Anhui's property market destocking: farmers who withdraw from rural homesteads get a reward of more than 50,000 yuan per mu
◎Daily Economic News reporter Zha Daokun
As the capital of Anhui, Hefei has recently become a focal point because of the booming property market. Apart from Hefei, however, most other cities in Anhui face slow sales and mounting inventory pressure.
On the evening of June 22, the Anhui provincial government officially released the "Implementation Opinions on Destocking to Promote the Stable Development of the Real Estate Market" (hereinafter referred to as the "Opinions"), requiring Hefei to stabilize its property market, control excessively rapid housing price increases, with the focus on destocking non-residential commercial housing.
The above "Opinions" also clearly state that it will take about 3 years to clear 25 million sq m of commercial housing inventory across Anhui province. By 2020, Anhui province is to achieve a basic balance between supply and demand, basically stable housing prices, and effective control of potential market risks.
The Daily Economic News reporter noted that in order to encourage farmers to buy homes in cities, the "Opinions" propose that for those who voluntarily withdraw from their rural homesteads, the county government will give a reward of no less than 50,000 yuan per mu.
Farmers who withdraw from rural homesteads receive rewards
At present, destocking is easy in first- and second-tier cities, but harder in third-, fourth- and fifth-tier cities. In Anhui, apart from the provincial capital Hefei, which is a second-tier city, all other cities are third-, fourth- or fifth-tier cities. How to resolve the property market inventory has become a difficult problem facing Anhui.
In this "Opinions", Anhui clearly encourages farmers to buy homes in cities. Among the measures, for those who voluntarily return their rural homesteads to the rural collective economic organization, the county government will give a reward of no less than 50,000 yuan per mu. For those who voluntarily withdraw from their rural homesteads, after the homestead is reclaimed as cultivated land or other agricultural land, if the original homestead user contracts and operates it, the county government will give a reward of no less than 30,000 yuan per mu.
At the same time, Anhui province will establish a loan risk-sharing mechanism between banks and guarantee institutions, with the government of the location where the home is purchased purchasing guarantee services from guarantee institutions for the home purchase loans of farmers who move to cities.
According to a report by Anhui's Market Star Daily, according to the targets set by Anhui province, the urbanization rate of the registered population is to reach 35% by 2020. To achieve this target, about 9 million rural people transferring to urban areas must complete household registration before 2020. If this target is achieved, it will undoubtedly stimulate property market destocking.
Real estate industry expert Zhang Jianchu, however, said, "After farmers move to cities, they will face issues such as employment and social security. If these issues are not resolved, relying only on a one-time reward for withdrawing from rural homesteads will not be very attractive to farmers."
Guiding developers to sell at lower prices
In the destocking process, housing prices are also a key factor. The above "Opinions" require strengthening the management of commercial housing supply and guiding real estate development enterprises to adjust their marketing strategies and appropriately lower commercial housing prices.
Among these measures, Anhui will gradually raise pre-sale conditions through land transfer contract agreements, and commercial housing built on newly transferred real estate development land will gradually transition to sales of completed housing. At the same time, qualification and credit reviews of bidders for real estate development land will be strengthened.
In addition, the "Opinions" also state that institutional investors will be encouraged to invest in and operate rental housing, and real estate development enterprises will be supported in shifting from commercial housing sales to an investment model combining sales and rentals. At the same time, in cities and counties where real estate supply is obviously excessive or the scale of real estate land under construction is too large, relevant departments should study and formulate plans for converting the use of undeveloped real estate land, and guide the transformation and utilization of undeveloped real estate land by adjusting land use and planning conditions.
It is worth noting that Anhui has also adjusted the land value-added tax. Under the current regulations, land value-added tax on real estate development projects is first pre-collected, then settled, with refunds for overpayment and supplementary payment for underpayment, and the rate in provinces in the central and northeastern regions must not be lower than 1.5%. All localities should apply a low pre-collection rate of 1.5% for land value-added tax on ordinary standard housing and fully decorated housing. For prefabricated buildings and green buildings, where the land value-added tax pre-collection rate exceeds 1.5%, it should be reduced by 0.2 percentage points respectively on the basis of the current pre-collection rate.
Plan to clear 25 million sq m in 3 years
The ultimate goal of the above series of policies is to reduce property market inventory. The "Opinions" clearly state that it will take about 3 years to clear 25 million sq m of commercial housing inventory across Anhui province. By the end of 2018, the destocking cycle for commercial housing in Anhui province is to be controlled within 15 months, and the destocking cycle in each prefecture-level city is to be controlled at around 18 months. By 2020, a basic balance between supply and demand is to be achieved, housing prices are to be basically stable, and potential market risks are to be effectively controlled.
Data previously released by the Anhui Provincial Economic Information Center show that, without considering the area of land pending development and new construction starts and pre-sale housing sales before 2005, from 2005 to the first 10 months of 2015, the real estate inventory area across Anhui province reached 328.442 million sq m. Calculated according to the province's commercial housing sales area in 2014, it would take 5.3 years to digest. Among this, the commercial residential inventory area was 188.863 million sq m. Calculated according to Anhui province's commercial residential sales area in 2014, it would require a 3.5-year digestion period.
As for the specific destocking time in individual cities, the commercial housing destocking cycles in Suzhou, Bozhou and Fuyang were 3.4 years, 5.2 years and 5.2 years respectively, Anqing's destocking cycle was 4.4 years, and the destocking cycles in some cities such as Chuzhou and Wuhu were 7 to 9 years, with some even above 10 years, putting greater pressure on destocking.
A manager surnamed Li from Evergrande Real Estate's Anhui company told the Daily Economic News reporter, "Compared with last year, property sales in Anhui's third- and fourth-tier cities have improved somewhat this year, but apart from Hefei, other cities still face relatively great inventory pressure."
The destocking task table published by the Anhui provincial government shows that in the next three years, Wuhu's task for clearing commercial housing inventory is 4.587 million sq m, Chuzhou's task is 4.603 million sq m, and Bengbu's is 4.56 million sq m.
In the view of Ling Bin, vice president of the Hefei Real Estate Research Institute, Anhui had previously introduced some destocking policies, but the effects were not obvious. "This 'Opinions' is actually a re-emphasis of previously introduced policies, and may not have much effect on stimulating homebuyers to buy. Therefore, completing the target will not be easy."