The Annual Report on Development of Housing Market in China (2013-2014) to Release

On December 18, 2013, the Press Conference of the Green Book of Housing Market and Seminar of the Development of Housing in China under the Trend of Urban and Rural Integration was held in Beijing by National Economic Strategy Academy (NESA) of CASS, Xinhua Economic Information Newspaper, Center for City and Competitiveness, and Social Sciences Academic Press of CASS. The Annual Report on Development of Housing Market in China (2013-2014) –The Green Book of Housing Market composed by NESA – was released on the conference.

The Green Book of Housing Market provides comprehensive and systematical analysis, forecast and evaluation on China’s housing market in 5 aspects, including macro-background, market player, market system, public policy and annual theme. It also comes out with some suggestions on relative policies. The content includes 1) forecast of the development and change of housing market from 2013 to 2014, based on the evaluation of the trend of housing market from 2012 to 2013; 2) quantitative evaluation of the development of the key fields in housing market by establishing China’s housing index system; 3) analysis of the issues and challenges towards the coordinated and healthy development of housing market and relative fields as well as suggestions for relative policies; and 4) specific analysis of housing issues of migrants in urbanization and corresponding solutions.

The Green Book of Housing Market indicates from 2012 to 2013that 1) the housing market in China stays at the range of expansion generally; 2) The housing price rises globally, and especially in the emerging economies; 3) the housing price rise in China is not alone, but it leads the trend; 4) the increase of housing price in China presents significant regional characteristic which means that the self-consumption demand panic promotes the sharp spike of housing price in big cities accompanied by obviously stagflation in small and middle-sized cites; 5) when the housing price rises fast, the rent in middle and big-sized cities rises continuously and rapidly, which causes the pressure of renting increase significantly; 6) for the whole land market keeps warmer, the planned and practical supply level and the trading volume increase drastically on year-on-year basis, and the housing land increase significantly; 7) the markets of both development loan and personal mortgage are flouring; 8) the industry concentration of real estate increases which results the quantity of company reduces gradually.

From the aspect of policy, from 2012 to 2013, the local governments continue to carry out the house purchase quota policy and mortgage quota policy strictly, and the policy control generally turns to transform steadily. Differentiated tax policies are carried out steadily, and the reform of real estate taxation is coming. However, it is difficult to reach the aim of housing price control of key cities, thus the control policy may be stricter. From the aspect of indemnificatory houses, the urban indemnificatory housing work is implemented successfully as multi-channel financing from 2012 to 2013, and it has taken the reconstruction of shantytowns as the core work. However, for the migrants are more than 30 percent of the total urban population, most of their housing conditions are not optimistic.

The Green Book of Housing Market prejudges the external environment housing market in China faces as follows: 1) the economy grows slowly, inflation slows, interest rate is steady and the trade is depressed; 2) the global housing price keeps increasing, but the growth slows down; 3) the constructional and periodic characteristics of economic cycle in China is more significant, and it may keep increasing at moderate speed; 4) the policy of “steady increase” won’t change, but its effect may be weak.

The Green Book of Housing Market prejudges that 1) the housing price in big cities in China in 2014 may reach the short-term peak, and the decadent trend of real estate market in small and middle-sized cities will continue; 2) the rent will increase habitually, and the seasonal fluctuation of its growth will be great; 3) the trading volume of land may increase further, and its price may be steady in general but increase a bit; 4) the industry concentration of real estate will increase further, and the enterprise competition will tend to focus on brand; 5)the real estate enterprises’ financing method presents diversification, and the proportion of direct financing keeps on increase.

The Green Book of Housing Market analyzes the prominent problems of the development of housing market in China: 1) the management of real estate enterprise is irregular, especially financial statement dressing and rent-seeking; 2) large real estate enterprise are keen to go abroad, and its investment risk can’t be ignored; 3) the renter can’t enjoy the due rights and there is mismanagement in intermediary market; 4) the mortgage occupies a high proportion of the whole business loan for banks, the credit risk of it can’t be eliminated; 5) it’s difficult to promote differential mortgage policy, and it lacks supporting financing system for indemnificatory housing; 6) financing risks of local governments accumulate, and the conflicts of land requisition sharpen; 7) the covering range of housing provident fund is limited and it has loopholes in actual usage; 8) the management level of indemnificatory housing is not clear, the qualification examination mechanism of indemnificatory housing is uncompleted, and the file management still has leak, as well as its allocation mechanism is not developed; 9) the supervision of idle land is not well implemented and the project quality supervision needs to be enhanced; 10) the regulation accountability is not fulfilled, and the long-term mechanism of indemnificatory housing is still on paper but not in practice.

The Green Book of Housing Market points out that the main challenges for constructing healthy and balanced housing market in China include: 1) from the point of external environment, there is serious overcapacity in some industries, and partial financing risk is hidden; 2) from the point of real estate market itself, administrative control distorts market signs, contradiction between supply and demand exists in housing market for a long time; 3) from the point of rental market, both the housing price and rent increase sharply, the wealth gap between tenant and homeowner increase; 4) from the point of land market, the land oligopoly tends to be serious, and is willing to push up land price; 5) from the point of housing financial market, it overfocuses on indirect financing market, the robust tendency of housing credit market causes great pressure on regulation policies of the real estate sector.

The Green Book of Housing Market points out that the housing regulation from 2013 to 2014 aims at keeping the growth rate of housing investment, housing price and housing stock-to-sales ratio in a reasonable range. The main tasks of housing regulation are: 1) balancing its supply and demand and adjusting its structure; 2) stabilizing housing price and accelerating reform. The direction of housing regulation is to change the administration-dominant regulation to market-dominant one, change the demand regulation to supply-and-demand regulation, and change the uniformity regulation to differential regulation. The principle of housing regulation is “five balances” which means balance between administrative regulation and market regulation, balance in housing supply-demand system, balance of housing markets between different regions, and balance between anticipation of housing market and improvement of infrastructure and public service, balance between regulation policy and system reform.  

The Green Book of Housing Market considers that the future policy aims to construct housing supply system of “safe habitation, healthy habitation, and happy habitation”, and construct long-term adjustment mechanism for housing market. Based on it, the Green Book of Housing Market proposes in 2014 the direction of key policies, which includes 1)completing relevant law, regulation, policy and system, and regulating real estate enterprise’s operation behaviors; 2) weakening administrative regulation of housing prices, and deepening the reform of housing market; 3) completing the rental housing market, and maintaining the legitimate right and interest of tenant; 4) enlarging the proportion of direct financial housing market effectively, and preventing capital risk of real estate by technology of securitization; 5) expanding the survival space for cooperative housing financial institution, and exploring to construct effective supportive system for indemnificatory housing financing institution; 6) constructing indemnificatory housing file system, and completing housing provident fund system; 7) enlarging the range of housing supervision to avoid “buying up but not down” and “preferring buying but not renting”; 8) reforming the current land market system and housing market system, and enhancing payment capacity of migrant by various methods.

As far as high-level operation and diverged structure of the housing market are concerned, the Green Book of Housing Market suggests maintaining proper scale of investment under the lead of government in 2014, and continuing to carry out prudent monetary policy. The management of market participation should be strengthened, and the regulation policy should be kept comparatively stable. The land supply in first-tier cities and hot second-tier cities should be increased properly while the land supply in third and fourth-tier cites should be decreased.

The attached is the transcript of the Press Conference of the Green Book of Housing Market and Seminar of the Development of Housing in China under the Trend of Urban and Rural Integration, broadcasted by China Network.