60 cities expressed support, 25 cities issued solicitation notices, and the "storage" of commercial housing still needs to be accelerated
2024-08-22
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In addition to destocking, affordable housing has also been a high-frequency keyword in policies this year. Purchasing existing commercial housing for use as affordable housing, or "storage", has become one of the important channels for raising funds for affordable housing. According to statistics from the China Index Academy, as of now, about 60 cities have expressed support for state-owned enterprises to purchase existing housing for use as affordable housing, of which more than 25 cities have issued solicitation notices, and first- and second-tier cities such as Shenzhen, Changsha, and Chongqing have also followed suit.
In the view of industry insiders, the current "stockpiling" faces challenges such as stockpiling prices and mismatch between supply and demand, and the pace of advancement still needs to be further accelerated. It is expected that the pace of subsequent loan issuance may further accelerate, and the expected financial support will also be strengthened.
Small apartments below 70 square meters have become the focus of "acquisition and storage"
On August 19, Changsha Affordable Housing Construction and Development Co., Ltd. in Hunan Province issued a "Notice on the Collection of Commercial Housing for Use as Affordable Housing". This is another important city that has released a collection and storage collection plan after Shenzhen. The collection scope of Changsha is the completed but unsold commercial housing projects in the administrative areas of Furong District, Tianxin District, Yuelu District, Kaifu District, Yuhua District, Wangcheng District, Changsha County, Liuyang City, and Ningxiang City in Changsha.
The conditions for "acquisition and storage" of housing in Changsha must meet four conditions, including suitable location, being in an area with convenient transportation and relatively complete supporting facilities, close to the core area of regional development, and having industrial foundation and development advantages; suitable apartment size, in principle, the main apartment size of the project (housing) should meet the requirements of Changsha's affordable housing types and areas (below 120 square meters); convenient living, convenient surrounding transportation, close to subway entrances and bus stops, and relatively complete infrastructure, living facilities and other livable conditions; complete procedures, the property rights of the proposed acquisition project must be clear and tradable, and the four certificates must be complete to ensure the legality and compliance of the project and meet the loan requirements of financial institutions.
The above-mentioned "storage" conditions in Changsha are quite representative. Compared with Shenzhen, the "storage" apartment sizes are different. For example, on August 7, Shenzhen Anju Group mentioned in the solicitation notice that the main apartment size of the project (housing) should meet the requirements of Shenzhen's affordable housing apartment size (less than 65 square meters). Priority will be given to projects (housing) with unsold whole buildings or whole units that can be closed for management.
The housing stock in Huizhou, Guangdong Province is the same as that in Changsha, with a single unit area of less than 120 square meters. However, judging from the policies of various places, small-sized commercial housing with a construction area of less than 70 square meters has become the focus of "stockpiling". In addition to Shenzhen, Beihai requires that small units with a construction area of no more than 70 square meters be the main ones; Dalian also regards single units with a construction area of less than 70 square meters as the focus of acquisition; Foshan also clearly requires that small units with a construction area of no more than 70 square meters be the main ones for affordable rental housing.
Some cities also emphasize that housing sources must meet certain parking space ratios. For example, Lin'an District of Hangzhou proposed that each unit with an area of 60 square meters or less should be equipped with 0.6 parking spaces. In addition, it is emphasized that the purchase price should not exceed the assessed price of surrounding housing sources and parking spaces as the maximum limit.
From the overall perspective, there are certain requirements for the acquisition price and the area of the acquisition project in the solicitation announcements of various places. In this regard, Mingyuan Real Estate Research Institute concluded that the assets, liabilities and legal relations are clear, the completion acceptance record certificate has been obtained, the ownership of the housing source is clear and tradable, the transportation around the project is convenient, the supporting facilities are complete, and a certain parking space ratio is met. Priority is given to building projects that have not been sold as a whole building or a whole unit and can be closed for management. The area requirement for acquisition is that the area of the housing source used for allocation is between 60 square meters and 120 square meters, and the area of the housing source used for allocation of affordable housing is within 70 square meters. The price must have a relatively obvious price difference with the same location and the same type of commercial housing, which is generally 50% to 60% of the market price. The unit price of housing source transaction is determined by the cost method of evaluation, which is in principle "land cost + construction cost".
"During the acquisition process, in addition to paying attention to the size, price and location of the housing to ensure that it meets the standards for affordable housing, the government will strive to quickly distribute the acquired housing at a reasonable price to avoid creating new inventory pressure," said analysts at Mingyuan Real Estate Research Institute.
Speeding up "storage" will help drive a sharp decline in residential inventory
More cities will follow up and issue "storage and purchase" solicitation announcements.Overall, the state-owned enterprises' acquisition and storage of unsold new houses will have a multi-faceted impact on the market. It will help speed up the supply of affordable housing, better meet the housing needs of wage-earning groups, and promote the rational allocation of real estate resources. Secondly, it will help to clear the market inventory and ease the financial pressure of developers, and the destocking effect is the most direct. In addition, since the acquisition and storage targets in this round are completed but unsold commercial houses, it will also help promote real estate companies to speed up the pace of project completion. After real estate companies sell completed commercial houses, the funds recovered can be used to support projects under construction and help ensure the delivery of houses.
According to previous estimates by the China Index Academy, the 300 billion yuan of affordable housing refinancing can 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 storage accounts for about 7.6% of new residential sales; based on the 383 million square meters of residential area for sale at the end of June 2024, the storage will drive the residential area for sale to fall by 18.7%. Of course, the scale of storage can be calculated, but the actual effect remains to be implemented.
Chen Wenjing, director of market research at China Index Academy, believes that the pace of state-owned enterprises' "stockpiling" of unsold new homes still needs to be further accelerated. Currently, there are still few cities that have issued solicitation notices. According to data released by the central bank, the balance of affordable housing re-loans was 12.1 billion yuan by the end of June. The promotion of state-owned enterprises' stockpiling may face certain challenges, including stockpiling prices and mismatch between supply and demand. For example, in some cities where real estate companies have great inventory pressure and strong willingness to sell, the demand for affordable housing is relatively limited, and the scale of state-owned enterprises' stockpiling may be small; while in some cities where the demand for affordable housing is relatively strong (first-tier and core second-tier cities), the market inventory level may not be high, and real estate companies are relatively less willing to sell existing houses at a discount.
"The July 30th Political Bureau meeting once again emphasized the need to 'actively support the acquisition of existing commercial housing for use as affordable housing', which means that related supporting policies are expected to continue to be improved in the future." Chen Wenjing expects that the pace of subsequent loan issuance may be further accelerated, and there is also a certain expectation of increased financial support. If all measures are implemented in the second half of the year, it will play a positive role in destocking and stabilizing the market, which will help accelerate the stabilization and recovery of the real estate market.
Analysts at Mingyuan Real Estate Research Institute also believe that the "acquisition and storage" of existing houses for affordable housing can reduce inventory pressure, speed up the construction of affordable housing, offset the decline in commercial housing investment, and indirectly stimulate domestic demand and consumption. At present, for some acquisition entities, the acquisition and storage path needs to be further explored for commercial sustainability. The "acquisition and storage" model has just begun. In the future, as various cities explore, implement and promote it, it will play a significant positive role in destocking and stabilizing the market.
In fact, "stockpiling" is also seen as one of the ways to ease risks in the real estate market. Huatai Securities believes that under the current policy environment, the gradual implementation of interest rate cuts and the "stockpiling" policy may help restore confidence in the real estate market and push the market to bottom out as soon as possible.
Beijing News reporter Yuan Xiuli
Editor: Xu Qian
Proofread by Zhao Lin
