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Read in Chinese
Speakers:
Mr. Ni Hong, minister of housing and urban-rural development
Mr. Song Qichao, assistant minister of finance
Mr. Liu Guohong, vice minister of natural resources
Ms. Tao Ling, deputy governor of the People's Bank of China
Mr. Xiao Yuanqi, vice minister of the National Financial Regulatory Administration
Chairperson:
Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO
Date:
Oct. 17, 2024
Shou Xiaoli:
Ladies and gentlemen, good morning! Welcome to this State Council Information Office (SCIO) press conference. Today, we have invited Mr. Ni Hong, minister of housing and urban-rural development, to share information on promoting the steady and healthy development of the property sector and to address issues of interest. Also in attendance are Mr. Song Qichao, assistant minister of finance; Mr. Liu Guohong, vice minister of natural resources; Ms. Tao Ling, deputy governor of the People's Bank of China (PBC); and Mr. Xiao Yuanqi, vice minister of the National Financial Regulatory Administration (NFRA).
Now, I'll invite Mr. Ni to give his briefing.
Ni Hong:
Ladies, gentlemen, and friends from the media, good morning! I'm pleased to meet with you today to discuss developments in the property sector, alongside my colleagues from the Ministry of Finance (MOF), Ministry of Natural Resources (MNR), PBC, and NFRA. First, I'd like to express my sincere thanks for your attention to and support of our work in the property sector.
The Communist Party of China (CPC) Central Committee attaches great importance to the steady and healthy development of the property sector. On Sept. 26, a meeting of the Political Bureau of the CPC Central Committee emphasized the need to stabilize the property market and halt its decline. The meeting also stressed that we should strictly limit expansion, optimize existing resources, and improve the quality of housing. It also called for addressing public concerns by enhancing policies on land use, taxation, and financing to foster a new development model for the real estate sector. On Sept. 29, the State Council convened an executive meeting to study and arrange specific implementation measures.
The Ministry of Housing and Urban-Rural Development (MOHURD), along with the MOF, Ministry of Natural Resources, PBC and NFRA, has guided local governments to take prompt action. This includes implementing existing policies and introducing new ones through a comprehensive package of measures aimed at stabilizing the market and ending its downward trend.
These measures involve scrapping restrictive policies, easing financial burdens, and intensifying support.
We have given municipal governments greater decision-making powers to regulate the real estate market, allowing them to reduce or abolish restrictions on housing purchases based on local conditions. These include eliminating restrictions on housing purchases, sales, and pricing, as well as scrapping relevant standards for ordinary and non-ordinary housing.
We've lowered the interest rate for housing provident fund loans by 0.25 percentage point; lowered the down payment ratios for housing mortgages, with the minimum down payment ratio for both first and second homes set at 15%; decreased interest rates for existing loans; and reduced taxes and fees for those selling old homes to buy new ones. Through implementing these policies, we have alleviated home purchasing costs and loan repayment pressures, helping people fulfill their needs for both basic and improved housing.
Through providing monetary compensation, we plan to renovate 1 million homes in urban villages and dilapidated housing. Residents in urban villages are eager for such renovation because their living environment is unsatisfactory and rife with hidden safety risks. According to our investigations, 1.7 million homes in urban villages across 35 major cities need renovation. When including other cities nationwide, this number becomes significantly larger, as there are renovation needs in other cities as well. A separate investigation shows that 500,000 old and dilapidated houses across the country require renovation. This 1-million-home renovation initiative primarily targets residential projects with suitable conditions that can be expedited through enhanced policy support. By receiving monetary housing compensation, residents can choose appropriate housing according to their preferences and needs, eliminating or reducing the need for temporary housing as they can relocate directly to their new homes. This will also facilitate the sale of existing commercial housing. By year-end, loans to white-listed real estate projects will reach 4 trillion yuan. The urban real estate financing coordination mechanism will work to include all qualified real estate projects in the "white list" and ensure loans are granted when conditions are met, thereby addressing their reasonable financing needs.
We can see that these policies have taken effect. The decline in property development investment and sales of new homes, among other main indicators, has continued to narrow. Particularly, since the end of September, there has been a significant increase in the number of visits to new property projects and in the number of sale contracts, while transactions of second-hand houses have continued to rise. The market is showing positive changes.
Reports indicate that many local governments have intensified policy support for the property sector, resulting in a rebound in the property market of first-tier cities. Moving forward, we will work with relevant departments to firmly implement the decisions and arrangements of the CPC Central Committee and the State Council, carrying out each task to fully realize policy benefits and serve more people.
Now, my colleagues and I are ready to answer your questions. Thank you.
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Shou Xiaoli:
Thank you for your briefing, Mr. Ni. The floor is now open for questions. Please raise your hand before asking a question.
21st Century Business Herald:
As far as we know, since its establishment, the urban real estate financing coordination mechanism has played a significant role in facilitating financing for property projects and ensuring the construction and delivery of houses. A recent meeting of the Political Bureau of the CPC Central Committee proposed increasing loans for white-listed real estate projects. What specific measures will the NFRA take to advance this work? Thank you.
Xiao Yuanqi:
Thank you for your question and for your interest in this work. The CPC Central Committee and the State Council attach great importance to the property sector and have made a series of crucial decisions and arrangements. Since the beginning of this year, we have worked with MOHURD to provide guidance on establishing the urban real estate financing coordination mechanism and incorporating qualified real estate projects into the white list to secure stronger support from financial institutions.
On Sept. 26, as you just mentioned, a meeting of the Political Bureau of the CPC Central Committee called for increasing loans to white-listed projects. We are currently implementing these directives by focusing on the following aspects:
First, all commercial housing project loans should be included in the white list to ensure comprehensive coverage. Established over six months ago, the white list and urban financing coordination mechanism have yielded valuable experiences and practices through collaborative efforts. A relatively complete system has been developed in areas such as government coordination and promotion, financial support, and judicial enforcement guarantees. Once included in the white list, the management of real estate projects becomes more standardized, and financing becomes more convenient and rapid, playing a crucial role in the completion and delivery of projects as well as in protecting the legitimate rights and interests of homebuyers. Let me share an example: In Zhuhai, Guangdong province, there was a residential project where some units had been sold, but the project was later halted due to various reasons. After the establishment of the urban financing coordination mechanism, corresponding financing coordination mechanisms were set up at provincial, municipal, and several other levels. Through these mechanisms, the project qualified for white list inclusion. Consequently, a state-owned bank extended an additional loan of 600 million yuan to the project. This led to the swift resumption and completion of the project, along with the simultaneous construction of supporting facilities. The project quickly became one of Zhuhai's most sought-after residential developments. The completed project's quality amenities attracted numerous homebuyers.
Following thorough research, we have determined that conditions are suitable for including all commercial housing development loan projects in the white list. Henceforth, real estate projects that meet the white list criteria should be managed according to the white list system, ensuring comprehensive inclusion. In terms of specific procedures, we will adopt both review and filing methods. For the review process, we will maintain the existing urban financing coordination mechanism for white-listed projects. Additionally, real estate project companies can consult with banks, which will conduct financing according to credit standards. Projects will then be filed through the white list mechanism and managed under the white list. As I mentioned earlier, once included in the white list, project management becomes more standardized, and financing becomes quicker and more convenient. This facilitates housing construction and helps protect all parties' legitimate rights and interests.
Second, commercial banks should provide necessary loans for white-listed projects. We have already guided banks to enhance their efforts, building on the existing task force mechanism, to implement loan disbursement progress on a project-by-project basis. This involves appropriately delegating approval authority, increasing the efficiency of approvals and disbursements, and issuing loans in a timely manner according to project construction progress. Urban coordination mechanisms should also actively coordinate with relevant parties to intensify efforts to rectify problematic projects, fulfill loan disbursement conditions, and collaborate with financial institutions to ensure effective loan review and disbursement. In principle, banks should extend all possible loans to white-listed projects that maintain compliance with requirements.
Third, we will optimize loan disbursement methods to expedite funding. Currently, commercial banks disburse loan funds to real estate project companies in batches according to project construction progress, directly entrusting payments to suppliers, contractors and other upstream and downstream enterprises. Moving forward, commercial banks under the premise of coordination can advance the entire loan amount to a project fund supervision account set up by a real estate company, and according to the usage plan provided by the real estate company. Subsequently, funds can be disbursed from the supervision account to intended recipients upon actual usage requests, advancing the timeline for fund disbursement. Once credit approval is obtained, the entire loan can be issued to the project's fund supervision account. The advantage of this approach is that loan funds can be quickly allocated to the accounts of white-listed project companies. This allows for earlier payments to upstream and downstream enterprises, such as cement and steel suppliers, as well as construction companies, ensuring that real estate and housing projects can commence construction early or ahead of schedule. Additionally, loan funds deposited into the project fund supervision account are earmarked for specific purposes and managed under strict oversight, preventing misappropriation. The loan funds are dedicated to the construction of the project and its supporting facilities, ensuring they are fully used for project completion and delivery, which helps protect homebuyers' legitimate rights and interests.
As of Oct. 16, approved loans for white-listed real estate projects totaled 2.23 trillion yuan. By the end of 2024, the approved loan amount for white-listed projects is expected to double, exceeding 4 trillion yuan. To ensure adequate financing for real estate projects and the successful completion and delivery of housing, we will continue to optimize and improve the financing mechanism for white-listed real estate projects. This will ensure all eligible projects receive prompt inclusion, loan approval and fund disbursement.
This concludes my response to this question. Thank you.
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Reuters:
First-tier cities like Beijing, Shanghai, Shenzhen and Guangzhou have recently relaxed their housing purchase restrictions. Data shows that during the National Day Golden Week, these cities saw significant increases in property viewings and home sales, while smaller cities did not see much improvement in housing sales during the holiday. Will MOHURD lift all purchase restrictions in these mega-cities? What impact will this "siphon effect" — people flocking to big cities to buy homes — have on the stability of China's overall real estate market? Thank you.
Ni Hong:
Thank you for your questions. You've raised two points: first, about housing purchase restrictions, and second, about the "siphon effect." Let me address both issues.
First, regarding housing purchase restrictions. As I mentioned earlier, since last year, various cities have been granted full authority over real estate regulation. City governments are now empowered to make their own decisions based on their specific economic and social development and current real estate situation. Let me provide some information on the four first-tier cities you mentioned. By the end of September, these four cities adjusted their housing purchase restrictions in slightly different ways: Beijing and Shanghai relaxed their restrictions, Guangzhou fully lifted them, and Shenzhen partially lifted them in certain areas. These adjustments fully demonstrate a tailored and autonomous decision-making approach based on the specific conditions of each city.
Second, regarding the "siphon effect" you mentioned. As a general trend, this is common in the development of world cities. The siphon effect has both positive and negative impacts, and its effects can vary across different cities and different stages of development. In the process of urbanization, China has focused on coordinated development among large, medium and small cities as well as towns. Adopting city-specific policies in the real estate market is an institutional arrangement designed to prevent the negative impacts of the siphon effect in the real estate sector. Thank you.
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CCTV:
Mr. Ni just mentioned the plan to renovate 1 million homes in urban villages and dilapidated residential properties. Could you please elaborate on the arrangements? Thank you.
Ni Hong:
Thank you for your question. As I mentioned earlier, this policy combination includes two new additions. Mr. Xiao just addressed the loan support of 4 trillion yuan, and I will now explain our considerations behind the project for renovating1 million homes in urban villages and dilapidated residential properties.
I mentioned this demand in my introduction. With urban development, buildings age over time, and some eventually become dilapidated. This creates a need for renovation. We conducted surveys in key cities, which revealed demand for renovating 1.7 million houses across 35 major cities. It is clear that this demand is significant and growing in China's297 prefectural-level cities.
This time, we have decided to expand our renovation efforts by an additional 1 million houses. Through a monetization approach, we are increasing policy support, especially for projects with mature renovation conditions, strong community demand for renovation, supported by thorough preliminary groundwork. The first advantage is that monetized settlements enable residents to choose housing types and locations according to their preferences. The second advantage is that it allows for a swift transition to new homes, bypassing the typical waiting period of several months. Third, this approach can eliminate safety hazards, improve living conditions and enhance urban functionality. Lastly, given the significant changes in the current real estate supply-demand dynamics, this policy helps clear existing inventory.
So, what kind of projects are eligible for policy attention and support? I believe two criteria are essential. First, there must be strong resident demand for renovation and significant safety concerns. Second, the plans for the project should be well-developed: the relocation and resettlement plan should facilitate a smooth process and safeguard residents' rights, while the comprehensive financial plan should be balanced overall and avoid new local debt risks.
There are five main policies in place. First, cities at the prefectural level and above are prioritized for support. Second, developmental and policy-based financial institutions can provide special loans. Third, local governments are allowed to issue special government bonds. Fourth, tax breaks and other fiscal incentives are provided. Fifth, commercial banks can offer commercial loans based on project evaluations.
With the backing of these five policies, regions can further plan and implement projects with mature conditions in conjunction with urban renewal efforts. With well-executed preliminary work, we can extend our support beyond the initial 1 million houses. Thank you.
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Zhinews of Shenzhen Satellite TV:
The Ministry of Finance previously announced policies to support land reserves through special bonds and government-subsidized housing via the purchase of existing housing stock. Could you provide details on the measures and considerations involved? Thank you.
Song Qichao:
Thank you for your question. To promote the stable and healthy development of the real estate market, the Ministry of Finance will coordinate with relevant departments to implement policies utilizing special bonds for land reserves and the acquisition of existing commercial housing. These two policies are designed to address key challenges in the real estate market. They not only help stabilize and revitalize the real estate market, but are also crucial for implementing the decisions made at the third plenary session of the 20th CPC Central Committee, expanding the scope of special bond support and their use as project capital. These measures help promote a balance between supply and demand in the land market, and alleviate liquidity and debt pressures for local governments and real estate enterprises, increasing the sources of government-subsidized housing and ultimately enhancing people's well-being.
Regarding the specific implementation of using special bonds for land reserves, the focus is on supporting regions to determine reasonable acquisition prices in collaboration with existing land owners based on the actual circumstances. This involves handling the debt relationships associated with acquiring existing land, appropriately defining the content and scope of special bond projects, and promptly arranging bond issuance and expenditures. The aim is to enhance the efficiency of land resource utilization and the effectiveness of bond fund utilization.
The policy of supporting local governments to effectively use special bonds to purchase existing commercial housing as government-subsidized housing primarily involves independent and voluntary decisions by local authorities, following the principles of the rule of law and operating in a market-oriented manner. While ensuring the balance of project financing returns, local governments can use special bonds to purchase existing commercial housing as government-subsidized housing. This policy will complement other relevant support measures to further diversify local funding sources, effectively clearing existing inventory to promote supply-demand balance, and optimizing new additions by gathering resources through multiple channels for government-subsidized housing.
Looking ahead, we will work with relevant departments to finalize the specific rules and requirements of the policies to expedite their implementation. Thank you.
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Beijing Youth Daily:
My question is about housing. Buying a house often poses significant economic pressure for some new urban residents and young people. Does the Ministry of Housing and Urban-Rural Development have any considerations or arrangements to help address their housing issues? Thank you.
Ni Hong:
Thanks to this young journalist. I believe when young people have hope, their city has hope. When young people have a future, their city certainly has a future. Solving housing problems for new residents and young people, ensuring they can live and work contentedly in cities, is both an undeniable responsibility of city governments and a key measure for enhancing urban competitiveness.
Regarding housing solutions, our national policy operates on two fronts: housing security and market mechanisms. The government leads efforts to secure basic housing needs while the market meets people's diverse demands for improved housing.
Housing security operates through two approaches: leasing and purchasing. For the leasing approach, we are vigorously developing affordable and public rental housing for new residents and young people, with options ranging from single beds to private rooms to full suites. This enables them to move in, settle down, live comfortably and focus on their careers. Governments at all levels attach great importance to urban low-income households facing housing difficulties, implementing public rental housing programs and ensuring that low-income families who face housing difficulties are fully covered by the housing guarantee system. Public rental housing also offers two approaches: physical leasing and cash subsidies. The purchasing approach serves those with some financial capacity who, while temporarily unable to buy commercial housing, can purchase affordable housing. This system operates on demand-driven construction and purchasing. Housing resources are gathered through new construction or by purchasing eligible commercial properties for conversion to affordable housing. We've adapted to changing circumstances, particularly considering families with two or more children. We require and support local governments to appropriately increase the size of affordable housing in accordance with local conditions.
Here, I would also like to emphasize that while local city governments optimize and improve real estate policies based on local realities, they must also strengthen their efforts to ensure housing security and stick to the bottom line of housing guarantees. Besides, I'd like to share some data: from January to September this year, we have already constructed or acquired 1.48 million units (rooms) of affordable housing. By the end of the year, 4.5 million new residents and young people will be able to move into affordable housing.
Next, we will work with relevant departments to guide local governments in increasing the construction, collection and supply of affordable housing, focusing on solving the housing problems of disadvantaged groups and striving to ensure that all people have access to adequate housing.
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N Video, Nanfang Metropolis Daily:
The PBC announced a set of real estate financial policies on Sept. 24, which included measures such as lowering interest rates on existing mortgages and standardizing the down payment ratio for housing loans. Could you please introduce the progress of these policies? Thank you.
Tao Ling:
Thank you for your question. The PBC, based on its macro-prudential financial management responsibilities, has formulated and implemented financial policies to support the steady and healthy development of the real estate market. To help stabilize the real estate market and promote the establishment of a new development model, Pan Gongsheng, governor of the PBC, announced a package of five real estate financial policies at a press conference on Sept. 24. It has now been three weeks, and the social response has been positive, playing a constructive role in boosting market expectations and confidence. On Sept. 29, the PBC published the relevant policy documents on its website. Since you are all paying close attention, let me provide a more detailed introduction to the implementation and progress of these measures.
The first policy is to lower interest rates on existing mortgages. Mortgage rates affect the lives of millions of families, and lowering existing mortgage rates is a concrete measure to implement the decisions of the CPC Central Committee, take a people-centered approach to financial work and benefit people's livelihoods. Regarding progress, on Sept. 29, the PBC issued an announcement to improve the pricing mechanism for commercial personal housing loans. On the same day, the PBC guided the market interest rate pricing self-discipline mechanism to release a self-discipline initiative, and commercial banks also issued their announcements. On Oct. 12, major commercial banks published their operational guidelines. Currently, commercial banks are working around the clock to modify contracts and systems, making all necessary preparations. Most existing mortgages will be adjusted in bulk by Oct. 25, meaning individuals can check adjustment results through their lending banks' designated channels by Oct. 26. Some small- and medium-sized banks may complete adjustments slightly later, but all adjustments are expected to be completed by Oct. 31.
To make the process more convenient, the vast majority of borrowers will not need to visit bank branches. Borrowers with floating-rate mortgages do not need to submit any applications. Commercial banks will adjust these loans in bulk. This group of loans accounts for over 90% of existing mortgages. Borrowers with fixed-rate mortgages can handle the adjustments through their bank's online banking or mobile banking services without visiting bank branches. Due to the less-developed networks of some small- and medium-sized banks, borrowers who have mortgages with these banks may need to visit branches to complete the process. For more specific details, please pay attention to announcements from your respective lending banks.
Borrowers are also concerned about specific mortgage interest rates after the policy adjustments. We've seen many calculations and discussions about this in society, so let me provide a brief explanation. As you know, mortgage interest rates consist of the loan market quotation rate (LPR) plus a spread. According to policy adjustments, what is being modified is the spread. For existing mortgages with a spread greater than -30 basis points, the spread will be uniformly reduced to -30 basis points. For example, in Beijing, the lowest spread for first-time home loans was previously 55 basis points. With this adjustment, the lowest spread will be reduced to -30 basis points, meaning the mortgage rate will be reduced by 85 basis points. For second-home loans in Beijing, the lowest spread was previously 105 basis points. According to city-specific interest rate limits, the minimum spread will now be reduced to -5 basis points, resulting in a 110 basis point reduction in the mortgage rate. The reduction will be even more significant in areas outside Beijing's Fifth Ring Road.
After the adjustment of existing mortgage interest rates, how much can borrowers save? It is estimated that existing mortgage interest rates will see about a 0.5 percentage point reduction, resulting in total interest savings of approximately 150 billion yuan ($21 billion), benefiting 50 million households and 150 million residents. Commercial banks calculate that individuals and families in Beijing would see a mortgage rate of 4.4% drop to 3.55% after the adjustment. For a 1 million yuan, 25-year loan with equal principal and interest payments, the monthly payment will decrease by 469 yuan, saving over 140,000 yuan in total interest payments. Because the implementation of mortgage rate adjustments involves many operational details and varies by region and borrower type, please refer to specific policies and operational guidelines during actual processing.
The second policy unifies the minimum down payment ratio at 15% for both first and second homes. This measure aims to better support first-time homebuyers and those seeking to improve their housing situations. Since the policy's release on Sept. 24, the PBC has been guiding its branch banks nationwide, helping them adopt tailored measures based on local conditions, while working with local governments to ensure implementation. Currently, most Chinese cities have standardized the minimum down payment ratio for personal housing loans at 15%, regardless of whether the purchase is for a first or second home. Beijing, Shanghai and Shenzhen will adopt differentiated policies. Additionally, some cities have adjusted real estate market regulations, including purchase restrictions and taxes, which have bolstered market confidence and sales.
The third policy is to extend the term of two real estate financial policies. This policy aims to adjust the two policy documents issued earlier. On Sept. 29, the PBC and the NFRA jointly issued the notice for new adjustments. First, we adjusted the 16-point policy plan proposed in November 2022. According to the previous policy, property development loans and trust loans maturing within six months could be extended by one year without requiring reclassification. This policy helps stabilize housing enterprise financing and improve the financial conditions of the real estate sector. It was originally set to expire at the end of 2024. This time, we have decided to extend the policy term until the end of 2026. Second, we made some adjustments to the notice on managing commercial property loans issued in January 2024. According to this notice, the property developers with compliant operations and good prospects are allowed to use commercial property loans issued by national commercial banks to repay the loans or bonds related to real estate projects of such developers and their holding companies. This policy's expanded scope of loan usage helps bolster the financial position of housing enterprises. It was originally scheduled to expire at the end of 2024, but we have extended the policy term until the end of 2026 as well.
The fourth policy optimizes the relending policy for government-subsidized housing, which functions as a structural monetary policy tool. On May 17, the PBC announced a 300-billion-yuan relending facility for government-subsidized housing. The policy encouraged banks to issue commercial loans, and supported local state-owned enterprises in acquiring unsold completed commercial housing to be used as either sale-oriented or rental-oriented affordable housing. The primary goal of this policy is to promote the destocking of existing commercial housing. The PBC has established a special task force with the Ministry of Housing and Urban-Rural Development. Working through the urban real estate financing coordination mechanism, this task force collaborates with local governments to strengthen policy implementation.
To better align with practical needs at the preliminary stage and to further enhance market-based incentives for banks and acquiring entities, the PBC decided to adjust and improve relevant policies. On Sept. 24, it increased its funding proportion by relending funds from 60% to 100%. This enhancement has helped further stimulate demand for existing commercial housing and accelerate destocking in the real estate market. The PBC officially issued a notice on Sept. 29, and commercial banks could begin relending applications to the PBC in October. Recently, several commercial banks have submitted applications. We believe that by working together, more progress will be made in the acquisition of existing housing stock.
The fifth policy supports the acquisition of property enterprises' land holdings. The PBC is working with relevant departments to develop new measures that allow policy and commercial banks to issue loans to qualified enterprises for acquiring housing enterprises' land inventory. The PBC will provide necessary special relending facilities to support this process.
The PBC recently implemented various financial measures, including cuts to the reserve requirement ratio and interest rates. These monetary policies, along with the previously mentioned real estate initiatives, are expected to further strengthen market confidence and stabilize expectations.
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The Poster News APP:
A meeting of the Political Bureau of the CPC Central Committee, held on Sept. 26, proposed that efforts should be made to strictly manage new commercial housing construction, optimize existing stock, and improve quality. What specific measures have been put in place to revitalize idle land stock?
Liu Guohong:
Thank you for your question. We share your concern about revitalizing idle land stock, and we are actively working on this issue. The MNR has implemented the requirements made at the meeting of the Political Bureau of the CPC Central Committee regarding strictly managing new commercial housing construction, optimizing stock, and improving quality. In terms of land supply, we have been managing new land supply while revitalizing land stock. We have guided local governments to properly control new land supply for commercial housing construction. We have temporarily suspended the supply of land for commercial housing development in cities experiencing excessively prolonged property sales cycles. In cities with relatively longer sales cycles, future land supply will be contingent upon the extent to which idle land is revitalized. Regarding the revitalization of land stock, as you've noticed, on Oct. 12, the MOF announced that special bonds could be used for land reserves. Mr. Song also provided some explanations in this regard. This policy is designed to provide financial support for local governments to revitalize idle land through acquisition. To ensure the successful implementation of this policy, we have provided guidance to local governments to help them standardize procedures and clarify standards, with a particular focus on outlining detailed procedures for land acquisition. We will prioritize the repurchase of residential and commercial land from enterprises that are unable or unwilling to proceed with development, as well as land that has not yet been developed, providing them with special bonds or other financial support. We will also work with relevant departments to set up special loans to acquire existing land stocks. This will serve as a supplement to special bonds, and the PBC will launch a special relending facility for it. Ms. Tao has previously elaborated on this issue. We will strictly control the reallocation of reclaimed land for real estate development. Such reallocations will only be allowed when there is a proven market need, and even then, the land must be allocated in an optimized and targeted manner while being kept within a certain proportion of the total reclaimed land.
Reclaiming and repurchasing idle land to revitalize the existing land stock can serve three purposes: First, it reduces the scale of existing land stock in the market and better leverages the role of land reserves as a "reservoir" and land supply regulator, which helps stabilize market expectations. Second, it increases the liquidity of funds, enabling real estate developers to pool funds for housing delivery. Third, land acquisition and reserves create prime land that can be used not only to shore up weaknesses in public service facilities, improve living conditions, and meet the housing needs of residents but also to boost the development of the real economy and effective investment.
In addition to the aforementioned measure of supporting local governments with reclaiming and purchasing idle land, there are two more approaches for putting such land into better use. First, enterprises are encouraged to enhance related development methods. For idle land that interests enterprises and meets market demand, enterprises are allowed to apply for certificates in phases, defer payments of land transfer fees and enjoy reasonable exemptions from the liability for contract breaches. These measures aim to ease the financial burden on enterprises. Second, efforts will be made to facilitate transfers of land within the market. For idle land that enterprises are unable to develop, local regions will be guided to establish trading platforms, support advanced house trading registration and property transfers with existing mortgages, as well as promote judicial disposal and joint development methods. These measures aim to boost market vitality.
This concludes my response. Thank you.
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China News Service:
Nowadays, some people's demands for housing has shifted from "whether it's available" to "whether it's good." What measures will be taken next to meet the public's expectations for better housing? Thank you.
Ni Hong:
Thank you for your question. China's housing sector has entered a new stage, shifting from a focus on availability to an emphasis on quality. People now have new expectations for the functionality and quality of houses.
In my view, people have diverse opinions on what constitutes a quality house. But in general, it bears the following four features: First, a quality house should demonstrate the feature of being green. It should be conducive to people's health, with comfort and health being the most crucial features of being "green." Second, a quality house should embody low-carbon features. To me, low-carbon indicates that, over its entire lifecycle, a quality house should be cost-effective. The consumption of electricity, water and other energy in the house should not only reduce expenses for the inhabitants but also achieve energy efficiency for society as a whole. Third, a quality house should have smart technology. It should make life more convenient through the application of modern technologies and digital solutions. Take drawing the curtains as an example. In the past, we would need to get up to do this manually; but now, we can use a remote control by simply saying "Xiaodu, draw the curtains," while lying in bed. All these smart applications have enhanced convenience for inhabitants. Fourth, a quality house should be safe, providing inhabitants with peace of mind and a sense of security.
The efforts to promote the construction of quality houses includes introducing sample projects, establishing standards, developing systems and enhancing sci-tech support. The most crucial part is to apply next-generation information technology, green and low-carbon solutions, new construction methods as well as some new products, materials and techniques into housing construction. We are also working to build quality houses of various sizes and for a arrange of prices.
Here, I would like to emphasis that local regions should prioritize building government-subsidized housing into quality houses. Projects that are initiated by the government and designed to improve people's well-being must take the lead in this effort. In the meantime, we need to collaborate with the urban renewal projects and explore measures to renovate older residences into quality houses.
Seeing is believing. A few days ago, I visited a quality house sci-tech exhibition at Shougang Park in Beijing, which was hosted by the China State Construction Engineering Corporation (CSCEC). The exhibition showcased some 160 new technologies, over 130 new products and more than 70 new achievements. There was show houses for both new homes and remodeled old homes for everyone to experience. There are indeed a lot of impressive facilities, especially for those looking for a house improvement, such as height adjustable kitchen cupboard s, sensor faucets and sliding wardrobes. All of these are highly practical technologies. To sum up, quality houses should be constructed in a way that offers convenience and comfort to the people.
I would also like to emphasis that the future development of real estate and construction enterprises will center on quality, new technologies and sound services. Those who can seize the opportunity for transformation, provide the people with quality houses and offer sound services will capture a larger market share, achieve growth and secure a promising future. Thank you.
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Securities Times:
I have a question about the financial support for real estate policy. What specific policy measures will be taken by the financial department next to promote the sound growth of the real estate sector? Thank you.
Xiao Yuanqi:
Thank you for your question. In terms of facilitating the steady development of the real estate market, financial policy consists of a package of measures. In addition to my earlier introduction of efforts to further boost the financing mechanism for the urban real estate sector as well as the financial policies that were introduced by Ms. Tao, there are also a few other policies, which I will elaborate on in the following aspects.
First, we need to effectively leverage a combination of real estate financing tools, delivering integrated and large-scale effects and enhancing precision. There are many real estate financing tools available. In terms of banks, there are real estate development loans. By the end of September, the real estate development loans increased by over 400 billion yuan compared with the beginning of this year. Other types of loans include individual mortgage loans, commercial property loans, merger and acquisition loans as well as housing rental loans. The merger and acquisition loans refer to the loan support provided by banks for real estate project companies and property developers to acquire other assets. In addition, there is also bond investments. For example, financial institutions can invest in bonds issued by property developers and insurance companies can also use insurance funds for equity investments. Therefore, there are a variety of financing channels and tools available. We need to leverage the unique strengths of different financial tools, being that they are highly targeted and tailored to meet specific demands. Furthermore, in accordance with the types of property developers and real estate projects, financing efforts at different stages require individually tailored financial products, ensuring that the financing support is more targeted, timely and effective.
Second, we will collaborate with relevant government bodies to proactively explore specific supportive measures by both policy and commercial banks in putting idle land into better use. This is a set of integrated policies. As mentioned by my colleagues from the MOHURD, the MNR, the MOF and the PBC, these policies need to work in synergy to put idle land into better use. After consideration, we have allowed both policy and commercial banks to issue loans for the purchase of these idle lands at a certain proportion. The primary goal is to promote the more efficient use of these idle lands, while also improving and releasing cash flow in the real estate sector.
Third, the 16-step guideline issued by financial authorities in November, 2022 to enhance policy support for the housing sector as well as other policies concerning commercial property loans will be extended until the end of 2026. Moreover, mortgage rates for existing home loans and the down payment ratio of individual mortgage loans for both first and second homes will be adjusted. We will collaborate with the PBC to ensure the proper implementation of these measures.
Fourth, we will fully utilize financial institutions' expertise in information and financial management, offering property developers and real estate projects some specialized financial services, such as financial advisory and project design. We will assist these property developers and real estate project companies with strengthening asset liability management along with improving their financial stability and sustainability. That's all I have for now. Thank you.
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Yicai:
What are the considerations for advancing the implementation of tax policies that are aligned with the cancellation of standards for ordinary and non-ordinary residential housing in the next step? Thank you.
Song Qichao:
Thanks for your question. The third plenary session of the 20th CPC Central Committee made it clear that some cities will be permitted to scrap relevant standards for ordinary and non-ordinary housing. Currently, the Ministry of Finance is stepping up its efforts to study and clarify tax policies that are aligned with the abolition of standards for ordinary and non-ordinary housing, mainly comprised of value-added tax and land value-added tax.
The current policies are as follows: In terms of value-added tax, except for the four top-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, if an individual in other cities sells a residential property, the value-added tax is exempted after two years (inclusive) of the purchase, regardless of if it is ordinary or non-ordinary housing. In the cities of Beijing, Shanghai, Guangzhou and Shenzhen, if an individual sells ordinary residential housing, the value-added tax is exempted after two years (inclusive) of the purchase; if an individual sells non-ordinary residential housing, the value-added tax is payable after two years (inclusive) of the purchase. In terms of land value-added tax, it is exempted for constructing or selling ordinary standard residential housing with an appreciation rate of less than 20%. According to the relevant provisions of the detailed rules for implementation of provisional regulations on land value-added tax, the standards for ordinary residential housing shall be clarified by each province.
Recently, we have been making further adjustments to the mentioned tax policies. The general considerations concern three aspects.
First, both the tempo of regulating and controlling the real estate market and local fiscal revenues in relevant cities will be taken into consideration to make sound arrangements.
Second, local governments will be given certain decision-making powers to maintain the stability and fairness of policies.
Third, the burdens on real estate enterprises and homebuyers will be effectively reduced to stabilize the real estate market.
We are moving quickly on advancing relevant procedures for the introduction of specific policies and will make these policies public in a timely manner after approval. Thank you.
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Shou Xiaoli:
Let's continue. Due to time constraints, last two questions.
Market News International:
Recently, major cities have reported an increase in the number of visitors to housing projects and subscriptions to real estate. What's the Ministry of Housing and Urban-Rural Development's expectation for the overall trend of housing sales in October? What follow-up policies will be introduced to stabilize the real estate market?
Ni Hong:
Thanks to this foreign media reporter. On Sept. 26, the meeting of the Political Bureau of the CPC Central Committee emphasized that it is necessary to stabilize the real estate market, releasing a positive signal. Relevant departments have introduced a series of policies and measures in the areas of fiscal, taxation and finance. Local governments have adopted city-specific policies and have canceled or reduced relevant restrictions to meet residents' demands for buying their first homes or improving their housing situations. It can be said that market confidence has been effectively boosted. Based on the market reaction, there has been a significant increase in the number of property viewings and visits in many cities and projects, and the sales volume has also increased to varying degrees. Major indicators of the real estate market have improved significantly. In particular, all the indicators in the top-tier cities have stabilized since October.
At the same time, we also see that under the effect of a series of policies, China's real estate market has begun to bottom out after three years of adjustments. You asked about the data in October. We expect that it will be a positive and optimistic result.
Concerning policies for stabilizing the real estate market, I have already made introductions at the beginning, and all departments participating in the press conference today have also introduced very valuable and practical policies. Next, we must make concerted efforts to make good use of these policies and ensure their implementation, so that these policies can fully take effect and bring benefits to the people. It can be said that we have confidence in stabilizing the real estate market. Thank you!
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Shou Xiaoli:
One last question, please.
The Paper.cn:
All aspects of society are very concerned about the battle to ensure the delivery of housing. What measures has the Ministry of Housing and Urban-Rural Development taken to ensure the quality and handover of sold commercial housing that is under construction? What are the next specific measures? Thank you.
Ni Hong:
Thank you for your questions. On May 17 of this year, the State Council made arrangements for ensuring the delivery of housing. It has been exactly five months to this day. Currently, delivery of housing has been vigorously advanced in various places, with 2.46 million units of housing having been handed over, making significant progress. The efforts to ensure the delivery of housing have reassured homebuyers and notably improved market expectations. We have worked with relevant departments to conscientiously implement the decisions and arrangements of the CPC Central Committee and the State Council, adopted multiple measures to form synergy, set up a special work group and have focused on work in two aspects with other departments and units, such as financial regulatory departments, development and reform commissions, the department of finance, the department of natural resources, audit offices, public security organs, courts and banks. First, we have focused on the "white list" mechanism to address funding shortages for project construction. Second, we have focused on progress with construction and delivery. We have seen that local governments, property developers and financial institutions assume their full responsibilities, act on market-oriented and law-based principles, adopt targeted policies for each project in accordance with their specific conditions, and take a category-based approach to advance construction, so as to ensure the handover of the housing at an early date.
For projects in normal operation, we have advanced their construction in accordance with the market-oriented and law-based principles. For insolvent projects, we have acted on the market-oriented and law-based principles to accelerate bankruptcy reorganization or liquidation, effectively safeguarding the legitimate rights and interests of homebuyers. It should be noted here that we have resolutely investigated and prosecuted those violating laws and regulations as well as harming the interests of the people. We must never let them get away without being punished.
How to advance the implementation of this work? Together with relevant departments and units, we and the National Financial Regulatory Administration have strengthened the link age of credit, land, judicial and other measures and have continued to advance the implementation of various tasks, focusing on the target of delivery. First, we have focused on progress. Through the national pre-sold homes information system, each set of pre-sold homes is registered and filed, and will be removed from the system once it is handed over to homebuyers. Second, we have focused on quality. We have taken the projects of pre-sold homes as a priority for strengthening regulation of housing quality. Houses should not only be built, but also have good quality. Houses handed over to homebuyers should have been evaluated and accepted. Third, we have focused on coordination. We have made good use of joint mechanisms consisting of special work groups at the national, provincial and municipal levels and have taken coordinated steps to solve difficulties and problems that are related to cross-regional fund withdrawal, legal and litigation issues and asset disposal of projects.
We believe that with the support of credit funds from the "white list" mechanism, as well as with full cooperation from various departments, resolute actions of local governments and active efforts of property developers, we can surely win the battle to ensure the delivery of housing and complete the task that was assigned to us by the CPC Central Committee and the State Council, so that the homebuyers can get their houses as soon as possible. Thank you.
Shou Xiaoli:
Thanks to Mr. Ni and to all the other speakers. Thanks to our friends from the media for participating. Today's briefing is hereby concluded. See you!
Ni Hong:
Thank you.
Translated and edited by Liu Sitong, Huang Shan, Yang Chuanli, Wang Qian, Chen Xinyan, Li Huiru, Wang Xingguang, Fan Junmei, Gong Yingchun, Zhu Bochen, Xu Kailin, David Ball, Rochelle Beiersdorfer, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
