Positive Comments: The Policy Combination Injects Long – term Stable Momentum into the Real Estate Market
The deployment of the State Council executive meeting regarding the real estate market is a further refinement and implementation of the “construction of a new real estate development model” following the Central Economic Work Conference and the Government Work Report of the Two Sessions. It releases a clear signal of the policy to “stabilize expectations, promote transformation, and prevent risks”. Its positive significance is mainly reflected in the following three aspects:
I. The Establishment of Basic Systems Lays the “Four Beams and Eight Pillars” for the Industry’s Transformation
The meeting clearly stated that “we should make progress while maintaining stability, establish new systems before abolishing the old ones, and orderly establish relevant basic systems”, and mentioned core areas such as land systems, financial systems, tax systems, trading systems, and security systems. This deployment addresses the long – standing pain point of the real estate industry, which has “emphasized short – term regulation and neglected system construction”. In the past 20 years, the real estate market has relied on administrative means such as “purchase restrictions, loan restrictions, and price restrictions” to regulate supply and demand. Although these measures can suppress overheating in the short term, they are difficult to solve deep – seated contradictions such as dependence on land finance, accumulation of financial risks, and mismatches in housing supply and demand. Starting from basic systems, in essence, it promotes the transformation of the industry from the old model of “high leverage, high turnover, and high debt” to the new model of “stable operation, emphasis on quality, and sustainability”. For example, the gradual implementation of the completed – housing sales system will force real estate enterprises to optimize their capital management capabilities and reduce the risk of “unfinished pre – sold housing”. The improvement of the housing security system can meet the housing needs of different income groups through the “parallel development of rental and purchase” and alleviate the structural contradictions in the market. The establishment of these systems is like installing a “stabilizer” for the industry. It not only avoids market fluctuations caused by sudden policy changes but also provides institutional guarantees for long – term healthy development.
II. The Linkage between the Construction of “Good Houses” and Urban Renewal Activates New Growth Points
The meeting incorporated the construction of “good houses” into the urban renewal mechanism and emphasized providing policy support in terms of planning, land, finance, and finance. This measure has dual values: On the one hand, the construction of “good houses” (including the construction of high – quality new housing and the renovation of old residential areas) directly responds to the residents’ demand for an upgrade from “having a place to live” to “living in a better place”. As the per – capita housing area exceeds 40 square meters, China’s housing demand has shifted from “shortage in quantity” to “improvement in quality”. Residents’ demand for high – quality housing such as green buildings, smart communities, and age – friendly designs has increased significantly. Policy support for the construction of “good houses” can not only activate the improvement – oriented demand but also promote the real estate industry to shift from “scale expansion” to “quality competition”, thus promoting the improvement of the industry’s added value. On the other hand, the linkage with urban renewal means that the construction of “good houses” will be carried out simultaneously with the renovation of old urban areas, the upgrading of infrastructure, and the improvement of public service facilities. This can not only enhance the overall function of the city but also revitalize the stock of housing resources through policies such as “trading in the old for the new” and “housing vouchers for resettlement”, forming a virtuous cycle of “old – renovation driving new – housing demand and new – housing supply feeding back to old – renovation”. For example, after Guangzhou completely lifted purchase restrictions and promoted the renovation of old residential areas in combination with the construction of “good houses”, it may attract improvement – oriented families to “sell their old houses and buy new ones”, which can not only digest the stock of second – hand houses but also stimulate the new – housing market.
III. Inventory Assessment and Policy Optimization Improve the Precision of Regulation
The meeting proposed to “conduct an inventory of the land supplied and ongoing projects in the national real estate market”. This is a crucial step in solving the current problem of “information asymmetry” in the market. In the past, in some cities, excessive land supply and unreasonable project planning led to high inventories. At the same time, due to opaque information, real estate enterprises had difficulty accurately judging market demand, which exacerbated the mismatch between supply and demand. Through a comprehensive inventory, policy – makers can more clearly grasp data such as land stock, progress of ongoing projects, and potential risk points (such as suspended projects), and then optimize the land supply rhythm (such as reducing new land supply in high – inventory areas) and adjust the land acquisition and storage policy (such as targeted acquisition of idle land or commercial housing). Data shows that as of the end of May, the amount of special bonds used to acquire idle land in stock only completed 16% of the announced plan, and the amount of commercial housing acquisition was less than 2 billion yuan. One of the important reasons for the slow progress is the unclear base and unclear goals. After this inventory, policies can formulate differentiated strategies according to the inventory structures of different cities (such as residential inventories in third – and fourth – tier cities and commercial and office inventories in first – and second – tier cities) to improve the efficiency of acquisition and storage. In addition, the policy clearly states that it will “adopt multiple measures to stabilize expectations, activate demand, optimize supply, and resolve risks”, and make simultaneous efforts from the demand side (lifting purchase restrictions, reducing down – payments), the supply side (increasing the supply of high – quality housing), and the risk side (ensuring the delivery of houses, improving the capital situation of real estate enterprises) to form a policy synergy and avoid the “diminishing marginal effect” of a single policy.
Negative Comments: The Implementation of Policies Still Needs to Overcome Three Realistic Challenges
Although this meeting has released positive signals, the complexity of the real estate market determines that the realization of policy effects still faces multiple challenges. The following potential risks need to be vigilant:
I. The “Gradualness” of the Implementation of Basic Systems May Affect Short – term Market Confidence
The meeting emphasized “making progress while maintaining stability and establishing new systems before abolishing the old ones”, which means that the implementation of basic systems (such as the completed – housing sales system and the real estate tax) will be gradual, and it is difficult to completely replace the supporting role of the old model in the short term. For example, if the completed – housing sales system is piloted in high – inventory cities first, it may lead to an extended capital – recovery cycle for real estate enterprises (pre – sold housing sales usually allow for capital recovery 1 – 2 years in advance), further exacerbating the liquidity pressure on some real estate enterprises. Although the legislation and piloting of the real estate tax can suppress speculative demand in the long term, it may trigger a concentrated sell – off of second – hand houses in the short term, impacting market expectations. In addition, the reform of the land system and the financial system involves the fiscal relationship between the central and local governments (for example, the proportion of land transfer fees in local fiscal revenue still exceeds 30%) and the risks of the financial system (real estate loans account for about 26% of the bank loan balance). The resistance and coordination costs of the reform are relatively high. If the progress is too slow, the market may continue to be sluggish during the window period when the old model is fading and the new model has not been established.
II. There Is Uncertainty in the Matching Degree between the Cost and Demand of “Good House” Construction
The construction of “good houses” has higher requirements for building standards and supporting facilities, which may drive up development costs. For example, the investment in supporting facilities such as green building certification, smart home systems, and community service centers may increase the cost per square meter by 10% – 20%. If the policy support (such as financial subsidies and floor – area – ratio incentives) is not in place, real estate enterprises may lack motivation due to compressed profits. If the cost is completely passed on to housing prices, it may exceed the payment ability of some improvement – oriented demand, resulting in a situation where “good houses” have prices but no market. In addition, the construction of “good houses” in the renovation of old residential areas involves issues such as residents’ negotiation (for example, the installation of elevators requires the consent of all owners) and property rights disputes (such as historical illegal buildings). If the local government’s overall planning ability is insufficient, there may be a phenomenon of “hot policy but cold implementation”. For example, some cities once tried the “trading in the old for the new” policy, but due to the opaque evaluation standards for old houses and insufficient discounts on new houses, the actual participation rate was less than 10%, and the market was not effectively activated.
III. The Implementation Efficiency of Inventory Assessment and Policy Optimization Is under Test
The inventory work of the land supplied and ongoing projects in the national real estate market involves the collection of a large amount of data (including land nature, development progress, mortgage status, etc.), and requires the coordination of data from multiple departments such as natural resources, housing and construction, and finance. The technical difficulty and administrative cost are relatively high. If the data statistics are incomplete or lagging (such as some projects having hidden information such as “dual contracts” and “illegal mortgages”), policy optimization may deviate from actual needs. For example, if the “ongoing projects” statistics in a certain city do not include projects that have stopped working but have not been reported, the policy may misjudge the inventory pressure and continue to promote acquisition and storage while ignoring the urgency of “ensuring the delivery of houses”. In addition, local governments may have problems of “one – size – fits – all” or “selective implementation” when implementing the policy of “activating demand”. Some cities may overly relax purchase restrictions and reduce down – payment ratios in order to quickly boost GDP, triggering a new round of speculative demand. While in some cities with population outflows, even if purchase restrictions are lifted, it is difficult to attract external demand, and the policy effect is limited.
Suggestions for Entrepreneurs: Seize the Policy Window and Find New Opportunities in the Transformation
This policy adjustment has pointed out the transformation direction for entrepreneurs related to the real estate industry (including real estate enterprises, urban renewal service providers, and construction technology enterprises). It is recommended to focus on the following strategies:
I. Focus on the Construction of “Good Houses” and Layout in the Quality – oriented Track
Entrepreneurs can strengthen product R & D and service innovation around the core standards of “good houses” (such as green buildings, smart communities, and age – friendly designs). For example, real estate enterprises can cooperate with construction technology enterprises to develop low – carbon building materials and prefabricated buildings to reduce the construction cost of “good houses”. Community service providers can introduce smart property management systems (such as face recognition and intelligent security) to improve the living experience. Decoration enterprises can launch “age – friendly renovation packages” and “smart home upgrade packages” according to the renovation needs of old residential areas to meet the residents’ demand for quality improvement. At the same time, pay attention to policy – supported scenarios such as “trading in the old for the new” and “housing vouchers for resettlement”, cooperate with local governments to participate in urban renewal projects, and obtain stable returns through the linkage model of “old – renovation + new – housing”.
II. Participate in the Revitalization of Stock Assets and Explore “Inventory Reduction” Opportunities
In response to the policy’s emphasis on “inventorying the land supplied and ongoing projects”, entrepreneurs can participate in the assessment and disposal of stock assets through big – data technology. For example, technology enterprises can develop a “real estate inventory monitoring platform” to integrate data on land, projects, and funds, and provide inventory analysis and risk – early – warning services for the government and real estate enterprises. Asset management companies can focus on the acquired idle land and commercial housing, and improve the utilization efficiency of stock assets through the “transformation – operation – exit” model (such as transforming idle commercial land into long – term rental apartments or industrial parks). In addition, pay attention to the policy window for special bonds to acquire stock assets, actively connect with local governments, participate in the design and implementation of acquisition projects, and strive for policy subsidies and tax incentives.
III. Optimize Capital and Risk Management to Adapt to the Requirements of the New Model
With the implementation of the completed – housing sales system and stricter financial supervision, entrepreneurs need to strengthen their capital – chain management capabilities. Real estate enterprises should reduce their dependence on high – leverage financing and explore diversified financing channels such as equity financing and REITs (Real Estate Investment Trusts). Small and medium – sized real estate enterprises can reduce their capital pressure through joint development and construction – agency models. At the same time, pay attention to the policy orientation of “ensuring the delivery of houses”, strengthen project engineering management, and avoid risks caused by misappropriation of funds or construction delays. For entrepreneurs in the urban renewal field, they need to evaluate the policy compliance of projects in advance (such as land – use change and planning adjustment), maintain close communication with government departments, and reduce the risk of project suspension caused by policy changes.
IV. Pay Attention to Regional Differentiation and Formulate Differentiated Strategies
The policy emphasizes that “different cities should advance gradually in light of local actual conditions”. Entrepreneurs need to formulate differentiated strategies according to the city level, population flow, and inventory level. In first – and second – tier cities, focus on the construction of “good houses” and improvement – oriented demand, and use the window period of policy relaxation (such as the lifting of purchase restrictions) to accelerate inventory reduction. In third – and fourth – tier cities, focus on the revitalization of stock assets and the construction of affordable housing, and obtain stable cash flow by participating in government acquisition and storage and public – rental – housing operation. At the same time, pay attention to regional policies such as “housing vouchers for resettlement” and “optimization of provident – fund loans”, and adjust marketing strategies accordingly (such as launching “housing – voucher housing – purchase discounts” and “rapid approval of provident – fund loans” services) to improve customer conversion rates.
Overall, the deployment of this State Council executive meeting marks that the real estate industry is shifting from “policy – driven market rescue” to “system reconstruction”. Entrepreneurs need to break away from the old thinking of “scale expansion” and take “quality, stock management, and refinement” as the direction. Only by finding new opportunities at the intersection of policy support and market demand can they achieve sustainable development in the industry transformation.
