Events
Recently, a number of key cities across the country continued to introduce loose policies such as deregulation of purchase and sales restrictions. On April 25, 2022, Wuxi Municipal Health Commission said that families with registered residence household registration who have two or more children can purchase a new set of commercial housing in the restricted purchase area; On April 26, Foshan Municipal Bureau of housing and urban rural development said that commercial houses that have reached five years are not included in the number of purchase restrictions; On April 27, according to the financial Associated Press, ① families of non registered residence residents in Nanjing can apply for house purchase after paying social security for 6 months within a year, which was previously required to pay for 24 months within 3 years; ② Zhengzhou Zhongyuan Bank launched a preferential policy on housing loan interest rate for college students who have graduated within 5 years. The first house loan is as low as 4.5%, which is lower than the LPR quotation of more than 5 years.
Commentary
The industry is still at the bottom stage, and more and more cities are deregulated. In many reports such as “accelerating the deregulation of regulation in the Yangtze River Delta, multi-dimensional easing promotes a virtuous cycle” and “stepping on the right track of a virtuous cycle, the layout of real estate is at the right time”, we predicted that the first and second tier and key cities in the Yangtze River Delta will accelerate the introduction of regulation and easing policies in the future. Recently, Wuxi, Foshan, Nanjing and Zhengzhou have successively relaxed purchase, sale and loan restrictions, which confirms this judgment. At present, many cities have promoted the recovery of sales by reducing the down payment ratio, reducing the mortgage interest rate, canceling the house and loan recognition, relaxing the purchase and sale restrictions and other measures, but the market has not stabilized yet, and the industry is still in the bottom stage: ① in terms of sales, the national commercial housing sales volume decreased by 23% year-on-year from January to March 2022; The full caliber sales amount of Top100 real estate enterprises decreased by 47% year-on-year. ② In terms of land auction, the transaction of residential land in 300 cities nationwide decreased by 60% year-on-year from January to March 2022; The popularity of land auction in many places is low. In the recent batch of centralized land auction, there are 30 land supply in Tianjin, only 6 transactions, 20 land supply in Nanjing and 6 flow auction. ③ In terms of mortgage interest rate, in April 2022, the first mortgage interest rate of Shell Research Institute in Baicheng was 5.17%, 57 basis points higher than the latest LPR over 5 years. Therefore, we expect that the intensity and breadth of relaxation will continue to increase in the future: on the demand side, in addition to the core 22 cities, the purchase and sale restriction policies of other cities may be further cancelled, and some cities in 22 cities such as Chongqing, Nanjing, Wuxi and Suzhou will also relax the purchase and loan restriction in disguised form; On the credit side, there is still a lot of room for decline in mortgage interest rates. Today, Zhengzhou launched the first house interest rate lower than the LPR of more than five years, which is an important signal. We expect the overall mortgage interest rate to continue to decline in the future.
The targeted relief and assistance of real estate enterprises have been strengthened. Recently, the central bank convened 6 major banks, 12 joint-stock banks and 5 major AMCs to hold a special meeting on the rescue and M & a business of 12 problematic real estate enterprises to help them solve their current cash flow difficulties. At the same time, some local governments have also provided substantial support to local high-quality private real estate enterprises, including but not limited to measures such as directly providing relief funds, coordinating financing of financial institutions, increasing credit by taking shares at the project level, and relaxing the supervision of pre-sale funds. The safe and steady development of high-quality real estate enterprises is also the basis for realizing “stable house price, stable land price and stable expectation”. We expect that the cooperation between the government platform and local real estate enterprises at the project level will increase in the future, the restrictions on the financing of high-quality real estate enterprises at the regulatory end will be reduced, and the financing channels may be widened.
The recovery of sales is the key to promoting the virtuous circle of the real estate industry, and boosting confidence is the key to solve the current sales dilemma. The recovery of sales can promote the real estate industry to enter a virtuous cycle of “improved sales – increased payment collection of real estate enterprises, increased asset value (increased mortgage loans) – stable cash flow – increased land acquisition for investment / increased completion and delivery – stable market confidence”. In March, because the international situation was very volatile and the superimposed epidemic situation worsened, the sales market that had improved due to the relaxation of political policy fell again. At present, the wait-and-see mood of home buyers is still heavy. We believe that the follow-up policies need to continue to make efforts to boost market confidence through multi-dimensional measures such as easing purchase, sale and loan restrictions, reducing mortgage interest rates and helping problem real estate enterprises escape from danger. In addition, from a fundamental point of view, we believe that the recovery of subsequent sales is supported. ① There is not much short-term supply. In the whole year of 2021 and the first quarter of 2022, the new construction area of real estate decreased by 11% and 18% year-on-year respectively; By the end of March 2022, the average de inventory cycle of new houses on sale in 20 key cities in China was 11.2 months, and the de inventory cycle of new houses in Hangzhou, Shanghai and Hefei was less than 6 months. ② In the long run, about 300 million new citizens are expected to generate about 80 million sets of commercial housing demand, which will be released in 8-10 years, which will become an important support for the future development of the real estate industry.
Investment advice? We expect that the strength and scope of policies and measures such as relaxed purchase and sale restrictions, reduction of mortgage interest rate and down payment ratio, and helping real estate enterprises get out of danger will continue to increase, helping the real estate industry restore a virtuous circle. We first recommend real estate enterprises with contrarian growth of sales Investment and strong certainty of future performance, such as Greentown China, China Construction Development International, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; In addition, they are also optimistic about the steady head state-owned enterprises and central enterprises, such as Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) .
Risk tips
Loose regulation is less than expected; The epidemic affected the implementation of policies and market recovery
