Local regulation and control from "preventing big rise" to "preventing big fall"

Local governments support the market with the help of the "order of limiting the reduction of land use" when financial resources are declining

Recently, the voice of the government to rescue the city has been spreading. Some media have revealed that after Hangzhou issued the "order of limiting the lowering of the land", Dongguan has also seen the phenomenon of "limiting the lowering of land".

In this regard, industry insiders said that in the context of the expected decline in housing prices, although it is close to the middle of the year, many real estate enterprises still have a large gap from their target at the beginning of the year, and some of them choose to reduce their prices. For the sake of fiscal revenue and other aspects, the local government has adopted the "order of limiting prices" to prevent house prices from falling sharply, which indicates that some local governments have shifted from preventing the "big rise" of house prices to preventing "big falls". However, it is worth noting that the administrative "limit" or lead to some real estate enterprises have been tightening the capital chain increasingly tight.

Hangzhou and Dongguan have successively issued the "order of limiting the lowering of land"

A few days ago, it was reported that Dongguan Century City happiness mansion project, the latest phase of special price housing project, due to the price reduction rate of 21%, according to the government's "more than the record price reduction of 15%, need to re record" regulation, the project is restricted online.

In this regard, Dongguan Housing Management Bureau related people to the "economic reference newspaper" reporter said that this is not the latest Dongguan policy, as early as 2011, the policy has been introduced.

It is understood that in 2011, in order to prevent developers from falsely high prices and low prices, Dongguan Housing Construction Bureau, Housing Administration Bureau and price department jointly issued the supplementary notice on strengthening the record management of sales price of newly-built commercial housing, which stipulates that once the sales prices of all newly-built commercial houses are put on record, the actual transaction price shall not be lower than 15% of the record price, and the online sales system of violators will automatically Locked.

The above-mentioned people said that when the actual transaction price is higher than or 15% lower than the record price, the online sales system of commercial housing will automatically lock the transaction and cannot carry out the online contract signing procedure.

This means that at that time, in order to put an end to the behavior of misleading consumers by arbitrarily reporting high house prices by development enterprises, now it has become a tool of "limiting price reduction".

In this regard, the above-mentioned people pointed out that the media reports were over interpreted, and the original intention of the policy was not to "limit the reduction". However, it is worth noting that, just a week ago, at a sensitive time point in the property market price reduction, Hangzhou City issued a similar "order to limit the reduction of property prices".

On the 23rd, Hangzhou issued a policy: the actual transaction price of commercial housing is more than 15% lower than the record price, and will restrict online signing through technical means.

It is understood that a week before the policy was introduced, many developers of Hangzhou's low-cost real estate were interviewed by the housing management department, and were told that the housing management department and the price department would launch a price reduction filing system. Specifically, after the commodity housing sales price is declared for filing, the price marked on the sales site shall be consistent with the price declared for filing and the price publicized on the Internet, and shall not be adjusted at will, and the actual transaction price shall not be higher than the declared price for filing. If the sales price is raised, it needs to be put on record and publicized again. If the price is not publicized or the reasons for price adjustment are not sufficient, the sales price shall not be increased. If the selling price of unsold houses obviously deviates from the original record price, it is necessary to apply for filing again.

"If the price reduction rate exceeds 15%, the price will be adjusted at will, and the real estate development enterprises need to report to the price department for filing again," said the relevant person in charge of Hangzhou Price Bureau

At the same time, the person in charge pointed out that when the commercial housing price reduction and preferential promotion, the scope should be clear, the rules should be transparent, the range should be reasonable, and the original record price, current sales price and activity period should be clearly marked. It is not allowed to sell at a false discount, or use vague or misleading pricing methods or sales terms.

The person in charge also said that real estate development enterprises can adjust prices according to the construction cost and market supply and demand, and the government departments will handle the price adjustment applications in a timely manner.

A person in charge of a real estate enterprise confirmed to the reporter of "Economic Reference News" that the real estate enterprise has received the relevant notice. If the price reduction rate exceeds 15% of the record price, it will not be able to conduct online signature, either cancel the transaction or adjust the price for re filing.

Local government revenue declines

Zhang Dawei, the market director of Zhongyuan Real estate, said that the current round of market cooling is more due to the accumulation of market risk factors such as the rapid rise of house prices in the early stage, as well as the demand disconnection caused by the centralized release of transactions in the early stage. He believes that the emergence of "price limit order" policies such as Hangzhou is rooted in the qualitative change of the overall or regional property market development. With this policy as the node, the regulation has changed from preventing the "big rise" of house prices to preventing "big falls".

Since February this year, the trend of property price reduction set off by Hangzhou and other places has spread from cities in the Yangtze River Delta to the whole country. Behind this is the decline in trading volume of the property market, prompting developers to choose to "trade in price for volume".

According to the statistics of Zhongyuan Real Estate Research Center, in the first 25 days of May, the total number of residential units contracted in 54 cities nationwide was 155906, down 4.22% from 162714 in April 2014. Compared with 193382 sets in the same period in May 2013, it decreased by 19.4% year on year.

However, under the influence of transaction decline, investment and land data have declined. Local governments relying on land finance have greatly reduced their fiscal revenues and expenditures. According to the Statistics Bureau, from January to April, the national real estate development investment reached 2232.2 billion yuan, a nominal increase of 16.4% over the same period of the previous year, with the growth rate falling by 0.4 percentage points compared with that from January to March, reaching a new low in 16 months. The real estate investment, which has been the focus of China's investment, has been a negative pull on the national fixed asset investment data for two consecutive months.

In terms of land income, it is impossible to see the phenomenon of lost auction in 2013. On May 27, three plots of land in Shenyang land exchange center participated in the bidding, but in the end, because no bidder signed up to participate in the bidding, all the three plots were sold out. It is worth noting that since May, Shenyang has launched a total of 18 plots, of which 10 plots have been sold.

On the same day, Foshan land market also experienced the embarrassing situation of no bidding and no auction. This is the second land auction in Foshan land market within a month.

In Changsha, on May 27, according to the Changsha land and resources online trading system, a commercial land in Changsha was sold by Changsha Xiangjiang commerce and Logistics City Development Co., Ltd. for 183 million yuan, while another commercial and residential land sold on the same day was sold out due to no bidding.

It is worth noting that these cities are highly dependent on land finance. According to the analysis report on the financial dependence of land in 45 cities with property market restriction issued by Tongce consulting and research department, the degree of land financial dependence of Hangzhou, Foshan, Nanjing and Changsha exceeded 100%, while that of Foshan reached 147.5%.

At the same time, according to the previous data of the Ministry of finance, in the first four months of 2014, affected by the continuous decline of national commercial housing sales, the real estate business tax decreased by 4.2% year-on-year; in addition, the contribution of real estate business tax, enterprise income tax and deed tax directly related to real estate transactions to local fiscal revenue increase also decreased significantly.

High debt of real estate enterprises and tight capital chain

Some people in the industry pointed out that under the background of the expected downward price of housing prices, although it is close to the middle of the year, many real estate enterprises are far away from their target at the beginning of the year, and some of them choose to increase their prices. The local government has adopted the "order of limiting the reduction" to prevent the house prices from falling off a cliff. However, it is worth noting that the administrative "limit" or lead to some real estate enterprises have dried up the capital chain even worse.

The average value of China's listed real estate companies increased to 15.79% year-on-year, up to 15.79% year-on-year.

The report points out that in 2013, the real estate market as a whole showed a basic trend of rising both in quantity and price. However, in 2014, the market situation changed, and the growth rate of real estate development investment began to slow down. The falling residential transaction market sent a negative signal to the real estate development market. Under the background of short change cycle and increasing risks in the real estate market, the competitive pressure of real estate listed companies is increasing, and the overall performance continues to differentiate. From the perspective of market and industry, the valuation of Listed Companies in the real estate industry is generally low, and there is no directional change in the pessimistic expectation of the industry in the capital market.

While the debt is high, financing is more difficult. According to the data of Zhongyuan Real estate, the overseas financing of real estate enterprises in the first four months of this year was 8.616 billion US dollars, 5.175 billion US dollars, 3.414 billion US dollars and 2.618 billion US dollars respectively, which decreased for several consecutive months.

Zhang Dawei said that in terms of financing costs, the cost of US dollar preferred notes of most enterprises has risen to more than 7%. Coupled with the strong dollar factor, real estate enterprises selling in RMB are greatly affected.

"Not only has overseas financing been hindered, but in order to strictly control risks, major domestic banks have generally substantially reduced the total amount of financing for real estate enterprises. In addition, the "guidance on risk supervision of trust companies" issued by the CBRC proposes to strengthen risk assessment and conduct regular stress tests on key risk areas such as real estate. There is another door of real estate enterprise capital that is gradually closed, which has a very negative impact on the market. " Zhang Dawei said.

"In the high debt of real estate enterprises, financing tightening at the same time, once the payment is not timely, it is very likely to cause uncontrollable risk." A person in charge of a small and medium-sized real estate enterprise said that with billions or even tens of billions of fund plates, sometimes even hundreds of millions of payments are not timely, the last straw can crush the real estate enterprises.

In this regard, Yang Hongxu, vice president of Shanghai E-House Research Institute, also said that the "order to limit the reduction" actually aims to control the price reduction range of real estate enterprises. However, the government's direct intervention in the enterprise's price reduction behavior is equivalent to directly intervening in the enterprise's operation right. The developers can't do it if they want to increase their sales promotion, and the government's behavior is not appropriate.

According to the person in charge of the above-mentioned real estate enterprises, there must be deep-seated consideration for the sharp price reduction of real estate enterprises. No real estate enterprise will reduce the price significantly and reduce the profits until the urgent stage. Therefore, the government should reduce the intervention in this respect, so that the funds of real estate enterprises can freely circulate, so as not to cause greater uncontrollable risks.