5.1. Discussion on the Current Situation
(1): It is an effective way to reduce the incremental cost of real estate enterprises with the government sharing the incremental cost of prefabricated residential buildings, and it directly encourages real estate enterprises for the construction. However, the increase in government subsidies will increase the financial burden. On the other hand, subsidies cannot solve the key problem of the incremental cost of prefabricated residential buildings, which is not conducive to guiding the prefabricated residential buildings industry to achieve sustainable development by reducing costs through self-innovation.
(2): When encouraging constructing prefabricated building, introducing and improving supervision and punishment mechanisms will make the government guidance more effective. It is conducive to the healthy development of the industry. Moderate penalties for dust, noise, and non-compliance with pollution standards when constructing traditional residential buildings will make the real estate enterprises more willing to adopt prefabrication.
(3): Only when the incremental benefits of developing prefabricated residential buildings are greater than the incremental costs will real estate enterprises choose to develop prefabricated residential buildings. Increasing consumers’ willingness to purchase such apartments moderately cannot greatly stimulate the market. The incremental benefits of prefabricated residential buildings compared to the traditional ones are the key to whether real estate enterprises want to construct prefabricated buildings. As an important participant in the prefabricated residential market, consumers’ influence has not been taken seriously. The sustainable development of the prefabricated residential industry relies on the growth of both supply and demand. Hence, the government’s incentive policies should not only focus on the supply side but also on the demand side. Effective publicity and incentives should be carried out to enhance consumers’ willingness to buy prefabricated residential buildings.
(4): There is a positive correlation between the incremental cost and the assembly rate of prefabricated residential buildings. Different assembly rates have different incremental costs. The government can provide certain financial subsidies based on the assembly rate. In this way, the incremental cost of prefabricated residential properties for real estate enterprises can be reduced while ensuring the assembly rate.
5.2. Policy Suggestions
Based on the above conclusions, the following suggestions are provided for improving the incentive policy of prefabricated residential buildings:
(1): Improve incremental cost control by means of technological innovation. Unlike traditional buildings, prefabricated residential buildings will use multiple technical indicators during construction, and different high-tech content indicators can promote the transformation and upgrading of prefabricated buildings. If the government adopts measures such as cost-sharing to control incremental costs, it will even hinder the development of the entire industry. It is not hard to discover from studying a large number of building energy-saving data from the housing and construction sector and the integrated information management platform for prefabricated buildings that the number of buildings using high-tech rate in China is low. The major reason is that currently, the innovation of China’s prefabricated houses is not enough, while the incremental cost of prefabricated houses is relatively high. Therefore, the current market is too saturated, and real estate enterprises dare not to construct and develop prefabricated residential buildings on a large scale. Therefore, if we want to promote the long-term development of China’s prefabricated residential buildings, we should stimulate scientific and technological innovation based on technical indicators. In 2017, China stipulated GB /T51129-2017 “Evaluation Criteria for Prefabricated Buildings”, and GB /T51129-2015 “Evaluation Criteria for Industrial Buildings” was abolished at the same time. In the new standard, assembly rate was determined as a key indicator, and various measures were taken to develop key technical products for building energy conservation and prefabricated buildings. The aim is to promote building energy conservation and prefabricated residential buildings and to let building energy conservation develop concurrently with prefabricated residential buildings. To create a good environment for developing prefabricated residential buildings, it is necessary to adopt scientific and technological innovation methods and control incremental costs reasonably. The adaption of high-tech indicators should be controlled within a reasonable range.
(2): Set the incremental cost sharing coefficient reasonably. The value of the government’s incremental cost-sharing coefficient affects the probability of developers applying prefabricated residential buildings directly. Therefore, it is very important for the government to set the value in the right way. It must be reasonable and perfect. The value should not be increased or set too low blindly. On the one hand, if the coefficient is too high, the incremental cost of real estate enterprises can be reduced sharply, and they can obtain greater benefits from prefabricated residential buildings; such strong incentives will encourage them to construct such buildings extensively. However, this effect is only short-term. It is merely because of the excessively high subsidy amount that such construction is attractive. The high cost borne by the government will inevitably bring pressure and restrict other government activities. As a result, these stimulus measures cannot be implemented for a long time. On the contrary, it reduces the government’s willingness to promote prefabrication. This means that after increasing the value of the cost-sharing coefficient, the probability of real estate enterprises applying prefabricated residential buildings increases, but the time duration is not long. On the other hand, if the government sets the value too low, the subsidy effect will be too small. Therefore, it is necessary to adjust the value to a reasonable level. To encourage the development of prefabricated residential buildings, the government should make timely adjustments in response to market changes. In the meantime, it is easier to ensure the incentive strategy is stable and sustainable. In addition to direct economic compensation, diversified incentive strategies can also be adopted, such as monetary compensation per unit area, floor area ratio incentives, tax incentives, and enhanced credit.
(3): Combine positive and negative incentives together and promote actively. Among negative incentives, it can be seen from the conclusion that punishment is a very effective one. Reasonable design will rather greatly encourage the construction. Therefore, when encouraging prefabricated residential buildings, the government can implement certain punitive measures such as paying a certain percentage of penalty or forbidding land bidding within two years. Such punishment may be implemented if the real estate enterprises have not followed the government’s economic incentive policies and still develop residential buildings in the traditional way or only respond to the policy superficially by taking advantage of the loopholes of polices, such as the prefabricated components being all non-structural components like stair slabs and balcony slabs. However, how strong the punishment is also needs to be controlled reasonably. After all, penalties are a means of punishment, which is for warning and supervision. Punishment cannot be used as the main means to encourage prefabricated residential buildings. If the punishment is set too high, the intervention will be too strong, which will not encourage the healthy development of prefabricated residential buildings. The government can also adopt multiple means when improving its punishment measures, such as publicizing the enterprises that create graver pollution, tightening approvals, and making land policies stricter, so as to form a dynamic and effective disciplinary mechanism. By analyzing loss of sales
and consumers’ willingness to buy W, it can be seen that the consumers’ willingness to buy can be improved by the government if it promotes prefabricated building actively. Like other commodities, market demand is one of the core factors in industry development [
33]. In the construction industry, market demand is also crucial. If there is demand for prefabricated residential buildings, its promotion in the market will naturally go smoothly. To transform the public’s impression of prefabricated residential buildings, the government can increase its promotion. When the public has started to know its advantages and benefits, they will purchase prefabricated residential buildings voluntarily. In turn, this will increase the market share.
(4): Set reasonable development goals. Both real estate enterprises and the government should set reasonable development goals based on the actual market conditions. The development of prefabricated residential buildings is gradual. We cannot seek high standards blindly. According to the evolutionary game and simulation between the government and real estate enterprises, it can be seen that when the government’s support is insufficient to make up for the incremental cost of real estate enterprises, the higher the assembly rate, the higher the incremental cost. Real estate enterprises should reduce some assembly rates regarding their own economic conditions, and to a certain extent, reducing the incremental cost will help the game to develop to an ideal state. Jaillon pointed out that in Hongkong, China, private prefabricated buildings were market-oriented and commercialized, and normally the assembly rate was lower than 15%. However, for projects lead by the government, the assembly rate usually reached over 40%. Hence, the assembly rate for prefabricated residential buildings in China at present should not be set too high, and the rate can be increased appropriately for the state-led public housing construction projects.