The recent meeting of the Political Bureau of the Central Committee emphasized that it is necessary to adhere to the positioning that houses are for living, not for speculation, implement policies according to the city, support rigid and improved housing demand, do a good job in ensuring the delivery of buildings, protecting people's livelihood and ensuring stability, promote the stable and healthy development of the real estate market, and promote the establishment of a new model for the development of the real estate industry. In megacities, we will actively and steadily promote the transformation of urban villages and the construction of "flat-emergency" public infrastructure. Planning and construction of affordable housing.

Since the beginning of this year, the real estate market has stabilized and rebounded, but the foundation is still not solid. This round of property market adjustment lasts for a long time, which on the one hand shows that the old development model of "high debt, high leverage and high turnover" is no longer sustainable; On the other hand, a new model of real estate development is still in the process of being explored.

China's real estate development "three highs" old model is a real estate development model with one-stop service as the main feature. Under this model, the whole process of real estate development is led by the developer, from land purchase, house construction to sales, and the property management after the sale is mostly taken over by the developer's property company; Financing is the whole process.

The old model of real estate development has its own specific background. In July 1998, the State Council issued the Notice on Further Deepening the Reform of the Urban Housing System and Accelerating Housing Construction, stopping the physical distribution of housing and gradually monetizing housing distribution. At that time, China's real estate financial market was just budding, there was a lack of powerful professional developers, and local governments had limited financial resources to provide a large number of public (affordable) housing.

An important support for the old model of real estate development is the pre-sale of commercial housing. It addresses the core problem of real estate development: liquidity. The pent-up demand for housing has been quickly satisfied under the pre-sale system, driving the rapid growth of the real estate market for 20 years.

Objectively speaking, the rapid development of China's real estate industry has greatly changed the appearance of the city and made important contributions to people's livelihood and social economy.

From 1998 to 2021, the national real estate development investment increased from more than 3000 billion yuan all the way to nearly 15 trillion yuan, an increase of nearly 40 times; The sales of commercial housing increased from more than 2000 billion yuan to more than 18 trillion yuan, an increase of more than 70 times. By 2005, more than 80 percent of urban hukou residents already owned a home. The per capita housing area also increased from 1990.13 square meters in 7 to 2020.41 square meters in 76.

At the same time, the real estate industry is large, long chain, and heavy investment, which has stimulated demand from a large number of other industries, including steel, electricity, construction, furniture, etc. According to incomplete estimates, from 2000 to 2020, the contribution rate of the real estate industry to GDP growth fluctuated from 4.8% to 13.9%. As a pillar industry, real estate is one of the locomotives of China's economic development in the past 20 years.

However, with the rapid development of the real estate industry, the drawbacks of this model have gradually been exposed. It is mainly manifested in the following aspects:

First, housing prices are high. Since 2003, although the state has adopted various regulatory measures and there have been short-term fluctuations in the middle, the overall housing price curve has still shown a rapid upward trend. Some people, especially new citizens, find it difficult to solve the housing problem through market-oriented channels.

Second, real estate and its industrial chain occupy more credit resources. At the end of last year, real estate loans, plus loans with real estate as collateral, accounted for 39% of the total loan balance.

Third, local financial resources are too dependent on real estate revenues. Land transfer income and real estate-related taxes account for nearly half of the local comprehensive financial resources, and the structure is unbalanced.

Fourth, a considerable number of real estate enterprises unilaterally pursue scale and superstitious scale, and constantly increase leverage for themselves.

Fifth, the weight of the real estate industry is too large, which is a double-edged edge. During the upward period of the property market, it is a positive pull for the economy; In the downward period, a negative pull is formed. For example, in 2022, real estate development investment decreased by nearly 2021.1 trillion yuan compared with 5, and commercial housing sales decreased by nearly 5 trillion yuan, and some experts said that real estate "dragged" economic growth that year.

The most concentrated embodiment of the superimposed effect of the above factors is that the inflated real estate financial risks have begun to spill over. If left unchecked, it risks threatening the security of the entire financial system. Therefore, in the past three years, the financial authorities have taken decisive measures to simultaneously exert force from the demand side and the supply side of funds, which has curbed the momentum of real estate financial bubble.

In this process, a group of highly leveraged and high-debt housing enterprises "thundered", how to view this phenomenon? On the one hand, this is precisely the unsustainable embodiment of the old model of "three highs" in real estate, and the further the risk exposure, the greater the damage to the relevant industrial chain and economy; On the other hand, new models of development must be sought.

The new model of real estate development is the need for high-quality economic development; It is the need of the people to pursue higher quality housing; It is the need for the safe development of the real estate industry and its industrial chain.

New models of real estate development are still being explored. Its connotation should include the following elements: rent-purchase, especially to increase the supply of rental housing; The market and security go hand in hand, and we must be willing to invest and increase the supply of affordable housing; Equal emphasis on development, operation and service; Expand real estate investment and financing channels and gradually reduce the reliance on credit financing; Establish an integrated urban-rural land supply mechanism; In the long run, it is also necessary to reform the commercial housing sales system and the real estate tax system.

It is worth pointing out that in the past few years, in the process of curbing the real estate financial bubble, the relevant departments have also begun to guide the real estate market entities to transition to a new development model, and continue to promote relevant institutional innovation. For example, real estate REITs, which have been in the call for many years, are piloting from the infrastructure sector to the stock housing sector.

Rome wasn't built in one day. Due to the wide range of real estate industry, large volume, multi-dimensional contacts and complex formats, the establishment of a new model also needs a long period of time. We should be more patient with this.

At present, real estate is in a period of alternation between old and new models. In December last year, the relevant responsible comrades of the Central Finance Office made an in-depth interpretation of the spirit of the Central Economic Work Conference and the current hot economic issues, pointing out that China's urbanization rate still has a lot of room for improvement, and the demand for rigid and improved housing has great potential. We believe that the real estate industry will remain the pillar industry of the national economy for a considerable period of time; The law of the diachronic development process of pillar industries should be respected.

Real estate bids farewell to the old model and establishes a new model, and the transformation in this period requires the real estate market to maintain a stable and healthy development environment. Some contractionary policies introduced during the overheating period of the property market should be adjusted in time; The liquidation of non-performing assets and the elimination of hidden risks must master the rhythm and cannot be pursued overnight. In particular, it is necessary to prevent the occurrence of large fluctuations.