Three years ago, foreign analysts who were accurately bearish on Evergrande began to sing long about China's property market, real estate stocks rose abnormally, and rumors of "first-line relaxation of purchase restrictions" reappeared

China Times

2024-04-26 19:58Published on the official account of Beijing China Times

Three years ago, foreign analysts who were accurately bearish on Evergrande began to sing long about China's property market, real estate stocks rose abnormally, and rumors of "first-line relaxation of purchase restrictions" reappeared

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On April 26, real estate stocks that were in a downward trend in stock prices suddenly rose sharply, and the real estate sectors of A-shares and Hong Kong stocks were red, and many real estate stocks rose to the limit. On the news side, on April 25, the China Housing Association convened a discussion with some real estate companies, and there were rumors that first-tier cities would loosen purchase restrictions on April 30.

Another blockbuster is that UBS analyst John Lam, who was accurately bearish on Evergrande in 2021, recently reversed his tone and turned to long China's property market, saying that the policies of the past three years have been effective, and it is expected that the demand and supply of China's property market will return to historical averages sometime next year.

Real estate stocks rose suddenly

At the end of the 2023 annual report disclosure season, the share price of real estate stocks, which could not deliver a stellar report card, rose once. On April 26, the A-share real estate development sector closed at 9813.82 points, an increase of 2.79%. Among them, Nanguo Real Estate, Binjiang Group, and Damingcheng rose by the limit, and many stocks, including Poly Development, Chongqing Development, and China Merchants Shekou, rose by more than 7%.

In terms of Hong Kong stocks, the real estate sector closed at 680.93 points, up 2.97%. Among them, China Cultural Tourism Agriculture led the gains, up 22.92% to close at HK$0.177 per share, and many real estate stocks such as Zhenro Real Estate, CIFI Holdings, and Sunac China rose by more than 10%.

At the same time, the A-share real estate services sector also rose significantly. On April 26, the real estate services sector closed at 768.39 points, an increase of 2.98%. Among them, I love my home daily limit, closing at 1.73 yuan / share, and many stocks such as special services, *ST brand-new, and World Union Bank rose by more than 4%.

Over the past year, the real estate sector has been in a continuous downward trend. The A-share real estate development sector has fallen from nearly 15,000 points at the beginning of 2023 to less than 9,900 points today. The Hong Kong real estate sector fell from nearly 1,100 points to less than 700 points. At the same time, the industry as a whole is accompanied by a continuous default or delisting of members.

Rumors of loosening restrictions on purchases have resurfaced

Judging from the performance data in 2023, real estate companies can be described as "bleak", many real estate companies still end up in losses, and the sharp decline in net profit year-on-year has almost swept the entire industry. At such a juncture, why did real estate stocks suddenly rise sharply?

The "China Times" reporter noticed that on the news side, a rumor that "first-tier cities will loosen purchase restrictions on April 30" is spreading on the Internet. This news does not seem to be groundless, in the low-level market, only the first-tier cities and a few hot second-tier cities are still "gritting their teeth and insisting" on the purchase limit, but it also reveals signs of relaxation.

On April 18, the couch, known as the "top student in regulation and control", issued a document stating that the city's purchase of houses will no longer review the qualifications of home buyers, and the official announcement will cancel the seven-year purchase restriction policy. In addition, Changsha said that the purchase of a new house by "trade-in" can enjoy the preferential down payment ratio and mortgage interest rate for the first house in accordance with the policy of "recognising the house but not the loan", and the maximum loan amount will be increased on the original basis when applying for a housing provident fund loan for the purchase of a new house.

On April 24, there was news in Shenzhen that the purchase restrictions in areas other than Futian District and Nanshan District will be canceled after the "May Day" holiday, and the five-year value-added tax requirement will be cancelled to a full 3 years. Subsequently, the Shenzhen Real Estate Registration Center responded to the media that it had not received a notice of relevant policies and denied the rumors of adjusting the purchase restrictions.

In February, Shenzhen made an adjustment to the purchase restriction policy, canceling the 3-year settlement period and the requirement of paying individual income tax and social security for 3 years, and changed it to buy a house after settling down, instead of Shenzhen household registration, and the purchase requirement was changed from 5 consecutive years of social security or individual income tax to 3 years, reducing the number of years requirement.

In addition, Shenzhen's property market has also made new moves in the near future and began to implement the "old for new" activity. On April 23, the Shenzhen Real Estate Association and the Shenzhen Real Estate Agents Association jointly issued a notice, announcing that from May 1, the city will implement the "old for new" for a period of one year, with 13 real estate projects and 21 intermediaries participating in the first batch of activities. As of press time, Shenzhen is the only city among the four first-tier cities that has announced the launch of real estate "trade-in".

After optimizing Tongzhou's "double limit" policy, Beijing has not made a big move in restricting purchases. On April 22, Beijing refined the policy of buying a house after divorce, and relaxed it again on the basis of abolishing the "no house in Beijing within 3 years of divorce", stipulating that as long as there is no house in Beijing under the name, the first house credit policy will be implemented if the house is bought within one year of divorce.

After Shanghai relaxed the restrictions on single home purchases in January, there have been no new developments in optimizing the purchase restrictions. So far, among the four first-tier cities, Guangzhou has the most relaxation. At the end of January, Guangzhou issued a document stating that the purchase of housing with a construction area of more than 120 square meters will not be included in the scope of purchase restrictions. At the same time, within the scope of the restricted area, if a resident family uses its own house as rental housing and goes through the formalities of housing lease registration and filing, or obtains the housing information code in the Guangzhou stock housing trading system and plans to sell it, the number of family housing units shall be reduced when purchasing the house.

It is worth noting that the industry generally believes that it is a general trend for first-tier cities to withdraw from the market with restrictive policies issued during the overheating period. "At the policy level, the central and regulatory authorities have made it clear that the real estate policy will be further optimized, and there is a strong expectation of optimization of policies at both ends of supply and demand in various places, and it is expected that first-tier cities may continue to optimize the purchase restriction policy, and the restrictive policies in second-tier cities are expected to be fully canceled. Chen Wenjing, director of market research at the China Index Research Institute, told the China Times.

Foreign giants have spoken out and sang

The current sensitivity of real estate can be described as a wave that can be set off by the wind and grass. On April 25, the China Housing Association convened a discussion with some real estate companies, and relevant government departments attended the meeting. It is reported that in addition to understanding the operation and market transactions of real estate enterprises, the symposium also exchanged views on the financing needs of real estate enterprises, debt resolution, the progress of real estate "white list" financing, affordable rental housing and enterprise suggestions.

Another voice believes that the foreign giant UBS has suddenly spoken out recently, singing more about China's property market, or indirectly pulling real estate stocks. According to public reports from the Securities Times and other media, John Lam, head analyst of UBS Greater China Real Estate Research, said in the latest interview that for the first time after being bearish, China's real estate industry has become more optimistic due to government assistance.

John Lam expects China's housing demand and supply to return to historical averages sometime next year, and stocks of China's big property developers could rebound.

It is worth mentioning that John Lam once accurately predicted the future of Evergrande. In early 2021, John Lam downgraded Evergrande and lowered its price target to HK$6 from HK$14.50, the only analyst out of 19 analysts who focused on Evergrande to give a sell rating and lowered the price target below the actual share price. A few days ago, the Institute of Finance of the Chinese Academy of Social Sciences suggested at the first quarter press conference that the RRR should be cut in a timely manner and continue to cut interest rates significantly, and the supply and demand sides will continue to make efforts to stabilize the real estate market, and "real money" will boost the confidence of home buyers and real estate companies.

Editor-in-charge: Zhang Bei Editor-in-chief: Zhang Yuning

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