"Buying a house but not a loan" is conducive to promoting effective demand
The highly anticipated "house recognition but not loan recognition" policy has officially been implemented. Recently, the Ministry of Housing and Urban Rural Development, the People's Bank of China, and the State Administration of Financial Supervision jointly issued a notice on optimizing the criteria for determining the number of housing units in personal housing loans. This policy is included in the "One City, One Policy" toolbox for cities to choose from independently. Currently, among the first tier hot cities, Guangzhou and Shenzhen have taken the lead in announcing the implementation of this policy.
The policy of "recognizing houses but not loans" helps to promote effective demand linkage and promote stable and healthy development of the real estate market. The new policy has significantly reduced the replacement cost for homebuyers, further releasing the demand for improved housing, and the "sell one buy one" transaction may increase accordingly. As a result, there will be more linkage between the demand for rigid and improved housing, as well as the primary and secondary housing markets.
As an important component of personal housing loan policies, "house recognition" or "loan recognition" is the standard for banks to determine the first and second homes. In the fourth quarter of 2016, in order to curb the rapid rise of housing prices and promote the stable operation of the market, some first tier hot cities began to implement the "housing and loan recognition" policy. As long as residents have taken out loans to buy a house, even if they sell the house, settle the loan, or have no house under the local name, the bank will still lend according to the standard for second homes when repurchasing. If you agree to a house but not a loan, the opposite is true. Regardless of whether residents have used loans to buy a house or not, as long as there is no complete housing under the local name, the bank will lend according to the first home standard.
The policy of "recognizing a house but not a loan" significantly reduces the replacement cost for homebuyers. Give two examples. Firstly, residents in a certain area plan to replace their only 65 square meter house purchased with a loan with a 90 square meter house due to reasons such as the birth of a child or the elderly living with them. If he agrees to buy a house and then buy a loan, the down payment ratio for his house change loan is generally 60%. According to monitoring data from Beike Research Institute in July, the average loan interest rate is 4.81%; If he agrees to buy a house but not a loan, his down payment ratio generally drops to 30%, and the average loan interest rate drops to 3.90%. Secondly, if a resident has previously taken out a loan to buy a house in City A and later resettled in City B. If they refuse to accept the loan, the resident will enjoy the first home credit policy when purchasing a house in City B.
After the replacement cost is reduced, the demand for improved housing will be further released, and the "sell one buy one" transaction may rebound. Currently, due to the short implementation time of the new policy, the market response needs further observation. However, from historical data, the policy of "recognizing both houses and loans" has to some extent reduced the activity of the second-hand housing market. According to data from Beike Research Institute, in 2017, the annual transaction volume of second-hand residential properties in Shenzhen, Shanghai, and Beijing decreased by 34%, 54%, and 49% year-on-year, respectively, and transaction prices also experienced a decline or slowdown in growth rate.
If the "sell one buy one" transaction rebounds, the demand for rigid and improved housing, as well as the first-hand and second-hand housing markets, will form more linkage. On the one hand, from the perspective of rigid housing demand, as the number of sellers increases, the supply of the second-hand housing market increases, and those in need will have more choices. On the other hand, from the perspective of improving the demand for affordable housing, after selling a house, the replacement person may either purchase a first-hand house or continue to purchase a second-hand house that meets their own requirements. The demand for both first-hand and second-hand houses may rebound.
The formation of effective demand linkage helps to promote the stable and healthy development of the real estate market. Since the beginning of this year, real estate sales have declined, real estate companies have slowed down their payments, and risk resolution work is facing many difficulties. From January to July, the sales area of residential properties decreased by 4.3% year-on-year, and as of the end of July, the unsold area of residential properties increased by 19.5% year-on-year. Next, while adhering to the principle of "housing is for living, not for speculation", various regions should implement policies tailored to the city to effectively reduce the cost of housing for residents and better meet the demand for rigid and improved housing; At the same time, in order to adapt to the new situation of significant changes in the supply and demand relationship in China's real estate market, timely adjustments and optimization of real estate policies are needed to further release effective demand and promote the stable and healthy development of the real estate market.
