Evaluation Of The Policy Effect Of "Three Red Lines" Regulation:The Influence To Stable Land Price,Stable House Price And The Housing Enterprise Efficiency Enhancement

The financial characteristics of the production process and cycle in the real estate enterprises lead to the fact that too much financial resource has been allocated in these enterprises.As a result,real estate enterprises and market have always been the focus when it comes to risk prevention in our financial development.Accordingly,central bank and Ministry of Housing and Urban-Rural Development issued the "Three Red Line" policy.For the first time,the focus of regulate and control is shifted from controlling market to regulating the business activities of the real estate enterprises.Through the monitor of debts of these enterprises,we can improve the quality and efficiency,inhibit the high debt expansion,induce rational management and efficient planning,and improve healthy development of these enterprises.The implementation of the new policy will create a new financial environment which will raise new challenges for most real estate enterprises.Some of these enterprises may even have to face debt crisis.The price of housing and land will no longer follow the pattern of spiral escalation.The land price will fall while the housing price will stay stable.With the feature of leveraging and debt reduction,the new policy will cause difficulties for the management of many private-owned enterprises.Is it because the stringency of the new policy or the wrong management decisions of these enterprises while coping with the new policy?On the other hand,the influence of new policy on the state-owned enterprises is minor.Why have there been these differences among different genre of enterprises while facing the new policy?By establishing a microcosmic transmitting mechanism of "policy regulation——enterprise behavior—market change",based on the three-dimensional study of land auction,sales of commercial housing and enterprise investment,combined with the analysis of the influence of the new policy of real estate regulation on the real estate management,this paper will offer proofs for the beneficial effect of the new policy in the process of keeping the housing and land price stable and improving quality and efficiency for the real estate enterprises.Firstly,this paper analyzes the influence of the new policy on the auction activities of land,demonstrates the relationship between the new policy and changes in land price,and explores the heterogeneity impact of on the characteristics of property right.Using the land auction welfare equilibrium model,this paper makes an empirical study.The result indicates the following,under the condition of high debt expansion,that is,there is no hard financing constraint,housing price expectation forms unilateral incentive to land price.On the other hand,optimistic expectations will encourage real estate companies to implement high premium land auction strategy,and thus lead to the rise of land prices.However,under the strict financing constraints of debt reduction,real estate enterprises with lower cost transfer ability and debt reduction ability will have to participate in the competition of land auction with lower prices.The regulation of the three red lines will effectively enhance the impact of financing constraints on land prices,and eventually lead to the decline of land prices.This paper tests test the above mathematical analysis conclusions using the data of 261 prefecture-level cities in China.The results show that both housing price expectations and financing constraints significantly affect the formation of land prices,and present an opposing influence structure of positive and negative hedging.Loose financing conditions aggravate the positive transmission of housing price expectations to land prices.Nevertheless,the implementation of the three red lines policy and the formation of strict financing constraints completely offset the impact of rising housing prices on land prices,and finally promoted the decline of land prices under the operation of debt reduction and"downgrading" of real estate enterprises.Using the DID model,this paper carries out an empirical study,which proves that deleveraging controls have indeed brought down urban land prices significantly,and the policy goal of "stabilizing land prices" has been basically achieved.However,this policy has different influence on enterprises with different characteristics of property rights,because state-owned real estate enterprises can form debt smoothing and debt transfer based on their diversified business structure,they can maintain the early expansion strategy and optimize the policy effect of deleveraging regulation on land price stabilization.While the non-state-owned real estate enterprises are more sensitive to cash flow,as a result the negative effect of the "three red lines" regulation policy on land prices is magnified in these enterprises.Secondly,this paper analyzes the impact of the new policy on the housing sales market,in order to clarify the operation of the micro mechanism of "policy regulation-enterprise market behavior adjustment-housing price change".Empirical studies show that the relationship between deleveraging constraints of real estate enterprises and the probability of price reduction of commercial housing sales is not statistically.significant.However,when the interaction factors between property right and debt constraint is added into the model,the deleveraging constraint of non-state-owned real estate enterprises and the debt level begin to show a significant negative correlation with the probability of their sales price reduction.On the other hand,the negative effect of debt on the price reduction probability of commercial housing sales in state-owned real estate enterprises is obviously weaker than that of non-state-owned real estate enterprises.Under the downgrading constraint of "deleveraging and reducing debt",non-state-owned real estate enterprises have to speed up the capital return through the sales strategy to meet the downgrading requirements.In this process,the credit dividend of property right attribute will be further highlighted for state-owned real estate enterprises,which will further enhance the difference in financing availability between state-owned enterprises and private enterprises,and the debt constraint on real estate enterprises caused by real estate deleveraging regulation will be greatly softened,thus weakening the willingness and motivation of state-owned real estate enterprises to sell at a lower price.Thirdly,this paper analyzes whether the new real estate regulation and control policy,on the basis of "stabilizing land price" and "stabilizing housing price",has improved the quality and efficiency of real estate enterprises and standardized the operation of these enterprises.The result of empirical studies made in this paper shows that real estate enterprises do not display obvious improvement of investment efficiency,and the debtleverage governance mechanism is not established in China’s real estate enterprises.At the same time,there is still no statistically significant effect between debt and overinvestment in the non-state-owned real estate sample group.But for state-owned real estate enterprises,the formation of deleveraging regulation has significantly increased the over-investment of enterprises.The new policy of real estate regulation not only did not force state-owned real estate enterprises to improve quality and efficiency,but further stimulated their irrational investment,leading to more excessive investment.At the same time,because of the deleveraging impact of the policy and downgrading needs,private-owned real estate enterprises have to implement the market softening and contraction strategy,which makes the private-owned real estate enterprises may eventually face the overall reduction of enterprise investment,and finally turn to under-investment instead of over-investment.Finally,from the perspective of corporate governance of real estate enterprises,this paper expounds the.management enlightenment for the operational transformation and the improvement of quality and efficiency in real estate enterprises,and puts forward relevant policy suggestions from the perspective of the optimization of real estate regulation policies.The innovation of this paper is mainly reflected in the following points.First,according to the analysis of the impact of the new real estate regulation on enterprises,the boundary between the government,enterprises and the market is further clarified,and the systematic research on the real estate market is conducted.Second,this paper fully combines the "localized" characteristics of China’s real estate market with the dynamic capital structure theory,and analyzes the applicability and explanatory power of debt constraint theory and leverage governance mechanism in the Chinese context based on the research of real estate enterprises.Last but not least,property right attribute is regarded as the key factor for the differentiation between the policy response of real estate enterprises and the adjustment of market behavior under the new real estate regulation.Thus,from a heterogeneous perspective,based on the behavior differences of enterprises with different property right attributes,the internal causes of the divergence between land price and housing price under the new real estate regulation are revealed.