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On August 23, the State Council Information Office held a series of press conferences on "Promoting High-Quality Development". Minister of Housing and Urban-Rural Development Ni Hong, and Vice Ministers Dong Jianguo and Qin Haixiang attended the press conference to introduce the situation and answer questions from reporters.

Ni Hong introduced that at present, the supply and demand relationship in the real estate market has undergone major changes and the market is still in a period of adjustment. With the implementation of various policies, positive changes have occurred in the market.

Regarding the construction of a new model for real estate development, Ni Hong introduced that the new model is divided into four aspects: concept, system, institution and elements, emphasizing the positioning of "houses are for living, not for speculation". In terms of system, reform and improve the system of real estate development, transaction and use, and lay a solid institutional foundation for the transformation and development of real estate. In terms of element allocation, establish a new mechanism for the linkage of "people, houses, land and money".

Image source: Photo by Zhou Yifei, reporter of China Business Network

The per capita housing area in urban areas exceeds 40 square meters

Ni Hong, Minister of Housing and Urban-Rural Development, first introduced three aspects of the new achievements in the high-quality development of housing and urban-rural construction.

First, in terms of housing and real estate, We will continue to optimize real estate policies, improve the housing security system, and strive to ensure that all people have a place to live. By the end of 2023, the per capita housing construction area in urban areas in my country will exceed 40 square meters; a total of more than 64 million units of various types of affordable housing and resettlement housing for shantytown renovation will be built, more than 150 million people will realize their dream of a safe home, and low-income families with housing difficulties will basically be covered by the minimum living allowance.

Second, in terms of urban work, We will solidly promote urban renewal, renovate old urban communities, accelerate urban infrastructure construction, and strive to promote high-quality urban development. By the end of 2023, my country's urban built-up area will reach 64,000 square kilometers, the urbanization rate of permanent residents will reach 66.16%, and more than 930 million people will live in cities and towns. Urban functions will continue to improve, and the urban living environment will continue to improve. A total of more than 250,000 old urban communities have been renovated, benefiting more than 44 million households and about 110 million people.

Third, in terms of the development of the construction industry, Deepen the reform of the construction industry, promote the industrialization, digitalization and green transformation and upgrading of the construction industry, and strive to contribute to economic development and improvement of people's livelihood. In 2023, the total output value of the construction industry will reach 31.6 trillion yuan, the added value will reach 8.6 trillion yuan, accounting for 6.8% of the GDP, and absorb more than 50 million jobs.

When talking about the next step of work, Ni Hong said,First, build a new model for real estate development.It can be summarized into four aspects: First, in terms of concept, we should deeply understand the positioning of "houses are for living, not for speculation", and build good houses that meet the new expectations of the people. Second, in terms of system, the government should mainly meet rigid housing needs, and the market should mainly meet diversified housing needs for improvement. Third, in terms of system, we should reform and improve the real estate development, transaction and use system, and lay a solid institutional foundation for the transformation and development of real estate. Fourth, in terms of factor allocation, we should establish a new mechanism for the linkage of "people, houses, land and money".

Second, establish a new mechanism for urban planning and construction governance. Adhere to the principle of “the people build the city and the city is for the people”, adapt to the new requirements of urban development entering the urban renewal stage, further deepen the reform of urban planning, construction and governance, establish a sustainable urban renewal model and policies and regulations, and adhere to the principle of “physical examination first, then renewal”. The problems found in the physical examination are the key points to be solved in the renewal, and we will build livable, resilient and smart cities to make people’s life in the city more convenient, comfortable and better.

Third, promote the transformation and upgrading of the construction industry. We will adhere to standard guidance and technological empowerment, focus on reforming and improving a package of basic systems such as construction project bidding, project supervision, project cost, and completion acceptance, strive to build a modern construction industry system, establish a market environment of integrity, law-abidingness, fair competition, and pursuit of quality, promote high-quality development of the construction industry, and strive to provide high-quality construction products to the whole society.

Orderly promotion of existing housing sales

Regarding the future direction and key tasks for accelerating the construction of a new real estate development model, Dong Jianguo, Vice Minister of the Ministry of Housing and Urban-Rural Development, first emphasized that the existing real estate development model was gradually formed after long-term development, so the construction of a new model requires a process and continuous exploration and practice. He also introduced it from six aspects, including supply, sales of existing homes, and financing mechanisms.

Dong Jianguo mentioned that in the future, the sale of existing homes will be vigorously and orderly promoted, and local governments will be guided to select new real estate development projects, agree to sell existing homes when land is transferred, and formulate supporting policies based on practice. Many places have launched a number of existing home sales projects and explored the reform of the commodity housing sales system.

Dong Jianguo said that it is necessary to establish a coordination mechanism for urban real estate financing, introduce a project "white list" system, take cities as units and projects as objects, provide financing support for compliant projects, and promote the transformation of real estate development companies' financing from relying on the credit of the main body to relying on project conditions.

The reporter of "Daily Economic News" learned that in fact, in recent years, some provinces and cities have been conducting pilot projects for the sale of commercial housing on the spot. According to incomplete statistics from CRIC Real Estate Research Center, since the second half of 2023, at least 13 provinces and cities have clearly piloted the sale of existing houses. In August 2023, Henan Province has proposed to use Zhengzhou and Kaifeng as pilot cities to actively explore the sale of existing houses. On January 15 this year, with the transaction of the Beilong Lake plot in Zhengdong New District, Zhengzhou, the first pilot plot for the sale of existing houses in Zhengzhou was landed. The successful sale of this plot is considered by the industry to be a key step in the pilot of the sale of existing houses.

Zhang Bo, director of 58 Anjuke Research Institute, believes that judging from the Ministry of Housing and Urban-Rural Development's statement, the pilot program of selling ready-made homes will be further expanded, and will be promoted at the policy level from the land transfer stage. The continuous expansion of the scale of selling ready-made homes can effectively avoid the phenomenon of unfinished projects, and at the same time achieve "what you see is what you get" to protect the rights and interests of home buyers.

CRIC Research Center believes that the policy of selling existing homes has evolved from a means of curbing the overheating of the land market in the past to an important means of "ensuring delivery" and stabilizing market confidence and housing purchase expectations in the industry's clearing phase. It is also a manifestation of a long-term mechanism under the "housing for living, not for speculation" policy. The implementation of the system of selling existing homes will be an inevitable trend, and in the long run, it will bring more benefits than disadvantages to the industry as a whole, but it will inevitably suffer a series of "pains" during the transition period, which requires the joint efforts of the government, the market and enterprises.

However, Zhang Bo believes that the biggest difficulty in promoting this policy is the overall financial pressure in the industry. Zhang Bo analyzed that the increase in the capital requirements for real estate developers due to the sale of existing homes has invisibly set up a "high threshold" to keep out real estate developers with high debt ratios and poor financial stability. However, this is also conducive to accelerating the survival of the fittest in the industry, promoting the overall health of the industry, and ensuring that more land flows to financially stable real estate developers.

Targeting 3.96 million homes to be delivered by the end of the year

Ensuring the delivery of houses is a major deployment made by the CPC Central Committee and the State Council. It is not only an important task to safeguard people's livelihood and effectively protect the legitimate rights and interests of home buyers, but also conducive to stabilizing the expectations of all parties, boosting confidence in the real estate market, and preventing and resolving real estate risks.

Dong Jianguo, Vice Minister of the Ministry of Housing and Urban-Rural Development, said that the guaranteed delivery of houses involves the vital interests of the general public. Ordinary people should get the house after paying the money.

Dong Jianguo introduced that in order to fight the battle to ensure the delivery of commercial housing projects, the Ministry of Housing and Urban-Rural Development, together with the State Administration of Financial Supervision, organized a "big investigation" in various places to comprehensively check the commercial housing projects under construction that have been sold but not delivered. The 3.96 million housing units that should have been delivered before the end of this year as agreed in the contract have been identified as the target task in the battle to ensure housing delivery.

Dong Jianguo also discussed the formation of policy synergy, giving full play to the role of the urban real estate financing coordination mechanism, “One project, one policy” Specific measures to ensure delivery were introduced in four aspects, including good classification and disposal, and promoting timely and quality delivery of projects.

Dong Jianguo said that in order to promote the timely and quality delivery of the project, a national guaranteed housing information system has been established. Each delivery task is matched with "one contract, one household, one ID number, and one contact number", and the work goals are implemented to the household and the buyer. One set is delivered and one set is cancelled. At the same time, it guides all localities to effectively strengthen the supervision of project engineering quality to ensure that the delivered projects are ready for occupancy and prevent the situation of goods not matching the specifications. In addition, the Ministry of Natural Resources has also issued supporting documents on the issue of certificates for guaranteed housing projects, and strives to achieve the "full issuance" of real estate certificates for guaranteed housing projects.

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban and Rural Planning Institute, analyzed that the main goal of this battle to ensure the delivery of housing is different from the concept of the 3.5 million "guaranteed delivery buildings" mentioned earlier. The scope of guaranteed delivery of housing is broader, referring to delivery projects other than special loans, mainly projects that should be delivered normally but are difficult to deliver since 2024. Guaranteed delivery of housing covers a wider range of content than guaranteed delivery of buildings, and the work requirements are higher.

"When the guaranteed delivery building has achieved a high delivery rate at the project level, the guaranteed delivery house policy will pay more attention to the full process and full function delivery at the house level." Li Yujia said that from this perspective, the guaranteed delivery house policy will obviously help bridge the gap between the building delivery rate and the house delivery rate, house collection rate and occupancy rate, thereby promoting further recovery of home buying confidence and stabilizing the real estate market.

Li Yujia stressed that although the financing coordination mechanism, compliance project identification standards and "white list" confirmation details have been established, due to the decline in sales, some projects may not be able to generate new sales to repay loans, resulting in low enthusiasm for bank loan issuance. In addition, the main responsibility of developers to ensure the delivery of houses has yet to be implemented. Only in this way will developers actively promote sales, sell projects and assets, and ensure that bank loan issuance is guaranteed.