Events
On February 17, 2022, according to the financial Associated Press, since February 14, Shandong Heze industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China have implemented a down payment ratio of 20% for buyers who have no housing and no personal housing loan records. In addition, the credit person of Heze agricultural bank told the financial associated press that the loan interest rates of the first and second houses were reduced to 5.6% and 5.95% respectively from 5.95% and 6.14% at the end of last year.
Commentary
Demand side relaxation signal reproduction. Today, the news that major banks in Heze reduced the down payment ratio and lowered the mortgage interest rate once again confirmed our previous judgment that there will be more relaxation on the demand side. We believe that this is another verification of the positive attitude of financial institutions towards real estate, and the implementation is expected to be sustainable in the future, mainly for two reasons: ① the 20% down payment ratio after this reduction still meets the lower limit previously set by the central bank; ② From the perspective of house prices in Heze, the year-on-year decline of 0.5% in January 2022 has slightly decreased year-on-year for 16 consecutive months. We believe that reducing down payment and mortgage interest rate is reasonable and urgent for these cities where house prices have been declining for a long time.
Heze has a strong demonstration role. We expect that more cities will follow up and adjust in the future, because: ① Heze is the city that launched the first shot to cancel the sales restriction in 2018, which has a strong signal effect. On December 18, 2018, Heze Municipal Bureau of housing and urban rural development issued the notice on promoting the transformation of shanty towns and promoting the steady and healthy development of the real estate market, which clearly mentioned "canceling the restrictions on the transfer of newly purchased housing", which fired the first shot of canceling the restrictions on sales that year. Within half a month after that, Hunan Hengyang civilization did cancel the price limit policy. ② According to the housing price index of 100 cities, the number of cities with year-on-year decline in house prices in January 2022 has expanded to 20, an increase of 5 compared with December 2021, which is the same as the number of cities with decline in April 2020.
The sales level of different cities is differentiated, and the demand side of third and fourth tier cities still needs more help. From the sales data of 30 large and medium-sized cities, from February 1 to 15, the year-on-year growth rate of the sales area of the first, second and third tier cities was - 27%, - 50%, - 71%. The decline of the first tier cities slowed down, but the third tier cities are still in the trend of expansion and decline. Even considering the impact of the Spring Festival in February 2022, compared with the sales during the Spring Festival last year, the year-on-year decline in the third tier cities is still - 57%, while the sales area of the first and second tier cities during the Spring Festival has become positive year-on-year compared with the Spring Festival last year. We believe that there is sufficient demand in the first tier cities. With the increased support of financial institutions, sales have shown signs of recovery. It is less likely to introduce more easing policies in the future, because there will be pressure on house prices to rise sharply. In the second and third tier cities, we believe that more policies need to be introduced in the future, especially in the third tier cities with shrinking demand, which need more effective policies on the demand side to reverse. For the sales market in third tier cities, the active cooperation of financial institutions alone cannot reverse the downward trend of sales. It also needs the simultaneous adjustment of policies such as the liberalization of purchase and loan restrictions in order to form a joint force to reverse the trend.
Still optimistic about the high growth and valuation repair of Wuguan company. With the implementation of the real estate relaxation policy, we expect the drag on the valuation of property management companies by related real estate enterprises to be repaired. We believe that private property management companies have high operating efficiency and are mainly optimistic about two categories: first, head property management companies that can quickly start after exploring a mature product line in terms of value-added services, benefiting from the accelerated integration of the property industry and a significant increase in scale. Second, it is a regional leading property company with high density of infrastructure management, good reputation and well-developed value-added services.
Investment advice
We believe that more cities will introduce measures to reduce the down payment ratio and reduce the mortgage interest rate in the future, and we are also optimistic about the introduction of adjustment policies on purchase and sale restrictions in the future. We expect that the focus of market attention will gradually switch from steady state-owned enterprises to highly flexible private enterprises, such as rongchuang China and Seazen Holdings Co.Ltd(601155) . In addition, we are still optimistic about the real estate enterprises with contrarian sales growth in 2021-22 represented by green city China. In the property sector, we are optimistic about private property management companies with high operation efficiency, such as country garden service and Jinke service.
Risk tips
The introduction of real estate improvement policies was slower than expected; The implementation effect of real estate improvement policies is less than expected
