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CF40 Youth Forum on China’s Real Estate Market amid Policy Adjustment

At the end of September, the People’s Bank of China (PBC), the China Banking and Insurance Regulatory Commission (CBIRC), the Ministry of Finance and the State Taxation Administration launched a series of policies to boost housing demand and support the recovery of the real estate market. Moreover, city-tailored policies have been introduced around the country, and efforts to ensure the delivery of unfinished homes are gradually implemented. Will the supporting policies on both the supply and demand sides help solve the difficulties faced by the real estate market, and what could be the future trend? Is there a need to introduce more policies to ensure stable and healthy development of the real estate sector?

To explore answers to the above questions, CF40 held a Youth Forum on “Real Estate Market amid Policy Adjustment” on Oct. 18. The seminar featured two keynote speeches from Zhang Hua, Chairman of DGW Fund and Xu Xiaole, Chief Market Analyst at Beike Research Institute. Zhang’s speech was themed on “Current Situation of the Real Estate Sector and Policy Recommendations”, while Xu discussed A Micro Perspective on Policy and Markets. Following the two keynotes are comments from Feng Jun, Chairman of Chinese Association of Real Estate Sector; Qin Hong, Research Fellow at National Academy of Development and Strategy of Renmin University of China; and Wang Yi from China Construction Bank. The second half of the seminar featured a candid and informative roundtable discussion.

Also joining the seminar were Liu Hongyu, Head of Institute of Real Estate Studies; Zhang Yu, Managing Director of Research and Research Head of Greater China Real Estate at CICC; Wan Tailei, Chairman of the Supervisory Committee of China Bond Rating, among more experts in the sector.

Experts at the seminar pointed out that despite the positive role recent policies have played, there are still some tough problems that remain to be addressed. For example, commercial housing sales did not see significant improvement and the scale of real estate companies has been shrinking significantly. The falling real estate prices have driven asset impairment and the sector's cash flow situation remains difficult.

Six policy recommendations were proposed. First, while making efforts to ensure the on-time delivery of unfinished homes, considerations should be given to ensure the survival of real estate companies. Second, the existing presale system and presale fund management must be optimized. Third, the establishment of a national insurance agency for real estate financing should be considered to accelerate the implementation of supporting policies for debt financing. Fourth, more equity financing channels should be allowed, so as to form a virtuous cycle between finance and real estate development. Fifth, efforts should be stepped up to improve the supply of housing, especially rental homes in big cities and city clusters, to meet the demand of migrant populations in those areas. Sixth, greater tax incentives should be provided to support home sales, and the tax prepayment mechanism should be optimized to alleviate the financial pressure of real estate firms.

The seminar was moderated by Zhang Bin, CF40 Non-resident Senior Fellow.