Event: on February 24, the Ministry of housing and urban rural development held a press conference to meet reasonable improvement needs
On February 24, the Ministry of housing and urban rural development held a press conference. Wang Menghui, Minister of housing and urban rural development, said at the meeting that this year, we will maintain the stable operation of the real estate market, maintain the continuity and stability of regulatory policies, and enhance the accuracy and coordination of regulatory policies. We will continue to steadily implement the long-term mechanism for real estate, ensure the rigid demand for housing, meet reasonable improvement needs, promote the virtuous cycle and healthy development of the real estate industry, and strive to stabilize land prices, house prices and expectations.
Comments: the reasonable demand for improved house purchase has increased, but the capital gap is large, and the credit support is expected to increase
1) “multi child policy” + “parents living together”, and the reasonable demand for improved house purchase has increased significantly
On August 20, 2021, the Standing Committee of the National People’s Congress passed the decision on Amending the population and family planning law. The revised population and family planning law stipulates that a couple can have three children. On November 18, 2021, the CPC Central Committee and the State Council adopted the “opinions on strengthening the work of aging in the new era”, which proposed to “study and formulate supporting policies such as housing, improve the policies of stepped electricity price, water price and gas price, encourage adult children to live nearby or live together with their elderly parents, fulfill their maintenance obligations and bear the responsibility of care”. Under the policy guidance of “multi child policy” + “parents living together”, the demand for improved house purchase of residents has increased significantly.
2) at present, more than 90% of personal housing loans are used to support the first loan, and the improved house purchase credit support is expected to increase
On January 6, according to the data released by the CBRC at the press conference, by the end of November 2021, more than 90% of individual housing loans were used to support the first loan housing (that is, the proportion of individual housing loans used to support improved house purchase was less than 10%). According to the central bank, by the end of 2021, the balance of personal housing loans in China was 38.3 trillion yuan, of which about 3.8 trillion yuan was used to support improved house purchase.
At present, the proportion of down payment for improved house purchase in some cities is high, resulting in a large capital gap for house replacement. In our previous report, we proposed that “the excessively high down payment ratio of two sets of houses makes it impossible for improved customers to raise enough down payment by selling their own houses, which greatly suppresses the improved demand. There is a possibility of centralized release of the improved house purchase demand of the first and hot second lines, and there is the possibility of structural leverage for the middle and high-income people in some cities such as Beijing and Shanghai” For details, please refer to 2019: a feather in a feather – 2019 investment strategy of the real estate industry.
According to our calculation of the improved house purchase model for typical families in Shanghai (see Table 1 in the appendix for details), if the current ordinary families in Shanghai meet the requirements of “five only”, if they want to improve from two rooms (90 m2) to three rooms (135 m2), it is calculated according to the medium hypothetical price of commercial housing in Shanghai (non indemnificatory), 6m rolling average price increase and 70% down payment ratio, The capital gap is about 35% of the total purchase price of the improved (three rooms), and the average annual household savings demand is about 490000 yuan; If the proportion of down payment drops to 50%, the average annual savings demand of households will drop to 220000 yuan, which will greatly reduce the pressure on the capital gap of residents’ improved house purchase and boost residents’ daily consumption.
Investment suggestions: 1) since the beginning of 2022, many parties have released the capital area pole signal, the five-year LPR has been reduced by 5bp, the affordable housing loans have not been included in the concentration management, the new measures for the supervision of commercial housing pre-sale funds have been structurally corrected, and major banks have provided M & A financing support“ α The “risk” restoration has entered the implementation stage, and the liquidity of the real estate industry continues to ease. 2) We believe that while the liquidity of the industry is alleviated, the trend of prudent management and “deleveraging” of real estate finance will continue to deepen, and some of the early overly radical real estate enterprises“ α “Risk” may still be exposed, but China’s real estate market“ β The overall trend of “coefficient” health and stability will not change. The high-quality real estate enterprises adhering to the principle of “moderate leverage, steady operation, quality and orderly development” will usher in the development opportunity of “orderly competition”, and gradually lead China’s real estate industry to the iterative upgrading of “rationalization of profits, refinement of management, high-quality products and green construction”; The Ministry of housing and urban rural development proposed to “meet the reasonable demand for improved house purchase”, and the credit support for improved house purchase is expected to be improved. 3) Recently, the confidence of the capital market in the real estate sector has increased significantly, the sector has ushered in a “good start”, and the high-quality leading real estate enterprises have performed well. Highlight China Vanke Co.Ltd(000002) / Vanke enterprises, China Jinmao, Seazen Holdings Co.Ltd(601155) ; It is suggested to pay attention to Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China overseas development, China Resources Land and Longhu group.
Risk analysis: global inflation expectations push up real estate development costs, covid-19 epidemic affects residents’ income and credit expansion; The “three red lines” of real estate enterprises superimpose the centralized debt repayment period, and some real estate enterprises may have credit default.
