The negative value of medium and long-term loans for new residents in February has raised concerns about real estate sales. The deviation between real estate sales and investment data from January to February has further raised market doubts. To achieve an economic growth rate of about 5.5% this year, it is inseparable from the stability of the real estate market. This paper will focus on answering three questions: what is the current real estate situation? What are the reasons for the deviation of real estate data? When will the real estate “market bottom” appear?
I. The current real estate situation is still grim: Residents’ wait-and-see mood is still strong, real estate enterprises remain cautious in land acquisition, real estate sales investment is still relatively low, and the risk of debt default of real estate enterprises is still high
1. The residents’ wait-and-see mood is still strong, the total sales volume of real estate is declining and the structure is divided
In terms of total volume, real estate sales are still declining. From January to February 2022, the sales area and sales volume of commercial housing decreased by 9.6% and 19.3% respectively year-on-year, continuing the negative growth trend since July 2021. Structurally, there are three major divisions in real estate sales: commercial real estate is good for second tier residential buildings, small and medium-sized real estate enterprises are good for second tier large real estate enterprises, and one event line cities are good for second tier, third tier and fourth tier cities.
The main reason for the current downturn in the real estate market is the lack of willingness of residents to buy houses. The growth rate of residents’ income slowed down and Preventive Savings increased. House purchase loans need stable cash flow as repayment guarantee. However, since the epidemic, the growth rate of residents’ income has been uneven and the economic growth has slowed down simultaneously; Moreover, the asymmetric recovery of the economy under the impact of the epidemic has exacerbated the imbalance of income distribution, and the employment and income status of low – and middle-income people has deteriorated. In addition, the situation of the real estate market and the risk of future house delivery also enable buyers to maintain a wait-and-see attitude.
2. Real estate enterprises remain cautious in land acquisition, and real estate investment is still relatively low
There was no doubt about the year-on-year growth rate of real estate investment, which deviated from that of January to March, and there was no negative year-on-year growth rate of real estate investment. There are three main reasons: 1) in terms of statistical methods, the “financial expenditure method” is adopted for the statistics of real estate investment, resulting in the retention of some data; 2) In terms of statistics, the land purchase fee is included in the real estate investment, but not in the total capital formation in the “troika”, which will interfere with the investment data; 3) Under the condition of tight funds, real estate enterprises speed up the project construction to meet the pre-sale standard in order to speed up the return of funds.
At present, real estate enterprises are still cautious in land acquisition, and real estate investment is still relatively low. The purchase price and new land area decreased by 26.42% year-on-year and 26.2% year-on-year respectively. Real estate enterprises are more cautious. First, the debt risk of some real estate enterprises broke out last year, and the model of blindly adding leverage has been reflected to some extent. The thing is that the capital chain of real estate enterprises is still tight. From January to February, the funds in place of real estate enterprises decreased by 17.7% year-on-year. Banks are still cautious about loans to real estate enterprises, and the downturn in real estate sales also affected the collection of funds by real estate enterprises.
3. High frequency data show that the epidemic situation in China rebounded in March, which had an impact on real estate sales and land acquisition by real estate enterprises. Since March, the transaction area of commercial housing in 30 large and medium-sized cities has fallen sharply, the transaction area of land in 100 large and medium-sized cities has decreased, and the premium rate has decreased significantly.
4. The debt risk of real estate enterprises has not been fully released. The amount of mature bonds of 100 typical real estate enterprises this year exceeds 600 billion yuan, and the mature bonds are mainly concentrated in the first half of the year. Although the government has increased its support for the financing of real estate enterprises since the fourth quarter of last year, this year, there are still substantial defaults by well-known real estate enterprises, including Yango Group Co.Ltd(000671) , Zhengrong, which leads to buyers still worried about the delivery of new houses and strong wait-and-see mood.
II. The policy of stabilizing real estate continued to work, and the “market bottom” warning appeared in the middle of the year
1. The government relaxed regulation to meet the reasonable housing needs of residents and the reasonable financing needs of real estate enterprises
Last December, the real estate market ushered in the “end of policy”. This year, more than 50 cities have relaxed the property market policies, including reducing mortgage interest rates, reducing down payment, relaxing provident fund loan conditions, house purchase subsidies, relaxing purchase restrictions and reducing transaction taxes. The financing policies of real estate enterprises have also been relaxed, and the marginal improvement of the financing environment of real estate enterprises. First, vigorously support the M & A financing of real estate enterprises, and the thing is the strict pre-sale fund supervision policy of correcting deviation.
2. It is expected that the real estate market will continue to adjust in the short term and usher in the “market bottom” in the middle of the year
At present, the “bottom of the market” of real estate has not yet appeared. Looking back on the previous two rounds of real estate regulation and relaxation cycles, we can find that: 1) the demand side policies such as relaxing purchase and loan restrictions and reducing mortgage interest rates have a strong effect on boosting the market, and the relaxation of this round of policies is expected to be further strengthened. 2) Mortgage interest rate is the leading indicator of real estate sales. The positive growth of commercial housing sales area generally lags behind the phased high of individual housing loan average interest rate by about 6-9 months. It is expected that this round of sales data will return to positive growth in about two years. However, considering the impact of the rebound of the epidemic and the debt risk of real estate enterprises in this cycle, it will take longer for market confidence to recover, and further policy care is still needed. 3、 Only when the real estate is stable can the economy be stable. Stabilizing the real estate is to stabilize the economy. The government needs to take multiple measures to stabilize the land price, house price and expectation, so as to promote the virtuous circle and healthy development of the real estate industry. First, appropriately reduce the mortgage interest rate and reduce the cost of house purchase; First, local governments should implement policies according to the city to meet the reasonable housing needs of property buyers; Third, meet the normal financing needs of real estate enterprises and prevent and resolve the debt risk of real estate enterprises; Fourth, further explore a new development model of real estate, adhere to the simultaneous development of rental and purchase, accelerate the development of long-term rental housing market and promote the construction of indemnificatory housing.
Risk tips: the rebound of the epidemic exceeded expectations, and the regulation of real estate exceeded expectations
