Affordable Housing "Military Order" &Nbsp, Boosting Economic Growth

A series of real estate regulation policies issued by the central authorities have also inhibited the high housing prices, but also led to the market's concern about the decline in commercial housing investment and the GDP growth.

Analysts pointed out that the Ministry of housing and other governments have recently signed a "military order" for affordable housing construction, which will effectively reduce the risk of investment in commercial housing and help stabilize economic growth expectations.

As a pillar industry, China's real estate investment accounts for 20% of the total fixed assets investment. Even if we do not consider the driving role of more than 50 sub industries in the upper and lower reaches, the direct output of the real estate industry accounts for 4% to 4.5% of the total GDP output.

At present, under the influence of real estate regulation and control policy, the volume of property market is approaching freezing point. If this trend continues, developers will reduce the amount of new construction, and the growth rate of real estate investment will surely decline.

But the policy of affordable housing is expected to bring about a turning point for real estate investment.

The Ministry of housing and the local governments signed a letter of responsibility for building housing protection. It was clear that in 2010, 3 million sets of affordable housing were set up in the whole country, 2 million 800 thousand housing units for all kinds of shanty towns were rebuilt, and 1 million 200 thousand rural households were rebuilt, and all localities were required to start construction of affordable housing projects before the end of July 2010. At the same time, the assessment and accountability mechanism was introduced.

Many places such as Shanxi, Shandong, Jiangsu, Chongqing and Shanghai have set up "military orders" to clarify their tasks.

Analysts believe that if the above affordable housing tasks can be completed on schedule, it means that the country will add 168 million square meters of new construction area, which will basically offset the start demand of real estate regulation policies.

As long as the new construction area does not show a sharp decline, the real estate industry can also play a stimulating role in the upstream and downstream industry chain. It can effectively consume the output of steel and cement in the upstream industry, and also can drive the consumption of household appliances and household textiles in the downstream industries.

CITIC Securities research shows that if housing prices are receded to the three quarter of 2009, then the growth rate of commercial housing investment will drop to 13.1% in 2010. According to the conservative calculation of the target of affordable housing construction, the national affordable housing investment will increase by 130% in 2010, and the total proportion of real estate investment is expected to reach 10%, which can withstand the decline of commercial housing investment to a certain extent.

According to the comprehensive consideration, the real estate investment growth in 2010 is about 19%, of which, the contribution rate of indemnificatory housing investment is 35%.

According to the real estate investment per change of 1%, GDP will change 0.17% projections, GDP growth rate is expected to remain at around 10%, and the two dip of the economy is unlikely.

Although the measured data can make people feel "comfortable", it is the key to stabilize the economic growth expectation to ensure the goal of housing construction.

On the one hand, whether the security housing construction funds can be guaranteed.

According to the budget released by the Ministry of Finance in 2010, the central government's budget for housing security expenditure is 37 billion 658 million yuan, and the local government will bear more than 110 billion yuan in accordance with the proportion of 1:3 between central and local governments.

Taking 2008 as an example, the central and local government expenditures were 4 trillion and 900 billion yuan and 1 trillion and 300 billion yuan respectively. According to the scale of the fiscal expenditure, the proportion of the central and local governments in the construction of affordable housing was 0.8% and 8.4% respectively, corresponding funds were 39 billion 200 million yuan and 109 billion 200 million yuan.

Considering that the fiscal revenue situation in 2010 will be substantially better than that in 2008, fiscal revenue can ensure the development of affordable housing.

In addition, the Ministry of housing also plans to build low rent housing as a supporting project for affordable housing, attracting more developers to participate in it, and local debt will also tilt towards the construction of affordable housing, which is conducive to diversifying the sources of funding for construction.

On the other hand, whether the enthusiasm of local governments to build affordable housing can be sustained.

In fact, affordable housing is planned every year, but the progress has been very slow, and the completion rate is often less than 30%.

The crux of this problem lies in the local government. Since the housing needs local financial contributions, there is no land pfer fee in the housing sector, and the tax and fees are reduced by half. This is really not cost-effective for the local governments whose land finance accounts for a larger proportion of their income.

However, the Ministry of housing's responsibility to promote the construction of affordable housing, and quantify it into the official assessment system, will greatly stimulate the enthusiasm of local governments.

At present, Shanxi has declared that it plans to start building 240 thousand sets of affordable housing, and has completed the task of pforming state-owned key coal mines into shanty towns. Shanghai has also made clear that the new area of affordable housing in 2010 is not less than 12 million square meters. Jiangsu has promised to build 40 thousand more units on the basis of 60 thousand sets of the target set of affordable housing.

The "competition" of the affordable housing between local governments seems to have the trend of "going to war". Once this kind of "comparison effect" is formed, it will also accelerate the construction of affordable housing.