Event: the government work report of the “two sessions” on March 5 “supports better meeting the reasonable housing needs of home buyers”
On March 5, the national “two sessions” were grandly held, and Premier Li Keqiang delivered a government work report, propose “Continue to ensure the housing needs of the masses. Adhere to the positioning that houses are used for living rather than speculation, explore new development models, adhere to the simultaneous development of rental and purchase, accelerate the development of the long-term rental housing market, promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, stabilize land prices, house prices and expectations, and promote a virtuous cycle of the real estate industry due to urban policies And healthy development “.
See Appendix Table 1: relevant contents of real estate in the government work report of the national “two sessions” over the years (20162022).
Comments: the demand side improved house purchase credit is expected to increase, and the supply side real estate bond issuance is expected to be large
1) in our previous report, we proposed that the “multi child policy” + “parents live together”, and the reasonable demand for improved house purchase has increased significantly. However, at present, more than 90% of personal housing loans are used to support the first loan house, and the proportion of down payment for improved house purchase in some cities is high, resulting in a large funding gap for house replacement, The current improved customers cannot raise enough down payment by selling their own houses, which greatly suppresses the improved demand. There is a possibility of centralized release of improved house purchase demand in first tier cities and some hot second tier cities, and there is the possibility of structural leverage for middle and high-income people in some cities such as Beijing / Shanghai.
For details, please refer to our external report “improving credit support for improved house purchase and meeting reasonable demand for improved house purchase – Comments on the press conference of the Ministry of housing and urban rural development on February 24”.
The government work report of the “two sessions” clearly proposes to “support the commercial housing market to better meet the reasonable purchase demand of buyers”. We believe that the reasonable improved purchase demand brought by the “multi child policy” and “home-based elderly care” is expected to receive further support, and the credit support for improved house purchase is expected to be further improved, The implementation of the “down payment” policy may be limited to the implementation of the “down payment” policy by the government, but the implementation of the “down payment” policy may not be supported by the local government.
2) since the beginning of 2022, although the central bank, China Banking and Insurance Regulatory Commission and other parties have released extremely large capital area signals, due to the fact that the confidence of financing subjects and financial institutions in the real estate industry has not been fully restored, the domestic bond financing of real estate enterprises is still weak. In February, the domestic bond issuance of real estate enterprises was 30.1 billion yuan (the same caliber data in January and December 2021 were 32.5 billion yuan and 43.3 billion yuan respectively), From January to February, the total issuance was 62.6 billion yuan, a year-on-year decrease of 37%. With the continued weakness of the real estate market in 2022, we believe that the issuance of real estate bonds will further improve the liquidity of the real estate market and support the real estate market in 2022.
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) While the liquidity is easing, China’s prudent management of real estate finance and the trend of “deleveraging” 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”; 3) On February 24, the Ministry of housing and urban rural development proposed to “meet the reasonable demand for improved house purchase”. On March 5, the government work report of the national two sessions made it clear that “support the commercial housing market to better meet the reasonable housing demand of house buyers”. We believe that the follow-up improvement of real estate credit support is expected to be improved, and the issuance of real estate bonds is expected to be large. 4) Recently, the market has paid more attention to the real estate sector, and high-quality leading real estate enterprises have performed well. We recommend China Vanke Co.Ltd(000002) / Vanke enterprises, China Jinmao, Seazen Holdings Co.Ltd(601155) , Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China overseas development, China Overseas Hongyang group, China Resources Land, Longhu group and Yuexiu real estate.
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 still have the risk of credit default.
