60 days into the implementation of the existing-home sales policy, the measure has taken effect in 13 cities.

Since late October, Suzhou, Hefei and Chengdu have successively issued detailed implementation rules for the reform of the commercial housing sales system. The national commercial housing sales system reform launched on August 28 this year (hereinafter referred to as the "August 28 New Property Market Policy") is being gradually implemented at the local execution level.

According to incomplete statistics from reporters of National Business Daily (hereinafter referred to as NBD reporters), as of October 27, at least 13 cities across the country have issued supporting rules, including Beijing, Shanghai, Guangzhou, Wuhan, Tianjin, Hangzhou, Shenzhen, etc.

The core logic of this round of reform is relatively clear: for commercial housing projects with newly released land transfer announcements, the pre-sale application threshold is uniformly raised to the capping of the main structure of a single building, existing home sales are promoted in a priority and orderly manner, and supporting buffer measures such as full-process strong supervision of all pre-sale funds and installment payment of land transfer fees are implemented.

On October 27, Chen Wenjing, Director of Policy Research at China Index Academy, said in an interview with NBD reporters that the "August 28 New Property Market Policy" has been implemented for less than two months, and the overall implementation rhythm follows a steady path of "key cities taking the lead and rolling out in a tiered manner". These cities have consistent calibers on bottom-line clauses such as pre-sale upon building capping, full-process supervision of all pre-sale funds, and division between old and new policies, and the differences are mainly reflected in operational parameters such as the granularity of policy division, the length of the transition period, and the deposit ratio.

Sales Threshold Raised Across the Board

The "August 28 New Property Market Policy" clarifies that projects with newly released transfer announcements applying for pre-sale must meet the requirement that the main structure of a single building is capped, and give priority to existing home sales at the same time, which has also become the core guiding rule of this round of commercial housing sales system reform.

However, there are obvious differences in implementation standards across regions regarding the specific identification criteria for "capping".

Suzhou, which released the detailed rules on October 24, has relatively strict requirements: in addition to the completion of concrete pouring of all building roof slabs, roof structures and supporting facilities, it must also issue signed and sealed acceptance records by five parties including the construction, survey, design, construction and supervision units. After the local housing and urban-rural development department verifies the project's construction progress on site, the pre-sale license can be processed.

On October 25, Hefei also issued its detailed rules, taking the actual project progress as the core basis, clarifying that the main load-bearing structure is constructed to the design roof elevation and the top floor pouring is completed, which can be used as the identification standard for pre-sale application.

Chengdu's standards are relatively simple, only requiring the completion of pouring of the top floor slab of the single pre-sale building. In addition to Suzhou, Beijing, Wuhan and Shenzhen have also issued detailed identification rules for "main structure capping", and most of the other cities have not added additional identification requirements.

In step with the raising of the pre-sale threshold, the promotion rhythm of existing home sales continues to accelerate, and the setting of deposit ratio has become the core starting point for all regions to balance the rights and interests of home buyers and the upfront payment collection of real estate enterprises.

NBD reporters noticed that among the cities that have issued detailed rules, the upper limit of deposit for existing home sales is basically divided into three grades: 1%, 3% and 5%. Among them, Beijing has the strictest standard, requiring the deposit not to exceed 1% of the total house price; Shanghai, Shenzhen and Suzhou align their standards, with the upper limit of deposit set at 3%; the remaining cities such as Guangzhou, Wuhan, Tianjin, Hangzhou, Chengdu, Hefei, Wenzhou and Shiyan all implement the maximum ratio of 5%.

In addition, for stock projects before the policy node, all regions have generally set up transition period buffers.

Most cities have clarified that projects that have obtained land before August 28 this year but have not yet obtained the construction project planning permit, if they meet relevant conditions such as risk assessment and fund supervision, can be implemented in accordance with the original pre-sale rules until the end of 2027; Wuhan and Hangzhou have separately stipulated that after risk assessment and filing, the transition period for historical legacy projects for stock revitalization can be extended to the end of 2028. Hefei has relatively more flexible policies: historical legacy revitalization projects that have obtained land use rights before August 28, after assessment and confirmation that they can be completed and delivered on time, can apply for pre-sale in accordance with the original pre-sale conditions, and no clear deadline is set.

Fund Supervision Lasts Until Delivery

While the pre-sale threshold is raised, the supervision of pre-sale funds is also fully tightened. "All funds included in supervision, whole-process control, and supervision lifted upon delivery" has become a generally implemented regulation in the 13 cities, further strengthening the safety line of funds.

After sorting out the supervision rules across regions, NBD reporters learned that the pre-sale fund host bank system is the mainstream configuration, but the strictness of supervision varies.

Among them, Ningbo requires all house purchase funds, including down payments and mortgage loans, to enter the supervision account, and the fund supervision can only be lifted after the project completes the completion filing and all supporting facilities such as water, electricity and gas meet the standards.

Suzhou's control rules are more detailed: all house purchase funds paid by home buyers, including down payments and mortgages, need to be fully deposited into the supervision account. In accordance with local rules, mortgage loans can only be issued after the project completes completion filing, and the pre-sale fund supervision can only be lifted and the supervision account cancelled after the project completes existing home sales filing and gets approval.

Chengdu stipulates that after the project completes the completion acceptance filing and the delivery and use filing of ancillary facilities and equipment, the development enterprise can lift the fund supervision, and at the same time, appropriate funds need to be reserved for subsequent house delivery and initial registration. Hefei also clarifies that the fund supervision can only be lifted after the project completes completion acceptance and supporting facilities such as water, electricity and gas meet the delivery conditions.

In addition, to hedge the financial pressure brought by the extended payment collection cycle, for commercial residential land with newly released transfer announcements after the "August 28 New Property Market Policy", all regions have generally issued supporting policies for installment payment of land transfer fees.

Beijing allows the remaining land payment to be paid off within two years; Shanghai, Guangzhou, Shenzhen and Tianjin implement the "1+1" rule, that is, the payment is settled within one year by default, and eligible enterprises can apply for a one-year extension in accordance with procedures; cities that have recently implemented the detailed rules such as Ningbo, Shiyan, Suzhou, Hefei and Chengdu also allow the land transfer fee to be paid in installments within a maximum of two years, and no interest is charged for the installment part.

Liu Shui, Director of Enterprise Research at China Index Academy, said that the pre-sale node is moved back to after the building is capped, which significantly raises the requirement for enterprises' own funds, and the turnover rate of own funds drops sharply. Central SOEs and local SOEs have sufficient own funds and abundant long-term low-cost funds, which can adapt to long-term capital precipitation. Small and medium-sized real estate enterprises and private enterprises with high net debt do not have sufficient own funds, and directly lose the independent land acquisition capacity, so they can either cooperate in development or withdraw from land acquisition.

Although the overall capital occupation cost of the industry has risen, the land market shows obvious differentiation between hot and cold, and high-quality plots in core cities remain highly popular. In the first land auction after the implementation of Shanghai's detailed rules, the 10th batch of land auctions, the plot in Jiangwan Historical and Cultural Area of Yangpu District experienced 109 rounds of bidding, with a premium rate of 21.46%; the plot in Gumei North Community of Minhang District was bid for 177 rounds, with a premium rate of 24.44%, and many leading real estate enterprises participated in the competition.

After the implementation of Guangzhou's detailed rules, a plot in Huangpu Science City was sold after 71 rounds of bidding, with a premium rate of 26.6%. Among second-tier cities, two plots in Ersha Area of Zhengzhou Zhongyuan District were sold at premium prices. Sichuan Bangtai won Plot No.24 with a premium rate of 20.76%, which is its second increase in holdings in the same area in nearly a month.

In Liu Shui's view, the continued popularity of core plots is on the one hand due to factors such as installment payment of land transfer fees and most of the plots to be auctioned are of small and medium size, which lowers the capital threshold for real estate enterprises to participate in auctions; on the other hand, core areas have mature supporting facilities and scarce residential supply, and the certainty of project sales is higher, which is still the priority option for real estate enterprises to make layout.

This article is from the WeChat Official Account "NBD Real Estate", author: Chen Ronghao, published with authorization from 36Kr.