Summary:“Existing house sales can be carried out if conditions permit, and pre-sales will continue to be implemented. Fund supervision responsibilities must be put in place to prevent capital evasion and prevent new handover risks.” The National Housing and Urban-Rural Construction Work Conference held on January 17 made it clear propose.
“Existing house sales can be carried out if conditions permit, and pre-sales will continue to be implemented. Fund supervision responsibilities must be put in place to prevent capital evasion and prevent new handover risks.” The National Housing and Urban-Rural Construction Work Conference held on January 17 made it clear propose.
In the nearly one month since then, four provinces, Shandong, Anhui, Henan, and Sichuan, have identified pilot projects for existing houses. From “encouragement” to “pilot”, how far is it from “paying for the house at the same time”?
Pilot existing house sales, risk prevention is the focus
On January 31, the Shandong Provincial Housing and Urban-Rural Construction Work Conference was held. The meeting proposed to gradually increase the threshold for pre-sales, encourage qualified places to try first, and carry out pilot sales of existing houses.
On February 6, at the Anhui Provincial Housing and Urban-Rural Construction Work Conference, the relevant person in charge of the Anhui Provincial Department of Housing and Urban-Rural Development revealed that in 2023 Anhui will launch a pilot project for the sale of existing houses according to local conditions.
On February 6, the Sichuan Provincial People’s Government issued a notice on “Several Policies and Measures to Focus on High-quality Development and Promote Overall Economic Operation Improvement” and proposed to support qualified cities to carry out pilot projects for the sale of commercial housing and actively promote the real estate industry to a new development model smooth transition.
On February 7, the Henan Provincial Housing and Urban-Rural Construction Work Conference was held. The meeting made it clear that this year, the supervision of pre-sale funds for commercial housing will be further regulated, and the threshold for pre-sale will be gradually raised. Taking Zhengzhou and Kaifeng as pilot projects, we will actively explore the reform of the pre-sale system and the sale of existing houses. .
In the golden age of real estate, the pre-sale system of commercial housing can quickly withdraw funds, and the fast turnover model has played an important role in accelerating the development of the industry. Entering a new cycle, the real estate industry is transitioning smoothly to a new development model. Guaranteeing the delivery of buildings and preventing risks have become the focus of work. Pilot sales of existing homes have also been put on the agenda in many places.
Taking Henan Province as an example, Chen Wenjing, Director of Market Research of the Index Business Department of the Middle Finger Research Institute, pointed out that Henan Province has a relatively heavy task of “guaranteed delivery buildings”, and 2023 is an important node for “guarantee delivery buildings”. This time Henan Province put forward new requirements based on the actual situation, which is a further implementation of the policies of the competent authorities.
“There are a lot of land and new houses supplied in Zhengzhou. The amount of available and potential supply is very large, and the housing prices continue to fall. The implementation of existing sales will not cause the supply to fail to keep up due to the long supply cycle and high construction costs, which will lead to an increase in housing prices in the whole society. , which is also in line with the ‘qualified cities to explore the current sale model’ proposed by the Ministry of Housing and Urban-Rural Development.” Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, pointed out.
Try upgrading, what’s the difference?
Compared with the off-plan sales, the existing home sales of “paying for the money and handing over the house” have obvious advantages for consumers, which can effectively avoid risks such as unfinished products and quality disputes, and are naturally favored by home buyers.
“In 2022, the transaction area of new commercial residential buildings across the country will decline by 26.8% year-on-year, and the sales area of off-plan housing nationwide will decrease by 29.6% year-on-year. The sales scale is obviously better than that of off-plan housing sales.
“I would rather spend 200,000 more than buy an existing house.” On social platforms, many house buyers communicated and appealed in this way. However, a real estate salesperson in a provincial capital city told Zhongxin Finance and Economics that the current purchase of existing houses also requires more attention.
“Under the current environment dominated by off-plan housing, it is difficult for a house with a good developer, good quality, and good location to ‘cook’ into an existing house. It may be that the local purchasing power is insufficient, or there are other unfavorable factors that make it a slow-moving property.” He said that another situation is that in some places, the price of off-plan housing is limited, but the price of existing housing is not limited, and developers are reluctant to sell. In short, consumers should not relax their vigilance because of existing houses, but must pay attention to observation.
But for developers, existing house sales have higher requirements on cash flow and construction capacity, so it is more difficult to implement.
Li Yujia believes that at this stage, if the land price and construction cost remain unchanged, the current sale will increase the construction cost, thereby affecting the sales of this type of house. Therefore, under the current sale system, the government must be required to make concessions on land prices in order to reduce development costs, thereby stabilizing housing price expectations and reducing the cost of purchasing houses.
Many attempts have been made before. In 2014, the pre-contract for the sale of an auctioned land in Wuliqiao Street, Huangpu District, Shanghai stated that “the houses built in this land shall not be pre-sold, and must be sold as fully furnished existing houses”; According to the requirements in the land auction, the sale of the parcel of land is implemented as existing houses, and the bidders can apply for house sales procedures only after the completion and acceptance of the planned houses.
“Before the first half of 2021, all localities mainly set the existing home sales model to promote the rational acquisition of land by real estate companies and promote the stability of land prices; after that, it is mainly from the perspective of preventing the risk of unfinished buildings and preventing the spread of financial risks for real estate companies. It is also an important manifestation of the exploration of new real estate development models in various places.” Yan Yuejin, research director of Shanghai E-House Real Estate Research Institute, pointed out.
From “encouragement” to “pilot”, is it time to cancel the pre-sale system?
On the basis of “risk prevention”, is it possible to cancel the pre-sale system at this stage?
“The problem of guaranteed delivery and unfinished buildings is essentially caused by the lax supervision of pre-sale funds, not any problems with pre-sale itself.” Li Yujia believes that the more important thing is to strengthen the supervision of processes and funds.
Chen Wenjing also believes that in the short term, in order to achieve “guaranteed delivery”, it is expected that the supervision of pre-sale funds and pre-sale policies may remain strict, and the policies will also be more standardized. Each region may flexibly adjust the supervision and management of pre-sale funds according to local actual conditions. Pre-sale conditions promote the stability of expectations at both ends of the real estate market.
In Yan Yuejin’s view, the previous reform of the pre-sale system was more from the perspective of encouragement and voluntariness; The pace of reform has accelerated significantly.
“Upgrading from ‘encouragement’ to ‘pilot’ in the past also means that the road to the reform of the existing housing model has officially opened. All localities still need to grasp the general trend of policies, actively study and judge the existing housing sales market, and create a better environment for the advancement of the existing housing model in various regions. conditions.” Yan Yuejin said.
Original title: “Pay the money with one hand and hand over the house”, how far is the sale of existing houses?