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The response of the urban market that adopted the trade-in model was relatively positive, and the subscription of project visits improved.
The Politburo meeting in April set the tone: to study the policy measures to digest the stock of real estate and optimize the incremental housing, "trade-in" is the policy grasp of "destocking", which has been implemented in 54 cities across the country. What are the usual modes of operation of "trade-in"? What is the effect of landing?
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54 Cities Support Housing "Trade-in"
It is intended to open up the replacement chain of first-hand and second-hand houses and help destock
Since 2023, more than 54 cities across the country have issued housing "trade-in" policies to support residents to sell their existing housing stock and exchange it for newly built commercial housing. "Trade-in" is intended to open up the replacement chain of first-hand and second-hand housing and promote the release of improved demand.
At the same time, "trade-in" is the policy starting point for digesting the stock of real estate, in response to the Politburo meeting's call for "destocking". On April 30, the meeting of the Political Bureau of the Central Committee set the tone for real estate: it is necessary to combine the new changes in the supply and demand relationship of the real estate market and the new expectations of the people for high-quality housing, coordinate the study of policies and measures to digest the stock of real estate and optimize the incremental housing, and pay close attention to the construction of a new model of real estate development to promote the high-quality development of real estate.
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"Trade-in" five modes of operation
The consignment model is the most common, and the coverage of replacement and "old insurance replacement" is limited
There are usually the following modes of operation for housing "trade-in" in various places:
The first, the consignment model, is the most common, and has been implemented in 29 cities including Shanghai and Shenzhen. That is, real estate enterprises, intermediaries, and buyers sign a new house subscription and second-hand house priority sale agreement, if the second-hand house is successfully sold within the agreed period, the new house subscription agreement will take effect, otherwise the agreement will be invalid, and the buyer does not need to bear the liability for breach of contract.
Second, the old house exchange model, Nanjing, Zhengzhou and other 19 cities have landed. There is usually a four-party participation of government platforms, new home developers, home buyers, and housing management departments. The process is that the buyer first selects the intended new house, and then the appraisal agency completes the evaluation of the value of the old house, and then the housing management department completes the preliminary review of the mortgage guarantee of the stock of housing, and signs a four-party replacement agreement, and then the platform company acquires the stock of housing, and at the same time, the buyer signs the new house sales contract with the developer, and finally completes a series of registration and handover procedures. The trade-in model is undoubtedly more efficient in "selling the old", but it is universal: first, the pilot scale is small, and most cities such as Wuxi, Xuancheng, and Taicang plan to have less than 200 sets; Second, the old housing requirements are high, and there are requirements for the age, area and location of the stock housing, for example, Qingdao clearly stipulates that the age of the house cannot exceed 10 years, and Zhuhai Huafa's "old for new" activity is only for the old owners of Huafa; Third, the replacement is restricted, generally speaking, only the designated projects of the designated real estate enterprises can be purchased, and the range of choices is narrow.
The third is the repurchase and storage model, which has been followed by 11 cities including Chongqing, Zhengzhou and Suzhou. Municipal state-owned enterprises, as the main operating body, self-raised funds or use the pilot loans of the rental housing loan support plan to collect and store new houses and second-hand housing projects, and most of the collected and stored housing is used to raise talent housing and affordable rental housing, and some cities will first collect and store the housing and then sell it in batches to improve market expectations.
Fourth, the subsidy for replacement will be issued, which will be implemented in 7 cities including Shenyang and Suzhou. That is, if you sell your old house and buy a new house, you can get the corresponding financial subsidies. There are three main ways to measure subsidies: first, tax subsidies, such as Changshu subsidy 50%-80% of the deed tax according to the purchase period, and Xiangyang subsidy of 1.5% of the taxable value added tax paid; the second is to subsidize according to the area of the new house, such as Shenyang subsidy of 100 yuan/square meter; The third is to subsidize according to the set, for example, regardless of the area and location of Zhongshan, each set of subsidies is 2,000 yuan of electronic consumption vouchers.
The fifth, "old insurance transfer", was pioneered by Zhaoqing. That is, the state-owned assets rent stock for the operation of affordable housing, and the replacement model is different, the "old to insurance" does not buy out the ownership of the old house, but a one-time payment of 5-10 years of rent, the requirements for housing are not low, such as Zhaoqing stipulates that the area of housing is 40-70 square meters, no more than 90 square meters, and priority is given to houses with a short building age.
Of course, there are also many cities that adopt two or more "trade-in" operation modes at the same time, such as Suzhou and Dalian, which not only encourage tripartite cooperation in consignment sales, but also give financial subsidies for replacement, and then Wuhan, Ezhou, Jingjiang and other cities, where the exchange of stock houses and the encouragement of consignment sales and purchase of new ones are promoted in parallel.
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The market response to the trade-in model has been relatively positive
The visit subscription has improved, and the effect of the consignment and subsidy model is not obvious
Since the implementation of the "trade-in", what has been the market response? The survey found that:
The response of the urban market that adopted the trade-in model was relatively positive, and the subscription of project visits improved.
In Nanjing, after the launch of "trade-in", the number of visits to projects in the main city and suburbs increased significantly during the May Day period, with an increase of 20%-200% compared with weekdays and weekends, and the subscription volume of some projects in Yanziji and Jiangbei increased by 50%-200%.
Wuxi launched the "trade-in" evaluation work on April 20, and as of the end of April, the first batch of 25 sets have been sold, with a transaction amount of nearly 100 million yuan, and the pilot project has performed better than natural transactions.
Zhengzhou's acquisition body, Urban Development Group, gave positive feedback that 64 groups of stock houses passed the preliminary review on the first day of the pilot, and if the exchange plan goes smoothly, it is expected to release the purchase demand of 1 million square meters of new houses.
The effect of the consignment sales model is mediocre, and most buyers "just look at it and don't buy it". For example, in Shenzhen, in mid-April, LVGEM Baishizhou project launched the "trade-in", and the number of project visits in the following week increased by 50% month-on-month, but the subscription only increased by 1 set. There are three main reasons why the effect of the consignment sales model is not obvious: first, "selling the old" is still a big problem, the general transaction cycle of second-hand housing is generally longer, and the lock-up period of new houses is generally only 90 days, and the consignment sales have not substantially improved the liquidity of second-hand houses, and if the core problem of second-hand houses is difficult to sell, it is impossible to talk about replacing them; Second, there is a lack of administrative force to intervene, and the "trade-in" of consignment sales is usually initiated by industry associations, with the participation of developers, home buyers, and intermediaries, and the lack of administrative power to match, which does not have advantages in terms of information platform construction and transaction costs; Third, the market has been immune, for example, in Shanghai, as early as 2023, some real estate companies have carried out similar "trade-in" activities.
The effect of the subsidy model is also not obvious. Whether it is taxes or subsidies per set or area, the subsidy ratio usually does not exceed 3% of the total price of the new house. (Source: CRIC Research Center)