Events
On March 1, 2022, the official website of the general office of Zhengzhou Municipal People's government issued the notice on promoting the virtuous circle and healthy development of the real estate industry (hereinafter referred to as "Article 19 of Zheng"), The notice puts forward 19 measures in five aspects: supporting reasonable housing demand, improving housing market supply, increasing credit financing support, promoting the construction and transformation of resettlement housing, and optimizing the real estate market environment, so as to promote the virtuous circle and healthy development of the real estate industry.
Commentary
The country's first comprehensive property market deregulation policy was introduced. The "Article 19" covers a wide range, including five aspects: housing demand side, supply side, credit side, resettlement housing and market environment; The support is strong, and some measures may directly improve the current situation of the downturn of the real estate market. On the demand side, indirectly liberalize the purchase restrictions by means of relatives; On the supply side, flexibly adjust the housing supply, reduce the land acquisition threshold, moderately relax the price limit, and improve the relationship between supply and demand; On the credit side, reduce the down payment ratio and mortgage interest rate to stimulate the release of demand; Carry out monetized resettlement, stimulate the waste heat of shed reconstruction and boost the purchasing power; Optimize the market environment and create a healthy and good property market atmosphere. We pointed out in the report "increasing urgency, the introduction of policy combination boxing is expected" issued on January 16, 2022 that second tier cities will introduce relaxed combination boxing in the future. This notice of Zhengzhou confirms our judgment.
"Zheng 19" is expected to boost market confidence. According to Kerui data, the sales area of commercial housing in Zhengzhou in 2021 was 9.48 million square meters, a year-on-year decrease of 24%. In January 2022, the sales area of commercial housing was 460000 square meters, a year-on-year decrease of 15%. The decline was ahead of the strong second tier cities. It is necessary to introduce appropriate loose policies to deregulate the property market. At the same time, in the context of the overall market downturn, the policy of Zhengzhou real estate market has been loosened in terms of purchase restriction, price restriction and down payment ratio. The formal introduction of "Article 19 of Zheng" is an open and clear policy that has been loosened at the implementation level. We believe that this will greatly boost the confidence of buyers and onlookers.
It is expected that more cities will continue to release policy warmth in the future. As a strong second tier city in Central China, Zhengzhou has issued a comprehensive deregulation policy, which has strong signal significance. We expect more cities to issue a moderate deregulation policy for property market regulation in the next two months. Mainly because: ① from the sales data of 30 large and medium-sized cities, from January to February 2022, the year-on-year growth rate of the cumulative sales area of the first, second and third tier cities was - 22%, - 17% and - 52% respectively, and the market of cities at all levels was still in a downward trend; ② According to Kerui data, the total sales amount of top 30 real estate enterprises from January to February 2022 was - 40% year-on-year, of which 29 real estate enterprises fell year-on-year; ③ Recently, there has been a substantial improvement in the credit side. According to the data of Shell Research Institute, in February 2022, the interest rate of the first set of mainstream housing loans in Baicheng was 5.47% (down 25bp from the high point in October 2021), and the interest rate of the second set was 5.75% (down 23bp from the high point in October 2021). At the same time, Heze, Nanning, Foshan, Jinzhong and other cities reduced the proportion of down payment. It is difficult to reverse the downturn of the real estate market by relying on the efforts of the credit side alone. The real estate market needs to be moderately loose and coordinated in terms of purchase, price and sales restrictions and other regulatory policies, so as to establish market confidence and realize a virtuous circle and healthy development of the real estate industry.
Investment advice
We believe that the relaxation policy of Zhengzhou is directly beneficial to the construction real estate of Henan leading real estate enterprises and the construction new life of local leading property management companies. At the same time, we are still optimistic about the growing real estate enterprises represented by green city China. We expect that more cities will follow up the relaxation measures of Zhengzhou in the future, which will be conducive to the repair and valuation of private enterprises, such as Seazen Holdings Co.Ltd(601155) and rongchuang China.
Risk tips
The implementation effect of real estate improvement policies is less than expected
