Real estate industry: multidimensional policy starts, and repair is waiting

Land: the first round of centralized land supply in Beijing has warmed up, and the profit of land acquisition has improved. Beijing ended the first round of centralized land supply in February, with a total transaction amount of 48 billion yuan. A total of 18 lands were linked, 17 were traded, and one was sold out, and the rate of sold out decreased. The overall land market is relatively stable, there is no substantial premium or auction, and there are plots such as cuigezhuang and Beijing Centergate Technologies (Holding) Co.Ltd(000931) life science park that touch the price limit, and the land auction market shows a warming trend. Land acquisition is still dominated by state-owned enterprises and central enterprises, and private enterprises are still subject to capital pressure. Only Xuhui won pinggezhuang plot in Shunyi with 1.407 billion yuan. The transaction floor price decreased, participated in the rational bidding of real estate enterprises, reduced allocation requirements, significantly improved the land to goods ratio of comparable plots, and the land acquisition profit margin of real estate enterprises rebounded. It is expected that the first round of local auction in China will still be dominated by state-owned and central enterprises, and the profit margin is expected to recover.

Price: Changsha differentiated house price management breaks through the price limit and opens the profit space of real estate enterprises. On February 17, Changsha held a symposium on real estate development enterprises, and proposed the pilot of classified statistics of house price index. The index of rigid demand housing is no more than 5% per year, and the growth of improved housing is controlled by 8% – 10% according to the income growth level of urban residents in Changsha, so as to reasonably meet the demand for housing purchase at different levels, breaking through the previous restriction of 5% house price increase, Allowing some projects to have relatively high price increases has opened up the profit space of real estate enterprises from the demand side. The breakthrough in the limit of house price rise sends a positive signal to the market. The expectation of house price rise is transmitted from the first and second tier cities to the third and fourth tier cities, which is conducive to reversing the expectation of house price decline.

Interest rate: the mortgage interest rate is down, and the expectation of falling house prices is reversed. Since September 2021, the loan interest rates of the first and second homes in China have declined for four consecutive months. In February, the loan interest rate of the first house fell to 5.47%, the loan interest rate of the second house fell to 5.75%, and the loan cycle has been shortened since September. From the mortgage interest rate and commercial housing price index over the years, the lower the mortgage interest rate, the faster the house price growth. The reduction of mortgage interest rate, the decline of house purchase cost and the release of house purchase demand have driven the rise of commercial housing prices. The decline of mortgage interest rate not only brings the demand released by the reduction of house purchase cost, but also brings the expectation of house price rise, which is an important driving force in the second half of each round of rising real estate market and increasing demand. When the mortgage interest rate decreases, the expectation of rising house prices will increase significantly.

Down payment: the proportion of down payment is reduced, and the demand side relaxation signal is released again. Years later, Heze took the lead in reducing the down payment ratio of loans to “people without houses and loans”, further releasing the positive signal of relaxation on the demand side: 1) house prices in Heze continued to fall, and new house sales fell year-on-year for five consecutive months; 2) At the end of 2018, it took the lead in liberalizing sales restrictions; 3) Heze is a representative endogenous third and fourth tier city. After Heze, Chongqing, Ganzhou, Nanning and Foshan also reduced the proportion of down payment, sending a signal of continuous easing of policies to the market, especially before the upcoming industry opportunity window “xiaoyangchun”, which can drive the positive expectation of the overall market. However, these non restricted cities are still difficult to reverse the downward trend of the market in the short term, and the strength and scope of follow-up policies need to be increased.

The real estate market continued to deduce, and the property sector began to counterattack. In February, affected by the low purchase intention of buyers and the continuation of the downturn of the market, the overall performance of the sales end was cold. Although there have been some relaxation policies on the supply side and demand side, due to the lack of clear recovery signal in the market, real estate enterprises can not form a virtuous circle to transfuse blood through the market. The risk of thunder explosion of real estate enterprises has not been solved, the industry continues to decline, and the industry differentiation continues. With the strengthening of policy easing, the property sector will be significantly repaired by continuing to benefit state-owned enterprises and high-quality private enterprises

Risk factors: policy risk: the progress of policy relaxation is less than expected, and the policy regulation of real estate tax and pre-sale funds is more than expected. Market risk: the decline of sales in the real estate industry exceeded expectations.

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