Economic Daily:
My question is for Chairman Tian of the CCB. Everyone says "if you want housing, go to the CCB," what is your opinion on the current real estate market and its regulatory policies? How do you see risks in the real estate market and future trends? Thank you.
Tian Guoli:
The slogan "if you want housing, go to the CCB" was put forward by the CCB more than three decades ago. At that time, everyone in the country lived in public rental housing, and basically no one was purchasing a house. When we were on the road to housing reform, people struggled to scrape together 50,000 yuan or 100,000 yuan to buy a house. However, people couldn't afford it and were under a lot of pressure. China wanted to develop quickly and so needed to solve the problem of housing marketization, so the CCB took the lead in proposing "if you want to buy a house, go to the CCB." At that time, we designed some financial products along this way of thinking, including the mortgage loans that everyone is now familiar with and has experienced.
With the gradual deepening of market reforms and the increase in the rate of home ownership, it is now basically market-oriented. We have seen a deep-seated problem, that is, the rent-to-purchase ratio needs to be balanced. At present, it is not very balanced. The price-to-rent ratio is basically 1:700. From a financial point of view, it is necessary to design new products to rebalance this problem. Everyone remembers "if you want to buy a house, go to the CCB," but I hope everyone can remember "if you want to rent a house, go to the CCB." It's more cost-effective (to rent a house), given the ratio of 1:700, even in global terms. No matter how much housing prices fall in the future, it will still be difficult to truly solve the issue of housing for the working class, and especially difficult to meet the housing needs of ordinary people, those without savings, migrant workers, and new urban citizens. In the future, we need to rely on rental housing to solve the problem. Since the 18th CPC National Congress in particular, we have emphasized that people are the center, the housing market must be controlled rationally, and there must be a new model. Now the rate of people renting is over 10%, which is already pretty good. Our goal is to push the figure up to more than 30%. Then there will be a fundamental change in the country's real estate market. In other words, it is still the implementation of the saying, "housing is for living in, not for speculation."
The CCB is a major state-owned bank. On the one hand, we should undertake our social responsibilities. On the other, we also have strong professional design capabilities. The CCB already launched a housing rental platform more than four years ago. While the platform is not perfect, it has already covered more than 300 cities across the country. We are working hard to establish relationships with houseowners, and also trying hard to connect with the market and customers. In this regard, the CCB is not engaged in this platform to seek benefits, instead we hope to try and help balance this long-term problem that has troubled society.
As you all know, the real estate issue is a worldwide problem. After Japan's housing bubble burst in the early 1990s, it had a profound impact on its economy. The subprime mortgage crisis in the United States actually stemmed from excess real estate. Fortunately, we have some policy and institutional strengths. But how can we use financial market-oriented means to gradually turn these advantages into economic momentum for sustainable development? We feel stronger and stronger that if we continue to design financial products around this, we will see a new scenario, that is, many residents will gradually become accustomed to renting in the future. You may have noticed that we have some slogans, the first is "if you want to rent a house, go to the CCB" and the second is "housing is for living in, renting is pretty good." In fact, from the perspective of financial management, renting is also a good idea, because now people don't always think that the value of a house will appreciate after buying. That era has now passed. Even if the house appreciates, it is very difficult to cash out. In fact, Europe has some good models for this, and has many financial products for people to manage their money, such as the stock market, bond market and rare metals. People can turn to these as it will be quicker to make money, and they are all relatively good in terms of liquidity, security and being risk-proof. In fact, real estate is not a particularly ideal asset for buying and selling. As the market matures in China, the era of relying on renting will soon definitely come.
Centering on this thought, the CCB put forward the slogan that "If you want to deposit a home in a bank, choose CCB." To be precise, there are some structural problems in the Chinese housing market. The housing vacancy rate is relatively high, and the rental market is unbalanced in two aspects. On one hand, from a landlord's perspective, it's still unclarified how laws would protect their income, and how they would enjoy preferential policies on the tax. Currently, we're discussing these issues with related departments. On the other hand, people may feel it's not so convenient to rent homes. Some leases can be cut short when landlords change their minds. Therefore, renters often lack a sense of stability in their lives.
The CCB put forward another notion that "Long-term rental means long-term stay; long-term stay equals settling down." From the perspective of a new urban resident, if the fixed term could last for three, five, or ten years, it should be enough. Even if you buy homes, you may want to purchase new ones after five to eight years or have new demands. We try to satisfy the needs of new urban residents through these means. There are now over 38 million people registering on the platform of the CCB to conduct transactions of this kind. At the same time, the CCB has a deposit of nearly 130,000 apartments. Sometimes we feel that landlords are not unwilling to rent out homes, since they may not rest assured, apart from taxes and troubles involved. But if the CCB assumes the responsibility, it will help improve their credit. As people have already deposited money in banks, why not homes? At the same time, we use our advantages in this aspect and try to fix long-term periods. During the years when the apartments are deposited in banks, we lock the rent and term to offer a stable home for new urban residents as possible as we can. Gradually, people will get used to renting homes, and it will become a choice and a normal for more new urban residents. We have offered some products in this aspect. We've also set up a housing rental industry alliance which unites sectors like housing design, renovation, and building materials. As for old apartments, the CCB established a comprehensive housing rental system entitled "CCB Jianrong Home." As some neighborhoods were outdated, we employed the best designers to design and renovate them with the best, high-quality, environment-friendly, and branded sanitary ware to lower the cost and offer new urban residents an affordable price. Usually, these run-down areas are located downtown, so the rental should be affordable for them. In Guangzhou, we built homes for sanitation workers through collaboration with the government. They are located in the downtown area, and are just hundreds of steps away from the river bank. These apartments have separate restrooms and kitchens. Though each one is probably about 20 square meters, our exquisite design makes it decent and comfortable. We also have many homes for high-end talents with elaborate designs. The mechanism can be more flexible with rental as the mainstay. It can satisfy the housing rental needs of all strata of society.
Finally, I would like to emphasize that the CCB does not aim to replace property agencies by doing this, but expects to help more property agencies get involved in the transition of the market, based on our responsibility and integrity, including our financial support capacity, and jointly build a new market supply. We believe it can help find a complete solution for the balance of properties in the long run. If the ratio of rental to purchase reaches 4:6, the real estate market would be very stable, and the concern be eased. The CCB has made some attempts, but we're still far away from the target. I hope the media will pay attention to our practice, come to the CCB and CCB Jianrong Home across China for a visit, and promote our notion. Thank you.
Guo Shuqing:
Mr. Tian has talked a lot. He has a good idea and encourages us to rent homes. The housing price declined last year, and the bubble and monetization of properties have been reversed fundamentally. The real estate market is not as active as before, but housing is still in demand, especially its rental and renovation. Therefore, it's of great significance to provide such financial services. We had a slogan in the past that "if you want to have homes, go to CCB." Over twenty years ago, applying for individual housing loans was inconvenient. I have my own experience. At that time, I served as the head of the State Administration of Foreign Exchange and applied for the housing provident fund loan from the CCB. It took half a year from my application to the issuance of the loan. However, afterwards, the financial services in real estate improved at a fast speed. Currently, housing mortgages are issued in great number and they account for a high proportion of loans from large banks. We always remind those banks that they should pay attention to risks as many buy homes for investment and speculation. If the home prices fell in the future, or other problems appeared, a huge financial crisis would arise. Some adjustments in the price of real estate and changes in the demand structure are good things for the financial industry. But we hope the adjustments are not that acute or exert huge influences on the economy. We need a smooth transition. That is all I want to add.
