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In recent years, China’s real estate industry has developed rapidly, and house prices have been maintained at a high level. The trend of house prices is related to the vital interests of the people and is an important issue related to the healthy development of economy and social harmony and stability.
As the first year of China’s real estate market, the sales area of commercial housing was only 120 million square meters in 1998, exceeded 1 billion square meters in 2010, and reached 1.76 billion square meters in 2020.
Since 1998, China’s real estate industry has made great progress. At the same time, since 1998, the policy regulation of China’s real estate industry has followed closely, and the goal of regulation and control is to “stabilize housing prices” and “stabilize the economy”.
The period from 2010 to 2020 is a decade when China’s national economy takes off. GDP increased from 41.21 trillion yuan in 2010 to 101.6 trillion yuan in 2020, an increase of about 146.54%. The per capita income of urban households increased from 21033 yuan in 2010 to 32189 yuan in 2020, an increase of about 53.04 percent.
The pillar industry of the real estate industry has a prominent position. Statistics show that the contribution rate of added value of the real estate industry increased from 5.7 per cent to 7.3 per cent from 2010 to 2020.
The standard ranking summarizes the experience and shortcomings of China’s real estate macro-control policies from 2010 to 2020, and compares some foreign real estate related policies, in order to put forward some suggestions that will help to improve the real estate macro-control.
The real estate regulation and control policy in 2010 has to start in 2008. At that time, the subprime mortgage crisis in the United States spread all over the world, and China formally established a monetary easing policy headed by 4 trillion yuan in order to stimulate the economy.
Driven by the 4 trillion yuan investment plan, real estate has become a tool to maintain economic growth. China’s economy was the first to recover from the financial crisis, which led to a sharp rise in house prices in 2009.
According to the National Bureau of Statistics, the average sales price of commercial housing rose to 4681 yuan per square meter in 2009 from 3800 yuan in 2008, an increase of 23.18% over the same period last year.
In order to curb the rise in house prices, the “National four principles” was introduced at the end of 2009, and the real estate policy began to tighten.
However, due to the lag of macro policy transmission, the real estate market continues to rise, and 2010 ushered in the year of the most stringent property regulation in history.
The relevant departments of the state have issued the Circular of the General Office of the State Council on promoting the stable and healthy Development of the Real Estate Market (issued by the State Office (2010) No. 4), the Circular of the State Council on resolutely curbing the excessively rapid rise of house prices in some cities. (issued by the State Office (2010) No. 10), “improve differential housing credit policies to regulate and guide housing demand”, Notice on adjusting the preferential Policy of contract tax and individual income tax in Real Estate transactions (Finance and Taxation (2010) No. 94) and other policy documents. By means of increasing interest rates many times, restricting purchases and loans, and strengthening the market inventory of land elements, we will comprehensively carry out a new round of real estate regulation and control in many aspects, such as the land end, the financing side and the consumer side, so as to curb the excessive rise in house prices.
In 2011, we continued this trend by adjusting and improving relevant tax policies, strengthening tax collection and management, strengthening differential housing credit policies, increasing the proportion of down payments for second homes and tightening the management of housing land supply.
Affected by the European debt crisis in 2012, the direction of real estate regulation and tightening remained unchanged, but some cities slowed down slightly. The Ministry of Housing and Urban-Rural Development, the National Development and Reform Commission, the people’s Bank of China and other departments supported the demand for first-time housing purchases, local governments fine-tuned the property market policy, and loan interest rates in many cities fell slightly from the benchmark interest rate last year, and the provident fund policy was relaxed. For individual city policies that touch on purchase and price restrictions, they have been suspended.
The notice on continuing to do a good job in the regulation and control of the real estate market issued in 2013 laid the tone of strict regulation and control throughout the year, levied 20% income tax on second-hand housing transactions, and expanded the pilot scope of property tax reform.
From 2014 to the first half of 2016, the real estate market entered a state of “total slowdown and regional differentiation”. Real estate regulation and control focused more on inventory removal and classified management, and real estate regulation and control policies turned loose. Through the relaxation of purchase and loan restrictions, repeated cuts in reserve requirements and interest rates, release of provident funds, reduction of property taxes and other measures from the demand side to regulate and remove inventory, the property market heats up.
Since the second half of 2016, China’s real estate regulation and control has entered a new round of tightening cycle, with regulation policies focusing on the combination of short-term regulation and long-term mechanisms. The relevant departments adopt many measures, such as purchase restriction, loan restriction, sale restriction, price restriction, raising the proportion of down payment, floating loan interest rate, and so on, to strengthen regulation and control.
In 2017, the short-term regulation and control of real estate turned to the construction of a long-term mechanism, proposing to adhere to the orientation of “houses are for living, not for speculation”, and to speed up the establishment of a housing system with multi-agent supply, multi-channel security and simultaneous rent and purchase. The regulation and control will continue from 2018 to 2019.
Under the influence of COVID-19 ‘s epidemic situation in 2020, the overall monetary environment is relatively loose, but real estate regulation and control still adhere to the basic tone of “housing speculation” remains unchanged, local governments are flexible due to urban policies, precise regulation and control, and the establishment of a long-term mechanism for real estate continues to be accelerated. real estate financial supervision has been continuously strengthened.
In the second half of the year, real estate will strengthen the financial prudent management system, and financial supervision will continue to be strengthened. To further implement the long-term mechanism of real estate, the “three red lines” at the enterprise end and the “two red lines” at the bank side have clarified the rules for capital monitoring and financing management of key real estate enterprises.
On December 31, 2020, the Central Bank and the CBIC jointly issued the Circular on the Establishment of a Management system for the concentration of Real Estate loans in Banking Financial institutions. It is clear to 7 large Chinese banks, 17 Chinese medium-sized banks, Chinese small banks and non-county rural cooperative institutions, county rural cooperative institutions, village banks, a total of 5 institutions set the upper limit of the proportion of real estate loans and personal housing loans. The Circular shall enter into force as of January 1, 2021.