Kerui: Real Estate Sets Tone for "Stabilizing and Rebounding"

01 The Central Political Bureau Meeting on September 26 for the First Time Clearly Stated "Promoting Market Stability to Stop the Decline", Requiring Response to Concerns and Adjusting Housing Purchase Restrictions

On September 26, the Central Political Bureau of the Communist Party of China held a meeting. The meeting pointed out the need to promote market stability in the real estate sector, strictly control the increase in new commercial housing, optimize existing stock, improve quality, increase the lending for "white-listed" projects, and support the activation of idle land resources. It also emphasized the importance of responding to public concerns, adjusting housing purchase restrictions, lowering interest rates for existing housing loans, promptly improving land, fiscal, financial policies, and promoting the establishment of a new model for real estate development.

02 Central-Level Real Estate Policies Open Up Space for Lowering Mortgage Rates and Adjusting Taxes and Fees

First, the central bank is further lowering the mortgage rate. The Political Bureau meeting required "lowering the reserve requirement ratio and implementing effective interest rate cuts." On the 24th, the central bank announced guidance to simultaneously lower loan market quoted interest rates and deposit rates. It is expected that the LPR quoted rate may be lowered by 20-25 basis points as early as October 20, which will further drive down mortgage rates.

Second, adjusting housing transaction taxes and fees. The Political Bureau meeting required "increasing the counter-cyclical adjustment intensity of fiscal and monetary policies, promptly improving land, fiscal, financial policies." This round of reductions in deed taxes, value-added taxes, personal income taxes, and other real estate transaction taxes and fees aims to promote housing consumption. For example, exempting deed taxes for individuals purchasing their only residential property, reducing deed taxes for families purchasing a second property or making significant improvements, and shortening the period for levying value-added taxes and personal income taxes on housing transactions.

In addition to incremental support, it is important to implement existing supportive policies such as reducing interest rates on existing loans, refinancing for affordable housing, and financing white-listed projects. The detailed rules for reducing interest rates on existing loans are still pending clarification, including how much to reduce, subsequent support for interbank mortgage transfers, etc., in order to quickly alleviate residents' financial burdens and ease the trend of early loan repayments.

03 Six Cities, Including First-Tier Cities, Will Accelerate the Introduction of New Local Regulations to Adjust and Cancel Purchase Restrictions, Optimize Existing Stock, and Improve Quality

We believe that Guangzhou is the most likely first-tier city to completely lift purchase restrictions, followed by Shenzhen, while the possibility of Beijing and Shanghai completely lifting purchase restrictions is unlikely. In addition, policies such as purchase restrictions, sales restrictions, and standardization of ordinary residential properties in first-tier cities are expected to be optimized and adjusted. For example, Beijing recently announced the timely cancellation of the distinction between ordinary and non-ordinary residential properties, further reducing the burden of housing transaction taxes and fees.

Second and third-tier cities will mainly focus on demand-side policies from the perspective of credit policies, trade-in policies, and housing purchase subsidies. For example, adjusting the down payment ratio for second homes to the national minimum of 15% as soon as possible, relaxing the rules for determining the number of restricted loans, increasing housing purchase subsidies, and enhancing the incentives for housing ticket resettlement.

On the supply side, policies include advancing the construction of high-quality residential properties, optimizing capacity rules to increase the floor area ratio, moderately reducing the pre-sale fund supervision retention ratio for high-quality projects, encouraging quality and price, and no longer implementing price guidance for new properties. Secondly, promoting pilot sales of existing properties, such as selling high-quality residential properties on existing land plots, delaying city infrastructure construction and supporting fees for existing sales projects, and increasing the development loan quotas for existing sales projects Extending the deadline for development loans, reducing the interest rates for development loans, and more.

Authors: Yang Kewei, Li Shiyun Source: Ke Rui Real Estate Research Original Title: "Quick Comment | The Political Bureau Meeting Sets the Tone to Promote the Stabilization of the Real Estate Market"