Four shots in a row! Can the unprecedented favorable real estate policy reverse the expectations of the real estate market?

CBN

2024-05-18 18:07Published on the official account of Jiangsu Yicai

A new round of financial measures to support real estate has been launched in four consecutive rounds: the lower limit of the mortgage interest rate policy at the national level has been clearly abolished, the down payment ratio of housing loans and the interest rate of provident fund loans have been lowered, and the refinancing of affordable housing has been established.

On May 17, the central bank announced a package of new real estate financial policies, starting from the digestion of stock real estate and the optimization of incremental housing, in order to reverse the current situation of weak demand in the real estate market, and the market was boiling for a while.

As of the close of the day, the three major stock indexes all rose more than 1%. The Shanghai Composite Index rose 1.01%, the Shenzhen Component Index rose 1.1%, and the ChiNext Index rose 1.12%. The real estate sector set off a tide of daily limits, with more than 20 shares such as Vanke A, Greenland Holdings, Gemdale Group, Urban Construction Development, and Airport Shares.

Since the beginning of this year, after many local governments have successively relaxed or canceled purchase restrictions, the property market has gradually rebounded, but some potential home buyers are also waiting for greater real estate support policies to be introduced, and there is a "wait" mentality. The first financial reporter interviewed and learned that after the introduction of the central bank's package of policies, it will meet the policy expectations of home buyers to a certain extent, and is expected to form a "policy bottom" in the real estate market.

After the intensive implementation of favorable policies, there are also some doubts in the market. For example, what will be the impact of setting up a new structural instrument? To what extent will the policy mix affect the market? At this time, does the introduction of real estate financial policy combination mean that the old road of "relying on real estate to drive the economy" is returned? What's next for you to continue to drive the real estate transition to a new model?

What will be the impact of the establishment of a new structural instrument?

Revitalizing the housing stock is the key to resolving real estate risks. The People's Bank of China's plan to set up affordable housing refinancing has attracted great attention from the market.

Cao Jingjing, general manager of the index research department of the China Index Research Institute, told Yicai that at this stage, in addition to the inventory of new houses for sale, projects under construction and vacant houses, it is also necessary to face the impact of the rising number of second-hand housing listings and poor replacement on the new housing market.

Dong Ximiao, chief researcher of Zhaolian Financial, told Yicai that a re-loan of 300 billion yuan for affordable housing can drive bank loans of 500 billion yuan, which is a direct and powerful support for the "destocking" of real estate in relevant cities.

In his view, the stock of unsold commercial housing is acquired, and after the funds of real estate enterprises are withdrawn, they can be used to ensure the delivery of housing and other project construction, forming a virtuous circle. In the next step, it is necessary to further clarify the objects and scope of support for affordable housing re-lending, which should be strictly limited to the acquisition of commercial housing that has been completed but not sold, and shall not be used to resolve local government debts. The People's Bank of China should establish, improve and strengthen supervision and inspection over the use of relending funds.

The first financial reporter learned from the preliminary investigation that state-owned enterprises in Zhengzhou, Nanjing, Zhuhai and other places have taken the lead in the trial, through direct acquisition, trade-in and other ways to participate in the stock of housing inventory, the current announced plans to purchase more than 10,000 sets of housing.

Cao Jingjing said that in the future, more detailed supporting policies around the digestion of stock real estate will be further implemented, and detailed policies for state-owned enterprises to acquire stock housing, such as acquisition scale and purchase price, are also expected to continue to follow.

What are the positive implications for boosting the real estate market?

From the perspective of the content of the policy combination, the main goal is to reduce the down payment ratio and guide the downward trend of residential mortgage interest rates.

Wang Qing, chief macro analyst of Oriental Jincheng, believes that the down payment and mortgage interest rate are the key to the direction of the property market, which directly determines the cost of housing and the expectations of residents for the future property market. From the perspective of policy content, the policy benefits greatly exceeded market expectations, releasing a strong signal to support the real estate industry to achieve a "soft landing" sooner, which is expected to have a strong boost effect on the property market in the short term.

"The key to the follow-up is that after the lower limit of the mortgage interest rate is abolished, the commercial banks in various places can reduce the residential mortgage interest rate relatively quickly under the principle of city-specific policies." Wang Qing said.

Dong Ximiao said that the adjustment of the housing finance policy is larger, exceeding expectations, sending a clear signal to stabilize the real estate market, helping to stabilize housing consumption confidence, and thereby improving residents' willingness and ability to consume housing. The housing finance policy supports the healthy and stable development of the real estate market from the demand side. It is expected that the mainland real estate market is expected to stabilize and rebound in the coming period.

Is it a return to "relying on real estate to drive the economy"?

The mortgage interest rate policy cancels the unified lower limit at the national level, but because the lower limit of the mortgage interest rate in most cities is consistent with the national unified level, it will actually drive these cities to cancel the lower limit of the mortgage interest rate together.

In August 2023, the People's Bank of China (PBoC) unified the minimum down payment ratio policy at the national level to 20% for first homes and 30% for second homes. On this basis, each locality independently determines the lower limit of the policy according to the city's policies.

At present, except for 8 cities such as Beijing, Shanghai, Guangzhou and Shenzhen, other cities have chosen to implement the national bottom line policy of 20% and 30%.

This time, the minimum down payment ratio for first home loans will be reduced from 20% to 15% at the national level, and the minimum down payment ratio for second home loans will be reduced from 30% to 25%.

After the adjustment, the city government can still implement policies according to the city. On the basis of the lower limit of the down payment ratio determined by the city government, the commercial bank can independently determine the specific down payment ratio according to the customer's risk profile. At the same time, the policy also retains the setting of a lower down payment ratio for the first home, and there is still a certain degree of differentiation between the first and second sets of policies.

A market authority said that some hot cities may also retain the lower limit of mortgage interest rates. These aspects not only show the central bank's consistent policy orientation of supporting rigid demand and improving demand, but also grasp the implementation of specific policies, including the policy intention of avoiding the old path of "relying on real estate to drive the economy".

The authoritative expert of the market believes that, on the whole, the basic idea of the central bank to optimize the housing finance policy has not changed, and it is the focus of the policy to promote the steady and healthy development of the real estate market and meet the rigid and improving needs of the market. The design and implementation of policies at different stages not only reflect continuity, but also emphasize targeted adjustment in combination with the requirements of the situation, and the policy intensity has gradually increased.

How can we continue to drive the transformation of real estate to a new model?

With the major changes in the relationship between supply and demand in the mainland real estate market, in recent years, financial measures have been continuously adjusted and optimized to meet the needs of the situation.

The current real estate financial policy is a reflection of the increased consistency of macro policy orientation. Industry insiders mentioned that after the Politburo meeting, Beijing, Hangzhou, Xi'an and other places complied with market demand, relaxed or canceled the housing purchase restriction policy, and the settlement policy was also relaxed. The central bank optimized the housing finance policy and coordinated with the relaxation policy of purchase restrictions, reflecting the coordinated efforts of macro policies to better promote the stable and healthy development of the real estate market.

Industry experts generally believe that the central bank's introduction of optimized housing finance policies at this time will boost market confidence and improve expectations, while also continuing to stabilize financial data. If the prepayment situation gradually improves, it will support the steady growth of personal loans and real estate loans.

It is very important to accelerate the transformation of the real estate industry to a new development model and give full play to the role of the market mechanism to a greater extent.

Market experts said that China's economy grew by 5.2 percent last year and 5.3 percent in the first quarter of this year, which was achieved on the basis of getting rid of the influence of real estate. The real estate sector can also be more regulated by market mechanisms. In the context of economic development not relying on real estate and orderly competition in the real estate market, real estate companies will also accelerate the pace of transformation, change their business philosophy, focus more on improving service levels, and vigorously develop real estate sub-industries such as leasing operations, intermediary services, and property management.

Wang Qing believes that in the long run, to promote the steady development of the real estate industry, it is necessary to ensure that housing and commercial housing "walk on two legs". The first is that the government should provide more affordable housing to meet the basic housing needs of low-income people, which is not only a livelihood issue, but also plays an important role in urbanization, which is an important driving force for economic growth in the mainland. Secondly, the real estate industry should get rid of the "three highs" model of high leverage, high turnover and high debt in the past and control the credit risk of real estate enterprises.

(This article is from Yicai)

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