2024.10.22

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In a set of policy "combinations" introduced by the Ministry of Housing and Urban-Rural Development and four other departments to accelerate the stabilization and recovery of the real estate market, the "two increases" have attracted widespread attention in the market. One of these is the doubling of the loan approval amounts for the "white list".

Recently, Xiao Yuanqi, Deputy Director of the National Financial Regulatory Administration, introduced that as of the date, the loans approved through the "white list" have reached 1.4 trillion yuan. It is expected that by the end of the year, the amount of loans approved for "white list" projects will exceed 2 trillion yuan. At the same time, the financing mechanism for real estate "white list" projects will also be further improved and optimized, ensuring that qualified projects are included "as much as possible," approved loans are granted "as much as possible," and funds are disbursed "as early as possible."

Within the next two and a half months, the credit scale of the "White List" project is set to increase by several trillion yuan. The industry believes that the "White List" is a breakthrough for ensuring the delivery of housing and a key to stabilizing expectations. This significant increase in credit scale not only means expanding the coverage of the "White List" but also addressing the bottlenecks in financing implementation and intensifying efforts to repair problematic projects.

As soon as the news broke, a real estate developer told First Financial Daily that this measure directly targets developers, "somewhat unexpected," and can be considered a "variable" in the policy "combination punch." Several other interviewees from real estate companies also revealed that after the press conference, they would re-submit projects that had not been included in the "white list" before. However, financial institutions are still very cautious in approving new financing loans, and the actual disbursement of funds will depend on the quality of the projects themselves.

Promote project revitalization

At the beginning of this year, the Ministry of Housing and Urban-Rural Development and the Financial Regulatory Administration jointly issued the "Notice on Establishing a Coordinated Mechanism for Urban Real Estate Financing," proposing to leverage the coordinating role of city governments, establishing urban real estate financing coordination mechanisms in prefecture-level and above cities. Under the impetus of the central government, local governments across the country swiftly acted, actively responding, and driving the implementation of the "white list." By the end of the month, urban real estate financing coordination mechanisms had been established in 350 cities across 31 provinces nationwide. By the end of the month, commercial banks had completed the review of all the first batch of "white list" projects pushed by the coordination mechanism, approving more than 1,000 projects with a total amount exceeding 1 trillion yuan.

Subsequently, regulatory authorities optimized and improved the urban coordination mechanism, implementing a push-and-feedback management system. This means that projects meeting the criteria form a "white list," which is pushed to the sponsoring banks. These banks then conduct credit assessments on the projects, providing support to those that meet loan conditions. For projects temporarily not meeting loan conditions, specific issues are listed, and the urban coordination mechanism promptly proposes targeted solutions. Once the related issues are resolved, the projects can be reviewed and pushed again.

Mid-month, He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, emphasized during his research that it is essential to fully leverage the role of the urban real estate financing coordination mechanism, accelerate the repair of problematic projects, and expedite their qualification for the "white list" standard. Financial institutions should further optimize credit approval and disbursement processes, enhance efficiency, and ensure that all projects in the "white list" for the battle to guarantee housing delivery are included and loans are granted as needed.

On this basis, further efforts will be made to expand the "white list" by including all eligible under-construction and sold commercial housing projects within the support scope, effectively ensuring the funding needs for project construction and promoting real estate enterprises to ensure timely and high-quality delivery of houses. Under this mechanism, the "white list" of real estate projects has been effectively expanded, and the credit allocation has been continuously increased.

An insider from a real estate company in East China revealed to Yicai that from the very beginning of the "white list" financing initiative, the company has been very proactive. As of now, projects that meet the criteria have basically been included, and recently, two projects have separately completed the replacement of operating loans and the extension of bank loans.

Before the Ministry of Housing and Urban-Rural Development and four other ministries jointly introduced a policy "combination punch," by the end of the month, commercial banks had approved project loans totaling 1.4 trillion yuan for real estate projects on the "white list." At a time when various financing channels for developers are frozen, troubled real estate companies no longer have the financial capacity to inject additional funds into projects to support construction. The "white list" financing mechanism not only addresses project funding and ensures project delivery but also helps to boost confidence among potential homebuyers for future purchases.

A marketing planning director from a Fujian-based real estate company that has encountered financial difficulties revealed to reporters that a project in Xiamen achieved new loan disbursements worth millions of yuan at the beginning of the month, which has driven the project's restart. Coupled with a series of favorable policies in the real estate market before the holiday, the project sold nearly a hundred units during the National Day holiday, which is sufficient to support the construction funds needed for the fourth quarter.

The above-mentioned insider from a real estate company in East China stated, "The 'white list' projects will help improve sales, and the attitudes of financial institutions and banks will also improve, gradually helping the company to break out of the negative cycle." Zhang Yu, deputy director of the research institute at Huachuang Securities, said that if the credit allocation for 'white list' projects increases to one trillion yuan before the end of the year, it would mean that the financing increment for 'white list' projects in the fourth quarter will increase by about one trillion yuan, and the funding side may no longer be a constraint for real estate investment.

still faces many challenges

Before the Ministry of Housing and Urban-Rural Development explicitly increased the credit scale for "white list" projects, some real estate enterprises had already felt changes regarding the inclusion in the "white list" projects and the implementation of financing. Yang Huiyan, Chairwoman of the Board of Country Garden Holdings, mentioned at a management meeting in a certain month that the government's expansion of the coverage of the white list, coordinating to resolve difficulties and issues in real estate financing, is a strong boost for enterprises to increase liquidity and ensure timely and quality delivery of housing projects.

In a relatively short period, the whitelist policy has already begun to show its effects. According to disclosed information, compared to the data on the 1st of the month, by the 15th of the month, the number of projects by Country Garden included in the whitelist increased by approximately 1.5%, the newly added loan disbursements increased by about 10%, and the extended funds increased by 1.5%. An insider from a state-owned developer revealed that the implementation of the whitelist has indeed accelerated. "The first quarter was mainly about registration and approval, the second quarter was about approval and securing disbursements, and by the third quarter, all the necessary procedures for approval had been completed, leaving only the disbursement process." The focus now is on whether more projects can secure approval and disbursements.

How much change can the newly added trillion-level credit quota bring to the financing of projects on the "white list"? An insider from an East China real estate company mentioned that one of the main changes after the new policy was announced is that projects that had been pre-approved are now being urged by institutions to disburse funds as soon as possible. Another change is that some projects that were previously ineligible for submission can now be reconsidered, but "most of the good projects were reported in the first half of the year, and what's left now are those with some issues."

Being included in the "white list" management also brings another level of benefits to the project. A project leader from a non-defaulting real estate company in South China revealed to reporters that the company's loans are currently proceeding smoothly and do not require the promotion of project financing through the white list. However, the project company will still apply to the housing construction department to be included in the white list, "because there may be situations in the future that require government assistance in coordination."

"After the recent real estate-focused meetings, it seems that banks are more proactive than before, but the core issues of loan extensions and new loan disbursements are still not being addressed quickly for real estate companies. There has been no substantial breakthrough so far, especially now that house prices have fallen compared to the previous two years, and banks also need to assess the situation," said a marketing director of a troubled real estate company in South China in an interview with a reporter.

The challenges faced by real estate firms in moving from the "white list" to the actual approval and disbursement of credit funds have been persistent. Reporters learned from several troubled real estate firms that many "white list" project financings in the past were primarily extended, with incremental financing being the exception. An insider from a real estate firm told reporters that whether a project is given an extension or a new loan largely depends on the project's existing loan situation. Some projects already have loans, and the subsequent sales may not be able to repay them on time, so they continue to be extended according to the white list. Projects that can receive new loans are mainly those that did not previously receive loans due to various factors, or those with insufficient original loan amounts, which can now receive additional approvals and disbursements. Essentially, there must be sufficient inventory value as a safety cushion.

The person from the real estate company said, "Now that the policies have eased a bit, the chances of a project being included in the list are greater, but when it comes to actual new approvals, it still depends on the quality of the project itself." Another manager from a troubled national real estate company in central China also told reporters that the power to include projects in the white list lies with the government, but whether to grant loans or approve them is up to the banks, and sometimes their steps are not in sync. "Banks generally consider the issue of subsequent repayment, whether the project itself is of high quality, whether the assets are sufficient, etc. If the project itself is not good and there are few assets, even if it is included in the white list, the bank will not grant a loan."