The first shot in first tier cities is to recognize houses but not loans! Why Guangzhou? Will Beijing, Shanghai, and Shenzhen follow up?

Guangzhou has launched the "first shot" of "recognizing houses but not loans" in first tier cities.

Five days after the Ministry of Housing and Urban Rural Development and other three departments released the Notice on Optimizing the Standards for Determining the Number of Housing Units in Personal Housing Loans, Guangzhou officially announced the implementation of this policy.

According to Guangzhou regulations, when a resident family applies for a loan to purchase commercial housing, if their family members do not have a complete set of housing under the local name, regardless of whether they have used the loan to purchase housing, banking and financial institutions will implement the housing credit policy for the first set of housing.

As a first tier city, Guangzhou has taken the lead in implementing the policy of "recognizing houses but not loans" to send a positive signal to the real estate market.

Why Guangzhou?

Yang Hongxia, General Manager of the South China Branch of Zhongzhi Research Institute, pointed out that since the second quarter of this year, the overall supply and demand of Guangzhou's real estate market have significantly declined due to multiple factors such as a slower than expected macroeconomic recovery, basic release of pre existing demand backlog, and insufficient confidence in potential homebuyers.

According to the data from the China Index, the transaction area of newly-built commercial residential properties in Guangzhou decreased for four consecutive months in July, and the prices of new and second-hand houses are also in a fluctuating adjustment channel, resulting in weak market expectations. According to preliminary statistics, the transaction volume of newly-built commercial residential properties in Guangzhou continued to decline slightly in August, with a year-on-year decrease of about 30%. Homebuyers have a heavy wait-and-see attitude, and the market continues to be sluggish.

At present, the real estate market in key cities is still in a stage of deep adjustment. According to data from Zhuge Data Research Center, a total of 58934 new houses were sold in 15 key cities in the first 27 days of August, a decrease of 7.19% compared to the same period last month. A total of 49227 second-hand residential properties have been sold in key 10 cities, a decrease of 4.59% compared to the same period in July. The transaction activity of new and second-hand houses in key cities has shown a continuous downward trend.

What is the expected effect of the policy?

According to the current policies in Guangzhou, the down payment ratio for the first home in Guangzhou is 30%, and the mortgage interest rate is 4.2%; The down payment ratio for the second property is 70%, and the mortgage interest rate is 4.8%. Wang Xiaoqiang, Chief Analyst of Zhuge Data Research Center, pointed out that after implementing the policy of recognizing a house but not a loan, the down payment threshold for a house with a total price of 3 million yuan can be lowered to 900000 yuan, which used to require 2.1 million yuan; The monthly interest rate will also follow the first home standard, reducing by 0.6 percentage points. After the new policy, the threshold for purchasing a house and the pressure on monthly supply have significantly decreased.

Zhang Bo, President of 58 Anjuke Real Estate Research Institute, pointed out that the implementation scale of Guangzhou's policies is relatively large, completely "not recognizing loans", and "recognizing houses" locally. The implementation time is based on the notice issued by the three ministries on August 25th. It is expected that the policy will have a greater impact on the market after its implementation, and the probability of market recovery in the short term will be greatly increased. At the same time, it will first promote a significant increase in the volume of second-hand housing transactions, which will then be transmitted to the new housing market.

Zhang Bo pointed out that this policy directly benefits two types of people: the first is the local population who change houses. After the sale of their homes, newly purchased houses can be subject to credit policies based on the first purchase, and the down payment ratio and mortgage interest rate have both significantly decreased; Secondly, for those who have a house in other cities, only the housing situation in Guangzhou is checked when determining the number of units. Therefore, even if there is a house in another city, as long as there is no house in Guangzhou, the credit policy can still be implemented for the first unit.

Will Beijing, Shanghai, and Shenzhen follow up?

Zhang Bo believes that the implementation of Guangzhou's policies has played a certain demonstration role for the other three first tier cities. It is expected that the nationwide implementation of "recognizing houses but not loans" has entered the countdown, and from the perspective of implementation intensity, it is expected to remain consistent with Guangzhou. The comprehensive recovery trend of first tier cities is about to begin.

The policy of "recognizing houses and loans" was proposed during the active stage of the market. Wang Xiaoqiang pointed out that it was first proposed by three departments in May 2010, and on July 15, 2010, Beijing became the first city to implement it. It has been in effect for 13 years now. She also believes that in the context of a downturn in the real estate market, the lifting of restrictive policies previously formulated is in line with the policy tone, and it is expected that other first tier cities will have a higher probability of following suit.

Yan Yuejin, Research Director of E-House Research Institute, said that it is expected that other first tier cities will also introduce relevant policies in early September, but whether there will be any clause amendments will depend on the specific situation. After all, the housing market in some areas of the main urban areas of the other three first tier cities is still slightly hot, and there is a possibility of classified regulation in the urban and suburban areas. But overall, this means that the bottom line of real estate policies has been formed, that is, since 2017, the overly strict housing purchase policies in first tier cities have indeed seen substantial and comprehensive relaxation.

At present, the real estate market heat in first tier cities is also at a historical low. Taking Beijing as an example, Wang Xiaoqiang stated that only 9122 second-hand residential properties were sold in July. As of August 29th, 9687 second-hand residential properties were sold in Beijing, still at a historically low level.

Yang Hongxia also believes that Guangzhou, as the first first first tier city to implement the policy of "recognizing a house but not a loan" for the first housing, has released a more positive signal. In the short term, the pace of implementing relevant measures in other cities is expected to further accelerate. Beijing, Shanghai, and Shenzhen also have optimization expectations. If policies are optimized and adjusted in a timely manner, the real estate market in core cities is expected to gradually stabilize, thereby driving the recovery of market sentiment nationwide.