The pre-sale system and shared area of commercial housing have once again attracted attention.
Recently, Zhou Shihong, a member of the National Committee of the Chinese People’s Political Consultative Conference, submitted a proposal to abolish the pre-sale system of commercial houses and sell commercial houses at the same time as the built-up area.
“The system of pre-sale of commercial housing and sales based on building area is generally against the laws of market transactions and is obviously unfair to buyers.”
How difficult is it to cancel the pre-sale system and share the area?
The pre-sale system of commercial housing, the shared area, and the land lease system are the three major inventions of Hong Kong’s real estate.
In the 1950s, Hong Kong was thriving and the real estate industry was thriving. At that time, buildings in Hong Kong were generally sold as whole buildings, which required a large amount of funds. Some developers took the lead in thinking of the idea of ”selling by tiers”. Since it is sold in tiers, the share of the share is naturally included, and the share of the area is derived from this.
In the same era, Hong Kong also invented the “sell uncompleted” system featuring pre-sale system. The people of Hong Kong call the building units that are under construction or that have not yet started, as “off-plans”. Selling houses in advance during the building construction cycle is precisely the “sell off-plan” or pre-sale system.
In the 1990s, with the rise of the mainland real estate market, the allocation of area and the pre-sale system of commercial housing were copied.
However, in recent years, Hong Kong has cancelled the pooled area. In 2013, Hong Kong introduced new regulations, requiring housing transactions to be based on “usable area” as the pricing standard, and the pooled area has since been withdrawn from the arena.
Chongqing is the first city in the mainland to cancel the shared area pricing. However, the new regulations in Chongqing are not thorough. At present, the sales of new homes in the local area generally indicate the average price of the unit and the average price of the building surface, and the total price is the same; the second-hand housing is mostly priced by the included building area, which is not significantly different from other cities.
As for the cancellation of the pre-sale system, Hainan has already tasted the soup.
In 2020, Hainan will introduce new regulations, the newly sold land for commercial housing construction, and the implementation of an existing house sales system. Hainan thus became the first province in the country to implement a system of on-the-sale commercial housing in the whole province.
However, in most places, the pre-sale system is still in charge, and the shared area is in power. Although the Xinhua News Agency and other authoritative media have repeatedly called for it, the thunder and the rain are always small.
What are the disadvantages of the pre-sale system and the shared area?
The disadvantages of the pre-sale system are obvious. What you see is not what you can get, cutting corners, and “goods are not right” often occur, and problematic real estate is commonplace. As for the appearance of “unfinished buildings”, it is nothing new.
The main reason why the pre-sale system is difficult to cancel is due to the obstacles of interest.
Pre-sales are equivalent to allowing developers to get funds back before the completion of the project, thereby accelerating the speed of capital turnover. The high turnover model of real estate comes from this, but the risk is passed on to home buyers and banks.
The disadvantages of the shared area are equally obvious.
Many real estates have a shared area of 15% or even more than 30%, and a house with a construction area of 100 square meters may have only 70 square meters of usable area, which leads to obvious distortions in the number of housing prices.
Not only that, there is a huge gap in the public share ratio, and there is a huge operating space behind it. What should be shared, what should not be shared, and how many are part of the shared share. Why some share only 10%, and some share more than 30%. The standards behind this are rather vague.
At the same time, the existence of the shared area has led to obvious overcharging in both the fine decoration and the calculation of property and heating expenses.
If the pre-sale system and shared area are abolished, how big will the impact be?
Abolishing the pooled area will make housing and housing prices more transparent. The shared part is not included in the pricing, and the actual area should be as much as it is, which makes the developer less room for black box operation.
Of course, if the communal share is cancelled, nominal house prices will inevitably rise. This is easy to understand. The same 2 million house has a construction area of 100 square meters and an inner area of 80 square meters. The original house price is 20,000, but the current house price has become 25,000.
However, this is only an increase in nominal house prices, while actual house prices remain unchanged. Changing the pricing method does not change the final price. However, the rise in nominal prices will undoubtedly give the whole society a deeper understanding of housing prices and strengthen the social expectation of “housing to live without speculation”.
At the same time, houses that have a high public share ratio may be significantly affected. For a house of 100 square meters, the share price for one set is 10%, and the other share is 30%, but the average price is 20,000 yuan.
Nowadays, the public share area has been cancelled, and houses with a high public share ratio may not be able to maintain the same total price as a house with a low public share ratio.
In addition, the abolition of the shared area is conducive to the advancement of property tax.
Real estate tax is levied according to the assessed price, and will not be affected by the presence or absence of the shared area. However, the existence of the pooled area will actually affect the real estate tax exemption area. If the per capita exemption is 30 square meters, it will be very different whether it is exempted according to the building area or the area inside the house.
Unlike the abolition of the shared area, the abolition of the pre-sale system is more positive.
Canceling the pre-sale system will be a big punch for developers. The turnover rate of real estate enterprises has slowed down, and the high turnover model has ended, which will inevitably bring about a comprehensive reshuffle of the real estate industry. Small and medium-sized real estate developers are faltering, and large developers will also lose the weapon of high turnover.
For home buyers, the cancellation of the pre-sale system, although it seems that the number of available houses will decrease in the short term, after a year or two, the market supply-demand relationship quickly returns to normal, and what you see is what you get, but fundamentally avoids falling into a “unfinished building” The possibility of dilemma.
Obviously, both the cancellation of the pre-sale system or the abolition of the shared area is the general trend, and it is also a matter of benefit to the entire society. I hope that we will not wait too long.