Which cities have the greatest impact?, Admit the house, not the loan! Real estate heavyweight favorable loans | housing | heavyweight

The Ministry of Housing and Urban Rural Development has clearly released a signal to further implement the policy of "recognizing houses but not loans". Is it expected that first tier cities will usher in new policy optimization space?

According to Xinhua News Agency on the evening of the 27th, Ni Hong, Minister of Housing and Urban Rural Development, said at a recent corporate symposium that we need to continue to consolidate the stabilization and recovery trend of the real estate market, strongly support the demand for rigid and improved housing, further implement policy measures such as reducing the down payment ratio and loan interest rate for purchasing the first home, reducing the tax and fee for purchasing improved housing, and providing personal housing loans with "no need to subscribe for housing"; Continue to do a good job in ensuring the delivery of buildings, accelerate the delivery of project construction, and effectively safeguard the legitimate rights and interests of the people.

The so-called "recognizing a house but not a loan" means that regardless of whether there has been a loan before, as long as there is no property under the current name, the first mortgage loan can enjoy a down payment ratio and interest rate discount.

Affected by favorable policies, after the opening on the 28th, real estate stocks showed active performance, with Jinhe Commercial Management rising by over 6%, Jinke Shares rising by nearly 3%, Jingtou Development and Special Development Shares rising by over 2%, and Guangming Real Estate, Poly Development, and China Merchants Shekou rising by over 1%.

Since the beginning of this week, the sentiment of real estate stocks has been boosted multiple times by policy news. On the 24th, the Political Bureau of the Central Committee of the Communist Party of China held a meeting. Regarding the real estate sector, the meeting pointed out the need to effectively prevent and resolve risks in key areas, adapt to the new situation of significant changes in the supply and demand relationship in China's real estate market, adjust and optimize real estate policies in a timely manner, implement policies tailored to the city, make good use of policy toolboxes, better meet the rigid and improved housing needs of residents, and promote the stable and healthy development of the real estate market. The next day, both the real estate development sector and the real estate related industry chain continued to strengthen.

In the view of Li Yujia, Chief Researcher of the Housing Policy Research Center of Guangdong Provincial Urban Planning Institute, this enterprise symposium means that the decision-making arrangements of the aforementioned Politburo meeting may be implemented. "The focus is on promoting consumption, supporting both essential and improved consumption."

In the first half of this year, the overall sales of commercial housing showed a weak recovery, with obvious structural differentiation. From a total perspective, data from the National Bureau of Statistics shows that in the first half of the year, the sales area of commercial housing in China decreased year-on-year, while sales increased year-on-year. From January to June 2023, the sales area of commercial housing in China was 595.15 million square meters, a year-on-year decrease of 5.3%. Since the second quarter, the sales data of commercial housing in China has been decreasing month by month. From the perspective of urban entities, in the first half of the year, the monthly sales area of first tier cities decreased the least compared to the previous month, and the cumulative sales area had the highest year-on-year growth rate. According to data from Wind's 30 major medium-sized cities in China, based on the year-on-year change in cumulative sales area, from January to June, the first tier saw a year-on-year increase of 21%, the second tier saw a year-on-year decrease of 5%, and the third tier saw a year-on-year increase of 7%, with the highest growth rate observed in the first tier.

Since July, multiple industry insiders have analyzed that in the first half of this year, the rebound in real estate sales was less than expected by the market. On the policy side, after low-energy cities relaxed their policies, the frequency of "city specific policies" in the real estate market gradually decreased in the second quarter of this year. In the second half of this year, due to the basic cancellation of restrictive policies in most cities, and the market's stabilization and recovery mainly rely on the efforts of the core first and second tier, recent positive statements may mainly focus on the core first and second tier.

"At present, the supply and demand relationship in the Chinese real estate market has undergone significant changes. From the previous state of supply being less than demand to entering a state of 'one unit per household' and supply exceeding demand. According to changes in the market environment, regulatory policies should also be adjusted accordingly, including some inappropriate restrictive and admission policies." Chen Sheng, President of the China Real Estate Data Research Institute, told First Financial.

According to the latest research report released by Guojin Securities on the 21st, as of June 30th, more than 10 core first and second tier cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Changsha, Hefei, Chengdu, Haikou, Xiamen, Fuzhou, Sanya, and Chongqing, still implement the policy of "recognizing both houses and loans". In addition, the minimum down payment ratio for first home loans in first tier cities is between 30% and 35%, and the minimum down payment ratio for second home loans is not less than 50%. The latter is significantly higher than that in hot second tier cities. Specifically, the minimum down payment for second homes in Shenzhen is 70%, Beijing is 60%, and Shanghai and Guangzhou are 50%.

As of the time of publication, according to the official website of the housing and construction departments in Beijing, Shanghai, Guangzhou, and Shenzhen, no new policies related to loan restriction policy adjustments have been introduced in these four regions.

In the aforementioned second tier cities, on the 24th, a rumor circulating online that the Changsha Housing and Urban Rural Development Bureau held a meeting to discuss and exchange suggestions written by representatives of the Municipal People's Congress on the comprehensive lifting of housing purchase and loan restrictions attracted social attention. Some people interpreted this as the complete lifting of housing purchase and loan restrictions in Changsha. On the 25th, the relevant person in charge of the Changsha Housing and Urban Rural Development Bureau clarified in an interview with local media that this was a misunderstanding. However, at the same time, the person in charge stated that Changsha City is also implementing a long-term mechanism for real estate regulation in accordance with the requirements of "implementing policies according to the city, one city, one policy", continuously optimizing and improving real estate policy measures. Relevant policy systems will be formulated and released in a timely manner as required to ensure "stable land prices, stable housing prices, and stable expectations".

"Currently, some core first and second tier companies still adopt strict purchase restrictions, with a high down payment ratio for second tier properties and strict 'house and loan recognition' policies, so there is still some policy space," said Du Haomin, an analyst in the real estate group of Guojin Securities.

Sun Binbin, a fixed income analyst at Tianfeng Securities, holds a similar view. Sun Binbin stated that "relaxing real estate policies in first tier cities" is one of the main directions of current real estate increment policies, and similar situations have also occurred in history. During the period of 2014-2016, various first tier cities successively introduced real estate relaxation policies, including "recognizing houses but not loans", increasing the amount of provident fund loans, and reducing the down payment ratio of provident fund loans. There were also corresponding optimizations and adjustments in loan application conditions.

The "China Economic and Financial Outlook Report" released by the Bank of China in early July also proposed to flexibly implement the "house recognition but not loan recognition" policy for homebuyers in first tier cities, which is conducive to mobilizing the enthusiasm of "sell one buy one" to improve demand. At the same time, the report suggests accelerating the pace of "mortgage transfer" appropriately, promoting information sharing, risk control, and registration system integration for real estate collateral across banking systems, and improving the collaborative quality and efficiency of various departments. Maintain the support for residential housing credit, provide loan discounts to homebuyers with basic and improved needs, and consider timely lowering of housing provident fund loan interest rates.

But there are also industry views that the current situation is different from the past, such as traditional demand side relief policies such as "recognizing houses but not loans", which not only narrow space but also decrease effectiveness.

"At present, the impact of real estate companies on the supply side has not eased, and the weakness of residents' demand side is still ongoing. Importantly, housing prices are still at historical highs. If these fundamentals have not changed, unilateral policies on the demand side, such as exiting sales or purchase restrictions, and launching 'house recognition but not loan recognition', will have policy effects in the short term, but the possible outcome is that many people choose to list for cash out." Li Yujia said.