The national team is out! The epic bailout is coming

National Strategy

2024-05-17 14:06Published in Guangdong financial field creators

Text: Kaifeng

Real estate has ushered in a historical turning point.

The just-held work conference on guaranteeing the delivery of housing proposed that in cities with a large inventory of commercial housing, the government can order and purchase some commercial housing at a reasonable price as appropriate.

This means that the "national team" has begun to collect houses, and the Chinese version of the real estate collection and storage model is about to emerge.

On the same day, the central bank and other departments issued a notice that the first home loan was reduced to 15%, and the second home loan was reduced to 25%, and the interest rate of the provident fund loan was lowered at the same time, and the lower limit of the national loan interest rate policy was cancelled, which was determined by each locality.

This means that after the cancellation of purchase restrictions, the era of low down payment has begun, and the mortgage interest rate has entered the mode of "no bottom line".

Several sets of combinations have been punched, marking a new stage of real estate "bailout", and China's property market has ushered in the most relaxed era in history.

Will this time spur house prices to rise?

01

All this did not land suddenly, but there were early signs.

At the end of last month, the tone of the important meeting was set: "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".

did not mention "housing not speculation", did not talk about the "three major projects", and for the first time proposed "digesting the stock and optimizing the increment", the signal significance could not be more obvious.

This is reminiscent of the "destocking" 10 years ago, and it was that round of destocking that started the biggest upward wave in history.

The "digestion of stocks and optimization of increments" proposed this time is called "inventory reduction" in the market, although the names are different, but the purpose is the same.

The difference is that in the last round of "destocking", the policy tools were full.

RRR and interest rate cuts, monetization of shantytown reform, and 100 million people settled in the city...... Combined with economic growth, accelerated urbanization, and residents' leverage, it can be said that it is unfavorable.

However, this time, the environment is completely different.

The relationship between real estate supply and demand is undergoing "major changes", the leverage ratio of residents is at a historical high, and the fundamentals of the economy, population, urbanization, and debt have long been different from the past.

Extraordinary times call for extraordinary strategies.

Lifting purchase and loan restrictions is only the first step. At present, except for Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Xiong'an, and Hainan, all cities have canceled purchase restrictions.

In the face of the reality of major changes in the relationship between supply and demand, the national team's collection of houses is also becoming a reality.

02

How important is the epic bailout?

Since the start of the housing market-oriented reform in 1998, the property market has been volatile, but the overall trend has been upward.

But this time, the magnitude, scope and length of real estate adjustment are far greater than in the past, and the market urgently needs to be stabilized.

On the one hand, the national inventory of commercial housing has hit a record high, and "destocking" is on the way.

At present, the inventory of commercial housing in the country is 745 million square meters, of which more than half is residential, which is equivalent to tens of millions of units that have not yet been sold.

However, market demand continues to shrink, and the de-industrialization cycle is still rising.

According to the latest data just released by the National Bureau of Statistics, from January to April this year, the sales area of new homes was 292 million square meters, a year-on-year decrease of 20.2%, of which residential buildings fell by 23% year-on-year.

You must know that during the peak period, the sales area of commercial housing in the country was close to 1.8 billion square meters, with a monthly average of 150 million square meters, and the sales volume was as high as 18 trillion.

On the other hand, housing prices in almost all cities are experiencing deep adjustments, and some cities have even returned to 6-7 years ago, and the task of stabilizing housing prices is arduous.

If the property market adjustment in the past few years was more concentrated in the third and fourth tier cities, this time the first-tier cities are also difficult to stay out of the matter.

According to the data of 70 large and medium-sized cities released by the National Bureau of Statistics, second-hand housing prices in all cities showed negative year-on-year growth, with the highest decline of more than 10%.

In Nanjing, Xiamen, Wuhan and other places, where second-hand housing prices once led, fell by more than 10% year-on-year, while in Beijing, Shanghai, Guangzhou and Shenzhen, where housing prices were relatively strong, second-hand housing prices fell by more than 7% year-on-year.

This is the most recent year's data. Compared with historical peaks, housing prices in most cities have returned to before 2020, and some cities have even returned to 2016-2017.

This situation is terrible to think about, and if it is allowed to develop, it is obviously not in line with the assumption at the macro level.

03

The cancellation of purchase and loan restrictions is not surprising, and the national team's collection of savings is an unprecedented new move.

How useful is it for the national team to collect the house after the game?

On the one hand, the national team's bulk acquisition of new houses can not only reduce inventory immediately, but also revitalize the cash flow of real estate companies.

The reason why many real estate companies are in crisis is not unrelated to their high leverage, high debt and high turnover model, but the shrinkage of market demand is more fatal.

The biggest problem at the moment, in official parlance, is that the relationship between supply and demand in real estate has changed significantly.

Too many houses are being built, and fewer and fewer people are buying them.

Whether it is a fundamental problem, an income problem or an expectation problem, once the property market falls into the negative cycle of "no one buys a house", it will be difficult to get out.

At this time, a new catfish - the national team is needed, which directly digests part of the demand and then reshapes the relationship between supply and demand.

On the other hand, the houses repurchased by the national team can be converted into affordable housing, which not only reduces the pressure on the construction of affordable housing, but also curbs the further expansion of the property market inventory.

The construction of affordable housing, the transformation of urban villages, and the construction of dual-use facilities for leveling and emergency are known as the "three major projects". Affordable housing is one of the most important things, and it is also a livelihood task that must be implemented in all localities.

However, not to mention that the construction of affordable housing requires a huge amount of capital investment, and the more houses are built, the more difficult it is to reverse the supply and demand relationship in the market, and the inventory of commercial housing is more difficult to digest.

Therefore, the transfer of funds for the construction of affordable housing to the collection and storage of commercial housing can not only complete the task of affordable housing, but also have the effect of resolving the inventory of commercial housing.

However, how many cities can be covered, how large the scale of collection and storage, and how large the amount of funds are, determine whether it is the possibility of supporting, stabilizing or stimulating.

04

Since the national team has such a good effect, why not implement it early?

Where the money comes from has always been the biggest question.

According to the calculation of Tianfeng Securities, if the real estate inventory returns to a reasonable level, about 7 trillion yuan of funds will be needed.

You must know that last year's national fiscal revenue was 21.6 trillion yuan, which is obviously not a small number.

Taking it a step further, who will pay for it?

Local governments, I'm afraid they don't have food in their hands.

Not to mention that after the "blood loss" of land finance, the disposable financial resources of local governments are far less than before, and the debt pressure has been hanging over their heads, and the space for increasing leverage is extremely limited.

The central mother's release of water or the central financial support is an option that is difficult to bypass.

10 years ago, the property market was destocked, relying on the central bank's directional water release, 5 RRR cuts and 5 interest rate cuts, plus monetization loans for shantytown reform, which directly stirred up the market.

This time, it may be possible to provide financial support for the collection and storage of state-owned banks in the form of subsidized loans or the issuance of special treasury bonds.

Some people also suggested that the state should come forward to set up a special collection and storage platform, or set up a housing security bank to be used specifically for the inventory of commercial housing across the country.

The most radical idea is to print money without anchors, let the central bank buy government bonds directly, turn on the switch of the money printing machine, and fundamentally solve the financial problem.

However, it is impossible to save the market without considering the cost, otherwise the finances will become a bottomless pit, and the disadvantages of the big money printing are well known.

For real estate acquisition and storage, the problem of capital is one one, and the problem of return is the second.

Rent may be the biggest source of return after acquisition, but the rent-to-sale ratio in mainland China is far lower than the international average.

At present, the rental rate of return in large cities is only 1-2%, which cannot even cover the cost of loan interest rate or special bond interest rate, let alone income?

Therefore, the national team's collection and storage will not cover all cities, nor will it rush up, and there will inevitably be trade-offs.

05

Real estate, why do you need to desperately save the market?

In any industry, if the market goes with the market, it is normal for prices to rise and fall, and the bubble formed when it soars can naturally be adjusted by natural bursting.

However, real estate is not an ordinary industry, and it has been tied to the national economy, local finances, and residents' property from the very beginning.

As a pillar industry, the GDP of the real estate industry has continued to decline, which has become the biggest drag on economic growth.

In the first quarter of this year, the country's GDP grew by 5.3% year-on-year, greatly exceeding expectations, but the real estate sector fell by 5.4% year-on-year, the only one among the 12 major industries.

This is the fourth consecutive quarter of negative growth in the real estate sector, the first since the housing reform in 1998.

The real estate trend not only affects itself, but is related to a series of upstream and downstream industrial chains, from the construction industry to building materials, household appliances and other industries, accounting for more than 10% of the economy as a whole.

Considering the existence of land finance, it can be said that real estate is not comparable to other industries in terms of scale and pulling effect.

At the same time, according to the central bank's report, about 70% of the property of mainland households is a house, and about 70% of the debt is also related to a house.

Therefore, the sharp fluctuations in housing prices are bound to be transmitted to everyone through the financial system.

Whether it is from the level of the national economy or the level of residents' wealth, real estate cannot be easily let fall.

Under the epic move, will house prices rise sharply in the future?

In a word, stabilizing real estate is the first step, and a soft landing is the most optimistic expectation, so don't think too far ahead.

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