Author: Ma Yifan
In 16 days, the first "existing home sale" plot in Fuzhou, the capital of Fujian province, will start shooting.
For many years, homebuyers have been troubled by the inconsistency of the real estate, and they are looking forward to the "what you see is what you get" when buying a home. This time, will Fuzhou's exploration be successful?
my country's current commercial housing pre-sale system has been implemented for 28 years. In recent years, many places along the eastern coast have proposed or explored pilot sales of existing houses, such as Hangzhou and Suzhou, but they have all died down.
Bai Wenxi, Chief Economist of IPG China, believes that the pre-sale system of commercial housing has formed a huge inertia and a bundle of interests, and it is difficult to return to the existing housing sales system. The abrupt cancellation of the pre-sale system of commercial housing will lead to dramatic changes in the industry pattern. Adjustment and the outbreak of a large number of bad debts, but the current supply and demand pattern of the property market has undergone fundamental changes, and the pre-sale system of commercial housing has reached the moment when it has to be adjusted. It is imperative to gradually promote the sales of existing houses.
Small county pilot
Recently, a piece of "commercial + residential" construction land has been put up in Yongtai County, Fuzhou City, and it is scheduled to be auctioned on the morning of August 5.
The price of this land is not high, the starting price is only 40 million yuan, the starting floor price is only 1106 yuan / square meter, and the premium rate cannot exceed 20%.
But an inconspicuous county land plot is significant because it is the first residential land in Fuzhou that requires "existing home sales".
It is clearly stated in the land transfer requirements that after the completion and acceptance of the planned house, the bidder can apply for the house sales procedure. The transfer of the listed transaction shall not go through the transfer notarization and other procedures.
In fact, since 2015, Fujian Province has started to study the topics related to the sales of existing houses.
In April 2018, the Fujian Provincial Department of Housing and Urban-rural Development issued the "Notice on Strengthening Precise Regulation and Stabilizing the Real Estate Market", in which the chapter "Optimizing Land Supply Management" mentioned that the pilot cities of Fuzhou and Xiamen gradually increased the pre-production of commercial housing in the land transfer. Conditions of sale until the sale of the existing home.
Now, the sale of existing homes has finally started from a county under the jurisdiction of Fuzhou. However, it is still unknown whether the land will be sold smoothly.
The scale of Yongtai County is not large, with a resident population of only more than 280,000. Judging from the recent local land auctions, most of the land-acquisition real estate companies are small local developers in Fujian. For example, in April this year, Fujian Pinrun Real Estate set a reserve price of 1.05 100 million yuan successfully bid for a piece of commercial and residential land in Yongtai Chengfeng Town, and the transaction floor price was 1629 yuan/square meter.
In September last year, Fuzhou Shengjiayuan Trading Co., Ltd. bid for the Liuqi Village plot in Yongtai Chengfeng Town with a reserve price of 330 million yuan.
Based on past experience, small and medium-sized real estate companies are not very enthusiastic about "existing home sales".
unfinished exploration
In addition to Fuzhou, several eastern coastal cities have taken the lead in exploring existing home sales pilots, but most have died down.
In 2016, due to the overheating of the land market, Suzhou issued the "Implementation Opinions on Further Strengthening the Management of the Real Estate Market in Suzhou Urban Area" and set a "market guide price" for land auctions. 10% of the guide price, it is necessary to apply for a pre-sale license after the project is completed and accepted.
This is regarded as the Suzhou version of the exploration of "existing home sales". In 2017, the second year after the policy was introduced, 39 plots of land for existing home sales were born in Suzhou, 6 of which were regional land kings.
These developers who acquired land at high prices quickly found themselves locked up. There were even properties that acquired land in 2016, but only opened after 6 years.
In 2020, the fiery Suzhou property market has entered a downward period, and some developers have begun to operate edge ball actions such as "hardcover to rough" and "forced decoration package" because they can't make the calculations.
Influenced by factors such as the epidemic, a notice in Suzhou in 2020 relaxed the conditions for pre-sale of housing companies, and also cancelled the mandatory existing home sales policy that had been implemented for 42 months.
From 2016 to 2017, Hangzhou, the capital of the next province, had the same booming land market as Suzhou. In order to curb the popularity of land auctions, Hangzhou briefly implemented the system of selling existing houses if the premium rate was too high. A total of 20 projects were born, but only The rule was repealed after a few months of trial.
In 2021, the land transfer method will change, and Hangzhou will become one of the 22 cities to pilot centralized land supply. Hangzhou plans to re-pilot existing home sales.
In August last year, Hangzhou released the second batch of centralized land supply announcements of the year. For the first time, it proposed to test 10 “competitive quality” existing housing sales plots. The administrative districts under Hangzhou will each send a representative plot, and interested developers. The construction plan can be provided first, and the land price can be auctioned after the plan is approved.
Because it is worried that developers are unwilling to cooperate with the sales of existing houses, Hangzhou has also made special concessions - the upper limit of the premium rate of ordinary commercial housing plots is 15%, and the maximum premium rate of plots sold for existing houses can only be up to 5%.
The final result was that all the 10 plots were passed in, and no developer was willing to participate in the land acquisition.
In 2017, Guangdong Province also proposed to encourage the implementation of the existing house sales system and gradually cancel the pre-sale system in the "Implementation of the Key Tasks of the Pearl River Delta Planning Outline in 2017".
At present, the only province that has achieved all existing housing sales in the province is Hainan. However, Hainan has its particularities, and its experience is difficult to replicate.
In March 2020, Hainan issued the "Notice on Establishing a City Subject Responsibility System for the Stable and Healthy Development of the Real Estate Market", stipulating that commercial housing for newly leased land must be sold as existing houses.
The special background for the introduction of this new regulation is that Hainan is vigorously building a free trade port, and its economic growth has shifted from mainly relying on investment to consumption.
Since the implementation of the global real estate purchase restriction in 2018, Hainan has greatly reduced the economy's dependence on real estate, and the proportion of real estate investment in GDP has dropped from 46% in 2017 to 25% in 2019.
Taking Haikou as an example, among the 95 land supply last year, only 3 were left for market-oriented commercial housing construction. Land-acquisition and real estate companies have completely withdrawn from Hainan.
Huatai Securities believes that high-turnover real estate companies lack interest in such land investment, and it is unrealistic to expand Hainan's practice to other areas in a short period of time.
Why is it so difficult
The current pre-sale system of commercial housing in my country started in 1994 and has been implemented for 28 years.
The whole society's discussion on canceling the pre-sale of off-plan housing has also continued for more than ten years.
In August 2005, the central bank proposed in the "2004 China Real Estate Finance Report" to "recommend the cancellation of the current housing pre-sale system", but the Ministry of Construction at that time stated that "the country will not cancel the commercial housing pre-sale system in the near future".
Subsequently, Xinhua News Agency commented that whether to cancel the pre-sale system of commercial housing is a major event that affects the whole body.
Why has this system been able to run for 28 years, and during this period, many attempts to cancel the pre-sale system have been unsuccessful?
Talking about the root cause, Bai Wenxi, chief economist of IPG China, told Yicai: "The pre-sale system of commercial housing supports the high turnover model of housing companies and the current real estate market scale, involving investment, construction, employment, taxation, In terms of land transfer fees and other aspects, if the sale of existing houses is implemented, the financial leverage and industry scale of the real estate industry will inevitably be greatly reduced, resulting in a drastic adjustment of the industry structure and the outbreak of a large number of bad debts, which are unacceptable to all stakeholders.”
Lu Wenxi, chief analyst of Shanghai Zhongyuan Real Estate, believes that the pre-sale system of commercial housing has played a supporting role in the large-scale development of the real estate industry. It takes three years to do a project, and a large amount of funds will be deposited in a single project, so the pre-sale system actually supports a large number of commercial housing market supply.”
Bai Wenxi said that the current supply and demand pattern of the real estate industry has undergone fundamental changes, and the failure of the supervision of pre-sale funds has caused many problems. It is time to cancel the pre-sale system of commercial housing.
However, the pre-sale system has been implemented for 28 years, and it has formed a huge industry inertia and interest bundle, and it is difficult to return to the existing home sales system.
"Once the pre-sale system is changed to existing home sales, it will lead to a shrinking of the real estate industry, which will directly affect the total supply of the property market, lead to a huge reduction in industry taxes, fees and land transfer fees, and even lead to a contraction in GDP." Bai Wenxi said.
Lu Wenxi also said that if existing house sales are implemented on a large scale now, it will lead to a contraction in the supply of the property market, which will affect fixed asset investment and local land transfer fees, and bring greater risks of market volatility.
Bai Wenxi believes that the sales of existing houses must be gradually promoted. At this stage, we can learn from the pre-sale system in Hong Kong and other countries, and place the issuance of bank mortgage loans before and after the delivery of houses. Real estate companies mainly rely on their own loans to banks. After the development and construction are completed, there will be no unfinished large-scale projects, and the impact on the real estate sector will be smaller.