(Economic Observation) China's property market has landed a number of heavy favorites Hot cities ushered in the era of "recognizing housing but not recognizing loans"

Beijing, 8 Aug (ZXS) -- China's property market is welcoming a number of heavily favorable hot cities to usher in the era of "recognizing housing but not recognizing loans."

China News Agency reporter Pang Wuji

On the 25th, China's real estate market ushered in a number of heavy favorable policies. The Notice on Optimizing the Recognition Standards for the Number of Housing Units in Individual Housing Loans jointly issued by the Ministry of Housing and Urban-Rural Development and other three departments of China was announced, promoting the implementation of the policy measures of "recognizing housing without recognising loans" for the purchase of first home loans.

The circular clarifies that when resident families (including borrowers, spouses and minor children) apply for loans to purchase commercial housing, and the family members do not have a complete set of housing in the local name, regardless of whether they have used the loan to purchase a house, banking financial institutions will implement the housing credit policy according to the first home. Industry experts believe that this means that China's hot cities will usher in the era of "recognizing housing without recognizing loans".

What is "Recognizing a House Without Recognizing a Loan"?

"Recognition of a house" or "loan subscription" is the reference standard for banks to determine whether it is the first home when issuing a home mortgage loan. "Housing recognition" refers to the bank's reference to the number of housing units actually owned by the proposed household; "Loan" means that the bank determines whether the first home is based on whether the proposed home has a housing loan record nationwide.

Among them, the most stringent recognition standard is "recognizing housing and loans". It means that if there is a record of buying a home, when you repurchase a house, even if you do not have a house in your name or the loan has been paid off, it will be recognized as a second home. The down payment ratio, mortgage interest rate and related taxes for the second home are significantly higher than the first home.

According to the calculation of the Shell Research Institute, in Beijing, a set of 650.40 million yuan (RMB, the same below) of improved housing (non-ordinary housing), in the case of "recognizing a house but not a loan", the down payment ratio is 80%, while in the case of "recognizing a house and recognising a loan", the down payment ratio doubles to 260%, and the down payment amount is <>.<> million yuan more.

Wang Xiaochang, chief analyst of Zhuge Data Research Center, said that at present, first-tier cities and about 20 hot cities such as Xiamen, Chengdu and Hefei implement the policy of "recognizing housing and loans".

Why adjust the "house and loan"?

Industry experts believe that the "house and loan" policy inhibits the demand for housing, especially the demand for improved housing for housing replacement groups. For example, after Beijing launched the "house recognition and loan subscription" in 2011 and 2017, the average transaction price of second-hand residential buildings experienced a decline of about one year, and the cumulative decline in house prices reached 1 percentage points.

In addition, some northern cities such as Tianjin and Jinan have continued to have low housing prices in recent years, largely because of the implementation of "housing and loans" in the low market heat stage, which excessively inhibits market demand.

In the two rounds of property market regulation and control cycles since 2010, "housing and loans" has been regarded as an important policy tool to curb demand and cool the property market, but the current market situation and expectations have changed. The Politburo meeting on July 7 clearly proposed to adapt to the new situation of major changes in supply and demand in China's real estate market, and adjust and optimize real estate policies in a timely manner.

Chen Wenjing, director of market research at the China Index Research Institute, pointed out that optimizing the first home "recognize a house and recognize a loan" policy for "recognizing a house but not recognizing a loan", for the replacement demand of foreign loan records, local houselessness and "selling one to buy one", the down payment ratio and loan interest rate will be significantly reduced, and real estate related taxes and fees are also expected to be implemented according to the first set, this policy reduces the threshold for family home purchase, but also reduces the cost of buying a house, which is conducive to the release of demand.

Which cities are likely to land?

It should be noted that the three departments emphasized: "As a policy tool, this policy is included in the 'one city, one policy' toolbox for cities to choose independently."

Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Urban Planning Institute, believes that this also means that whether and when to implement the "housing without loans" is up to the city to decide. To implement this policy, local governments need to consult with the local People's Bank and comprehensively assess the operation and risks of the local real estate market.

Chen Wenjing said that the new policy has opened up space for core cities to optimize real estate credit policies, and it is expected that most second-tier cities will follow suit soon. First-tier cities also have policy implementation expectations. Due to the high total price of housing in first-tier cities and the large gap between the down payment ratio of the first home and the second home, if the policy is followed up, it is expected to have a more obvious impact on the market.

A number of policies are the same as the sunset

On the same day, in addition to the policy of "no mortgage for housing recognition", the official extended the preferential treatment of "house exchange tax refund" to the end of 2025. On the same day, the relevant departments also announced the continuation of the implementation of preferential tax policies to support the construction and operation of public rental housing.

Experts believe that many ministries and commissions have successively released favorable policies, injecting confidence into the market and helping to stabilize the expectations of all parties. (End)