On May 22nd, the Third Session of the 13th National People’s Congress opened in Beijing, and Li Keqiang, Premier of the State Council of the People’s Republic of China made a report on the government work, which included more than 190 words about the deployment of real estate in 2020, mainly including promoting the construction of affordable housing in cities and towns and the renovation of dilapidated houses in rural areas. Renovate 39,000 old urban communities and support the installation of elevators; Adhere to the positioning that houses are used for living, not for speculation, and promote the stable and healthy development of the real estate market because of the city’s policy.
The government work report pointed out that the construction of affordable housing in cities and towns and the renovation of dilapidated houses in rural areas have been further promoted. At the same time, strengthen the construction of new urbanization, and vigorously improve the public facilities and service capacity of the county to meet the increasing demand of farmers for employment and settlement in the county. Newly started renovation of 39,000 old urban communities, supporting the installation of elevators and developing diverse community services such as dining and cleaning.
In further promoting new urbanization, it is mentioned that central cities and urban agglomerations should be brought into play to foster industries and increase employment. Adhere to the positioning that houses are used for living, not for speculation, and promote the stable and healthy development of the real estate market because of the city’s policy. Improve the convenience facilities to make the city more livable.
What are the differences between the real estate-related expressions in this year’s government work report and last year’s?
Zhang Bo, Dean of 58 Housing Research Institute Branch, pointed out that from 2017 to 2019, real estate went from destocking to stabilizing the property market. In 2020, it continued to emphasize the in-depth promotion of new urban construction, giving full play to the comprehensive driving role of central cities and urban agglomerations, cultivating industries and increasing employment. Compared with 2019, it insisted on leading the development of urban agglomerations with central cities, and emphasized the overall orderly development of cities within urban agglomerations. The shed reform was not mentioned in 2020, and the curtain of shed reform has fallen. The next step will be to transform the old community.
The report of China Index Academy also shows that this year’s government work report did not mention the reform of urban shanty towns, but this year is the closing year of the new three-year shed reform plan, and the overall shed reform still has a certain volume, which may be significantly lower than the original plan. The special bond for shed reform was resumed, but it was limited to the projects that had already started, and the proportion of superimposed monetary resettlement dropped sharply. The support of shed reform for the real estate market was obviously weakened, or more efforts were made in the field of infrastructure investment.
What are the mission objectives of the renovation of old residential areas?
According to the report of China Index Academy, since the beginning of this year, the central government has repeatedly stressed the need to strengthen the renovation and upgrading of existing housing in order to improve the living conditions of residents. In this government work report, it is clearly stated that 39,000 old urban communities will be newly renovated, involving nearly 7 million residents, which is twice as much as last year, and the intensity is obviously increased. While improving the living conditions of residents, it can also expand domestic demand and promote effective investment. In 2020, the old community will focus on improving the community facilities and municipal infrastructure, and improve the level of public services such as community pension, nursery and medical care. In this process, it also creates conditions for enterprises to intervene, especially property service enterprises, and the market space will be further expanded.
Pan Hao, a senior analyst in RealData, pointed out that according to the data previously released by the Ministry of Housing and Urban-Rural Development, 170,000 old residential areas have boosted investment by 5 trillion yuan, and according to the proportion of 39,000 residential areas, it is expected to boost investment by about 1.2 trillion yuan.
According to the statistics of RealData, more than half of the top 50 housing enterprises have started urban renewal business, including Country Garden, Vanke, Evergrande and Poly. However, at present, the spatial distribution of urban renewal and old renovation projects is obviously uneven, and there is still much room for housing enterprises to invest in this area.
Is there any change in the direction of real estate market regulation?
Jiang Han, a senior researcher at Pangu think tank and a special researcher at Suning Financial Research Institute, said that in the face of downward pressure on the economy, the central government maintained its real estate control. The government work report once again emphasizes the orientation of insisting that the house is for living, not for speculation, but it also clarifies the main tone of real estate because of the city’s policy.
According to the report of China Index Academy, this time, the "city-specific policy" was written into the government work report, and the "implementation of the city’s main responsibility" was deleted. Since the outbreak of the COVID-19 epidemic, many places have flexibly implemented policies to regulate the real estate from both the supply and demand sides, which has played an important role in the stable operation of the real estate market. In addition, policies such as relaxing purchase restrictions and restricting loans introduced by over 10 cities such as Guangzhou, Jinan, Qingdao, Leshan and Chifeng have been withdrawn. In the future, under the general tone of "housing and not speculating", local policies will be more flexible to ensure the smooth operation of the real estate market.
What new progress has been made in real estate tax legislation?
In this government work report, there is no mention of real estate tax. In 2018 and 2019, real estate tax legislation was written into the government work report for two consecutive years.
Looking back at the statement in the process of promoting real estate tax, since the central government proposed to legislate on real estate tax in 2013, "real estate tax legislation" has been nailed down, but at the same time, how far the real estate tax will land is still unknown.
In the 2018 government work report, it was mentioned that "improve the local tax system and steadily promote real estate tax legislation."
The 2019 government work report also mentioned the deployment of real estate in 2019, "improving the local tax system and steadily promoting real estate tax legislation."
But it was not mentioned in this year’s government work report. However, on May 18th, Xinhua News Agency was authorized to issue the Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Improvement of the Socialist Market Economic System in the New Era, which mentioned that the establishment of a modern fiscal and taxation system should be accelerated and the real estate tax legislation should be steadily promoted.
On May 14th, when talking about the progress of "implementing the statutory principle of taxation", the relevant person in charge of the Legal Affairs Committee of the Standing Committee of the National People’s Congress said that according to the arrangement, relevant work is progressing steadily, and relevant parties are studying and drafting the draft real estate tax law.