On December 31, 2020, the central bank and the CIRC issued the notice on establishing the management system of real estate loan concentration of banking financial institutions. The banking system adopts differentiated housing loan “five categories of file” supervision. Liu Quan believes that this year is the first year of the 14th Five Year Plan period, and economic growth will enter the first year of high-quality development and usher in a new stage of development. The real estate industry is the lifeblood of economic development, such as economic growth, local fiscal revenue and financial market stability. In order to ensure the steady development of the real estate market, it is necessary to control the real estate developers and buyers to increase leverage and tighten the credit policy. The central bank’s tightening of credit policy will usher in “huge bad news” in China’s property market.
According to the survey data of Zhongyuan Real estate, from January to December 2020, the accumulated revenue of land transfer fees in 50 large and medium-sized cities in China was 4.2 trillion yuan, up 18.1% year on year. Among them, Shanghai, Hangzhou, Guangzhou, and Nanjing all received more than 200 billion yuan in land transfer fees, reaching a new record. Liu Quan believes that the real estate control policy and credit policy are tightening, while the land market price is still at a new high. The rise of land price and the increase of market activity will promote the development of the real estate market to focus on the first and second-tier cities and metropolitan areas. The price of land has increased, and the price of housing has increased significantly.
According to the data released by the National Bureau of Statistics, in the first three quarters of 2020, the sales of commercial housing in China increased by 3.7% year-on-year; among them, the sales of residential housing increased by 6.4% year-on-year. Liu Quan believes that last year’s real estate market sales and house prices hit a new high, which is closely related to the loose credit policy. Due to the impact of the epidemic, economic growth has been greatly impacted. The income growth of the residential sector has slowed down significantly, and excessive leverage may cause financial system risks, which is not conducive to the growth of domestic consumption demand. It is urgent to reduce the leverage of real estate developers, stabilize the leverage of buyers, and avoid the risk of the financial system. Spark Global Limited
According to CNBS survey data, at the end of 2019, the leverage ratio of the residential sector was 55.9%; at the end of the third quarter of 2020, the leverage ratio of the residential sector was 64.2%. Liu Quan believes that driven by the interests of the real estate market, the debt scale of the residential sector continues to rise. More than 80% of homebuyers in China buy houses through bank loans, and credit policy is the precondition to support the rise of house prices. Credit policy is closely related to house prices. If there is no easy credit policy, the real estate market may shrink. Therefore, tightening credit policy is the main way to maintain the steady development of the real estate market. The central bank took action to cool down the property market.
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