I. how did the land market perform in the first quarter?
First, the land market maintains low temperature operation, the land transfer fee is halved, and low premium and high auction coexist. According to the land transaction data of China Index Research Institute, the national land transfer fee in the first quarter of 2022 was 622.8 billion yuan, a year-on-year decrease of 52.9%; The average premium rate of land traded is 4.0%, which is at a low level since 2016. In the first quarter, the number of land auction in China totaled 1631. Affected by the contraction of land supply in the land market, the number of land plots in auction decreased by 22.3% year-on-year, but the auction rate was 11.5%, an increase of 0.8 percentage points over the same period in 2021.
Second, land transfer fees in more than half of the provinces decreased by more than 50%, and only Beijing and Fujian increased year-on-year. In the first quarter of 2022, the transfer fees of 16 provinces decreased by more than 50% year-on-year. In addition to the land not yet transferred in Tibet, the land transfer fees in Tianjin, Ningxia, Heilongjiang, Qinghai and Guangdong decreased significantly year-on-year, with 95.1%, 84.3%, 83.4%, 79.1% and 74.0% respectively. Only Beijing (81.4%) and Fujian (17%) had a positive year-on-year growth rate of land transfer fees.
Third, the land transfer fee of 247 cities increased negatively, the transaction premium rate of 90 cities was "zero", and the land auction rate of nearly 30% of cities exceeded 20%. In the first quarter of 2022, except that the land transfer fees of 85 cities or regions such as Beihai, Daxinganling and Xiamen increased compared with the same period last year, the other 247 cities showed negative growth, accounting for 74.5%. In the first quarter, the phenomenon of "land picking" at the base price was prominent. The land transaction premium rate in 90 cities was 0, accounting for 27.3%, an increase of 13.3 percentage points over the same period last year; There are 27 cities with a land auction rate of more than 20%, accounting for 26.5%.
II. Why does the land market keep low temperature?
In the first quarter of 2022, due to factors such as the decline of the real estate market and the increase of capital pressure, real estate enterprises were cautious in land acquisition, coupled with the slowdown of land promotion by local governments and the multi-point spread of the epidemic in China, the land market maintained a low temperature trend.
First, the bottom of real estate sales has not been fully built, and the return of enterprise funds is limited. In the first quarter of 2022, the sales area and sales volume of commercial housing decreased by 13.8% and 22.7% respectively year-on-year, continuing the negative growth trend since July 2021.
Second, real estate enterprises are facing the peak of debt repayment, and the shortage of cash flow is increasing. As of April 30, 2022, the balance of credit bonds due by real estate enterprises in the next year was 398.5 billion yuan, and the balance of overseas bonds was 448.8 billion yuan (US $67.8 billion), totaling 847.4 billion yuan. In June and July 2022, real estate enterprises ushered in a phased debt repayment peak, with maturity of 127.2 billion yuan and 98.6 billion yuan respectively. Among them, the repayment pressure of domestic foreign debt is great, and the balance due in the next year accounts for 53.0%. In the first quarter, many real estate enterprises have defaulted or extended their bonds.
Since this year, the main force of land acquisition is still central enterprises and local state-owned enterprises, and the overall attitude of real estate enterprises is cautious. From January to March 2022, the total land acquisition amount of top 100 real estate enterprises was 227.16 billion yuan, and the land acquisition scale decreased by 59.3% year-on-year. Among them, 73 are central enterprises or local state-owned enterprises, accounting for 72.4% of the land acquisition amount.
Third, the efforts of local governments to promote land have slowed down. Local governments have maintained a cautious attitude in promoting the scale of land supply. Some key cities have adjusted the land supply batches from "land supply in three batches" to "land supply in four batches" last year to disperse the land supply area of each batch. The first batch of land supply areas in Wuhan, Chongqing and Qingdao decreased by 91%, 79% and 68% respectively compared with last year.
III. impact on local finance?
The impact of the downturn in the real estate market on local fiscal revenue in the first quarter gradually appeared, and the downward pressure on real estate related taxes and land transfer income was great. If the epidemic continues to spread, the growth rate of disposable financial resources of local governments will decline in the second quarter, and the spending on anti epidemic and relief will increase. The situation is grim. In the first quarter, deed tax and land value-added tax decreased by 22.4% and 7.6% respectively year-on-year, 90.6 and 32.9 percentage points lower than the same period last year. In the first quarter, the revenue from the transfer of state-owned land use right of local governments (different from the land transfer fee referred to in the previous article, but the warehousing data) decreased by 27.4% year-on-year.
First, the government needs to take multiple measures to stabilize land prices, house prices and expectations, so as to promote a virtuous circle and healthy development of the real estate industry. First, appropriately reduce the mortgage interest rate and reduce the cost of house purchase; Second, 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 the 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.
Second, the central government needs to continue to strengthen the transfer payment to local governments, promote the sinking of financial resources to the grass-roots level of cities and counties, avoid local discounts on expenditure due to lack of financial resources, and hold the bottom line of "Three Guarantees".
Third, speed up the issuance of special bonds, increase investment in high-quality projects, expand effective investment, promote infrastructure investment as soon as possible, hedge the contraction of demand, especially the decline of real estate and sluggish consumption, and reverse the sluggish expectation at the same time.
Fourth, consider issuing special treasury bonds to deal with the impact of the epidemic on the economy and local finance, and spend on infrastructure investment, relief for small and micro enterprises and low - and middle-income people, and anti epidemic expenditure.
Risk tip: the loose real estate policy is less than expected, and the rebound of China's epidemic has impacted the sales of real estate enterprises
