To promote the acceleration of the real estate market in "stopping the decline and stabilizing," the Ministry of Housing and Urban-Rural Development and other five ministries and commissions have introduced a set of policy "combination punches," among which "two increases" have attracted widespread market attention. One of them is to double the loan approval amount of the "white list."
Recently, Xiao Yuanqi, deputy director of the China Banking and Insurance Regulatory Commission, introduced that as of October 16, the loan approved by the "white list" has reached 2.23 trillion yuan. It is expected that by the end of 2024, the loan approval amount of the "white list" project will exceed 4 trillion yuan. At the same time, the financing mechanism of the real estate "white list" project will also be further improved and optimized, achieving qualified projects "should enter as much as possible," reviewed loans "should lend as much as possible," and fund disbursement "as early as possible."
In the next two and a half months, the credit scale of the "white list" project will increase by another 1.77 trillion yuan. The industry believes that the "white list" is the breakthrough for ensuring housing delivery and the key to stabilizing expectations. The significant increase in credit scale this time means not only expanding the coverage of the "white list" but also unblocking the financing bottlenecks and increasing the repair efforts of problematic projects.
As soon as the news came out, some real estate company insiders told Yicai that this measure directly targets developers and is "a bit unexpected," which can be considered a "variable" in the policy "combination punch." Several interviewed real estate company insiders also revealed that after the press conference, they will re-apply for projects that were not included in the "white list" before. However, financial institutions are still very cautious about the approval of new financing loans, and the situation of fund landing still needs to consider the quality of the project itself.
Promoting project revitalization
At the beginning of this year, the Ministry of Housing and Urban-Rural Development and the China Banking and Insurance Regulatory Commission jointly issued the "Notice on Establishing a Urban Real Estate Financing Coordination Mechanism," proposing to give full play to the leading coordination role of the people's government of the city, and to establish an urban real estate financing coordination mechanism in cities at the prefecture level and above.
Under the promotion of the central government, local governments quickly took action and actively responded, promoting the "white list" to land. By March, 312 cities in 31 provinces across the country had established an urban real estate financing coordination mechanism; by the end of March, commercial banks had completed the review of all the first batch of "white list" projects pushed by the coordination mechanism, with more than 2,100 projects approved, and the total amount exceeding 520 billion yuan.
After that, the regulatory authorities optimized and improved the urban coordination mechanism, implementing push feedback management, that is, forming a "white list" for projects that meet the standards and pushing it to the host bank. The latter conducts credit review on the project and supports projects that meet the loan conditions; for projects that do not meet the loan conditions for the time being, specific problems are listed, and the urban coordination mechanism should promptly propose targeted solutions. After the relevant issues are resolved, they can be reviewed and pushed again.
In mid-October, when He Lifeng, a member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, conducted research, he also emphasized the need to give full play to the role of the urban real estate financing coordination mechanism, to accelerate the repair of problematic projects, to promote them to reach the "white list" standards as soon as possible, and for financial institutions to further optimize the credit approval and disbursement process, to improve efficiency, and to ensure that the "white list" projects in the battle to ensure housing delivery are fully entered and loans are fully lent.
On this basis, further promote the expansion of the "white list," include all qualified under-construction and sold commercial housing projects in the support scope, effectively ensure the construction fund needs of the project, and promote real estate companies to ensure on-time and high-quality delivery of houses.Under the influence of this mechanism, the real estate "white list" projects have effectively expanded, and the credit allocation has been continuously increased. An insider from an East China real estate company revealed to Yicai that from the very beginning of promoting "white list" financing, the company has been very active. Up to now, projects that meet the standards have basically "entered as much as possible," and recently, two projects have completed the replacement of operating loans and the extension of bank loans, respectively.
Before the Ministry of Housing and Urban-Rural Development and other five departments jointly launched the policy "combination punch," by October 16, the loan amount approved by commercial banks for real estate "white list" projects had reached 2.23 trillion yuan.
At present, when the financing channels for developers are frozen, the real estate companies in trouble have no strength to inject more funds into the projects to support construction. The "white list" financing mechanism can not only solve the project funds and ensure the delivery of the project but also help to increase the confidence of subsequent homebuyers.
A marketing planning person in charge of a Fujian-based real estate company that has already encountered difficulties revealed to the reporter that a project in Xiamen achieved an additional loan of 30 million yuan at the beginning of September, which promoted the resumption of the project. With a series of favorable real estate policies before the festival, the project sold nearly 20 units during the 7-day National Day holiday, which can already support the construction fund needs for the fourth quarter.
The aforementioned insider from the East China real estate company said that "white list" projects allow sales to pick up, and the attitudes of financial institutions and banks will also improve, gradually allowing companies to slowly emerge from the negative cycle.
Zhang Yu, Deputy Director of Huachuang Securities Research Institute, said that if the credit allocation for "white list" projects increases to 4 trillion yuan before the end of the year, it means that the financing increment scale of "white list" projects in the fourth quarter will increase by about 2 trillion yuan, and the capital side may no longer become a constraint on real estate investment.
Still facing many challenges
Before the Ministry of Housing and Urban-Rural Development clearly increased the credit scale of "white list" projects, some real estate companies have already felt changes in the entry situation of "white list" projects and the landing of financing.
Yang Huiyan, Chairman of the Board of Directors of Country Garden Group, mentioned at the management meeting in October that the government's expansion of the white list coverage and coordination to solve the difficulties and problems in real estate financing are a strong support for companies to increase liquidity and promote on-time and high-quality delivery of houses. In a relatively short period of time, the white list policy has begun to show results.
According to the disclosure, compared with the data on September 13, by October 10, the number of Country Garden projects entering the white list increased by about 12.8%, the newly added account loans increased by about 260%, and the extended funds increased by 62.8%.An insider from a state-owned real estate developer has revealed that the current implementation of the "white list" has indeed accelerated. "The first quarter was mainly about registration and approval, the second quarter about approval and striving for loan disbursement, and by the third quarter, all the approval procedures should be completed, and it's just a matter of drawing the funds." The next focus will be on whether more projects can gain approval and receive funding.
Now, the regulatory authorities emphasize that there will be an additional credit allocation of about 2 trillion yuan, how much change can this bring to the financing of "white list" projects?
One of the main changes after the new policy was announced, according to an insider from a real estate company in East China, is that for projects that have been approved in the early stages, institutions are demanding that companies draw funds as soon as possible. Another change is that some projects that could not be applied for before can be tried again, but "good projects were mostly reported in the first half of the year, and now there are more issues with the remaining ones."
Inclusion in the "white list" management also has another level of benefit for projects. A project manager from a real estate company in South China, which has not yet encountered risks, told reporters that the company's loans are relatively smooth and there is no need to promote project financing through the white list. However, the project company will also apply to the housing and construction department to enter the white list, "because there may be issues in the future that require government coordination."
"After the recent real estate special meeting, I feel that banks have become more proactive than before, but the core issues of loan extension and new loan disbursement are still not quickly given feedback to real estate companies. There has not been a substantial breakthrough, especially now that housing prices have fallen compared to the previous two years, and banks also need to assess." A marketing manager from a real estate company in South China, which has encountered risks, told reporters.
All along, real estate projects from the "white list" to the actual approval and disbursement of credit funds have faced many challenges. Reporters learned from several real estate companies that have encountered risks that many "white list" project financings have been promoted in the form of extensions, and incremental financing is a minority.
An insider from a TOP20 real estate company told reporters that whether a project is given an extension or a new loan mainly depends on the loan situation of the project itself. Some projects already have loans, and the subsequent sales situation may not be able to repay on time, so they continue with the extension according to the white list; projects that can be given new loans are mainly those that have not been loaned before due to various factors, or the original loan amount was insufficient, and more approval and disbursement can be given. Essentially, there must be enough value as a safety cushion.
"Now that the policy has been relaxed a bit, there is a greater chance for projects to enter the list, but when it comes to actual new approvals, it still comes back to the quality of the project itself." The TOP20 real estate insider said.
Another management from a national real estate company that has encountered risks in Central China also told reporters that the power to include what projects in the white list is on the government side, but whether to disburse loans or approve them is decided by the banks, and sometimes the two sides are not in sync. "Banks generally consider the issue of subsequent repayment, whether the project itself is of high quality, whether the assets are abundant, etc. If the project itself is not good and there are no assets, even if it is included in the white list, the bank will not lend."