mainly because the basic housing needs of most cities have been met and there is a large inventory pressure in the commodity housing market, so local governments mainly adopt the method of "building according to demand". For example, in the draft for comments on the management measures for allocated affordable housing issued by Guangzhou on August 6, it was proposed that allocated affordable housing be provided to eligible local residents with housing difficulties and various types of introduced talents and other wage-earning groups, and closed management be implemented, and it is prohibited to change allocated affordable housing into commodity housing and enter the market in any illegal or irregular way.

In practice, most cities that have introduced policies to digest existing real estate are converting existing real estate into guaranteed rental housing. It is understood that during the 14th Five-Year Plan period, the country plans to raise 8.7 million units of guaranteed rental housing. By the end of 2023, 5.73 million units have been raised. From 2024 to 2025, there is still a task scale of 2.97 million units of guaranteed rental housing.

Xu Yuejin, deputy director of research at China Index Academy, said that if existing properties can be converted into rental housing in the future, it will not only speed up the fundraising process of rental housing, but also effectively digest market inventory and promote the stabilization and recovery of the real estate market.

In terms of housing requirements, the main requirements of various places include: having obtained a completion acceptance registration certificate; the ownership of the housing is clear and tradable, and can meet the requirements of financial institutions for issuing loans; the surrounding transportation is convenient, the supporting facilities are complete, and a certain parking space ratio is met; priority is given to whole buildings or whole units that have not been sold and can be closed for management. Among them, Yantai, Xinxiang, and Weihai stipulate that the entire building is the basic acquisition unit.

In terms of housing area, various places mostly set standards according to two types: allocation type and sale type. For example, Yantai's housing acquisition and storage details state: first, for those converted into affordable rental housing, the building area shall be within 70 square meters; second, for those converted into sale-type affordable housing, the building area shall mainly be 90 square meters, with a maximum of 120 square meters.

In terms of the purchase price, most cities require the replacement price of affordable housing in the same area as a reference upper limit. For example, announcements from Guilin, Nanning, Xinxiang, Weifang, Dalian and other cities mentioned that the reference is generally based on the allocated land cost + construction cost + profit of no more than 5%.

In addition, some cities use the income method to calculate the housing prices of the acquired stock for rental housing. For example, Chongqing plans to use the acquired stock housing for rental housing, requiring that the building area of ​​a single unit does not exceed 90 square meters. The housing price is calculated using the income method, which is composed of the weighted average of the base price and the market price (60% and 40% respectively).

The progress of storage is expected to accelerate

It is understood that as the destocking path currently promoted by policy, the pace of state-owned enterprises' purchase and storage of unsold new homes still needs to be further accelerated, and there are still relatively few cities that have issued solicitation notices.

The reporter learned that the source of funds for state-owned enterprises to purchase and store housing mainly relies on the support of 300 billion yuan of affordable housing refinancing. According to Xu Yuejin, the path of issuing affordable housing refinancing is: after financial institutions issue loans to state-owned enterprises that purchase and store housing, they can apply for refinancing from the People's Bank of China, which will be issued at 60% of the loan principal, on a first-come-first-served basis, with a quota of 300 billion yuan, which can be adjusted and improved in the future according to the implementation situation and needs; the annual interest rate of the refinancing is 1.75%, the term is 1 year, and it can be extended 4 times, each extension is 1 year, and the maximum period of use is no more than 5 years. The policy will be implemented until the end of 2027.

Re-loans will be issued at 60% of the loan principal, which means that 300 billion yuan of re-loans can drive a total of 500 billion yuan in bank loan funds; based on the calculation of storing 20% ​​of state-owned enterprises' own funds and 80% using loans, about 625 billion yuan of acquisition funds can be leveraged.

The acquisition and storage costs are estimated based on the data from the China Index of New Residential Prices in 100 Cities. In June, the average price of new residential properties in 100 cities (excluding first-tier cities) was 12,500 yuan per square meter. Assuming the purchase price is 30% off, the acquisition and storage costs are about 8,728 yuan per square meter. The 300 billion yuan of affordable housing re-loans can acquire and store a total of about 71.61 million square meters of commercial housing.

Based on the 950 million square meters of commercial housing sales in 2023, the scale of acquisition and storage accounts for about 7.6% of the sales of new residential buildings; based on the 383 million square meters of residential areas for sale at the end of June 2024, acquisition and storage will drive the residential areas for sale to fall by 18.7%. "Of course, the scale of acquisition and storage can be calculated, but the actual effect remains to be implemented," said Xu Yuejin.

It is worth noting that the promotion of stockpiling by state-owned enterprises may face certain challenges, including stockpiling prices, supply and demand mismatch and other issues.

For example, in terms of supply and demand allocation, Huatai Securities pointed out that according to the purchase and storage policies issued by various regions, the government requires that the completed existing commercial housing units to be purchased have appropriate size, price and location, and it is necessary to pay attention to whether there are sufficient related assets.

In some cities where real estate developers are under great inventory pressure and have a strong desire to sell, the demand for affordable housing is relatively limited, and the scale of acquisition and storage by state-owned enterprises may be small. On the contrary, some third- and fourth-tier cities and counties, or even lower-level cities and counties, have been the main force in issuing acquisition and storage policies and details since this year.

However, in some cities with relatively strong demand for affordable housing, such as first-tier and core second-tier cities, the market inventory level is not high. Whether it is for rental or sale, the government's purchase price must be relatively low. In this case, whether real estate developers are willing to sell at a discount will affect the progress of purchase.

In addition, in terms of the purchase and storage price, Huatai Securities calculated based on the detailed rules of each city and with reference to the situation in Xi'an and Fuzhou where affordable housing will be allocated at around 50% off the price of commercial housing in the same location. In accordance with the principle of breaking even and making small profits, some cities may set the upper limit of the price of purchase and storage housing at less than 50% of the price of commercial housing in the same location in the future.

As for converting existing housing into affordable housing after the acquisition, there will also be some challenges, especially the problem of "break-even operation" of affordable housing.

It is understood that in the past, many places provided guaranteed rental housing through the "guarantee" fundraising of market-oriented long-term rental apartments. Compared with the "guarantee" fundraising method, the conversion of state-owned enterprises' stored real estate into guaranteed rental housing requires more low-cost incremental funding support.

According to Xu Yuejin, overall, my country's rental return rate is low. According to the monitoring data of China Index Academy, the average rental-to-house price ratio of 50 key cities is 2.1%, that is, without considering the rent increase, the rental return rate of acquiring stock houses for leasing is only 2.1%. In terms of cost, when using the refinancing of affordable housing (the refinancing rate is 1.75%), considering the increase in commercial bank loan interest rates, the capital cost of state-owned enterprises' acquisition and storage is about 3%. If the costs of transformation and operation are considered, the actual cost may be higher. Therefore, in the process of acquiring and storing stock houses and converting them into guaranteed rental houses, fiscal subsidies and discounts on the purchase price are required to achieve a balance of benefits.

Zhang Dawei said that in January last year, the People's Bank of China set aside 100 billion yuan for a rental housing loan support plan to support the bulk purchase of existing housing for use as affordable rental housing. The pilot cities included eight cities, including Chongqing, Jinan, Zhengzhou, Changchun, Chengdu, Fuzhou, Qingdao and Tianjin, but in the end only more than 20 billion yuan was completed.

According to data released by the People's Bank of China, as of the end of June this year, the balance of affordable housing re-loans was 12.1 billion yuan.

Chen Wenjing, director of market research at China Index Academy, pointed out that the Political Bureau of the CPC Central Committee meeting on July 30 once again emphasized the need to "actively support the acquisition of existing commercial housing for use as affordable housing", which means that relevant supporting policies are expected to continue to be improved in the future. It is expected that the pace of subsequent loan issuance may further accelerate, and there is also a certain expectation of increased financial support.