Will it bring fire to housing prices?, Zibo houses can be "exchanged for new"

Is it suitable?

Recently, after the popularity of barbecue in Zibo City, Shandong Province, the idea of exchanging old for new houses has once again attracted widespread attention. Some people believe that Zibo's "big move" will effectively stimulate the vitality of the local real estate market; Some people also believe that none of them have paid "real gold and silver" to benefit homebuyers, and are skeptical of the practical significance that this measure may bring.

It is not uncommon for cars, electrical appliances, electronic products, etc. to trade in old for new. Consumers generally sell their old items at a higher price than they do in the second-hand market. Can exchanging old for new for real estate be so affordable?

What is "exchanging old for new" in Zibo real estate?

According to the content of the Proposal of "Old for New" and "Easy to Buy" issued by the official official account of Zibo Real Estate Brokers and Appraisal Association on August 30, the groups that can participate are "those who have the willingness to sell their own stock houses and buy new houses in the urban area". The specific benefits include enjoying the hassle free "trade in" service, prioritizing the acquisition of new housing, synchronously selling existing self owned housing, improving replacement efficiency, and mitigating replacement risks.

There are 5 steps to follow in the process of "trade in old for new" hassle free shopping:

1. Real estate brokerage firms communicate with potential clients about replacement needs and sign real estate brokerage service contracts.

2. Intended clients choose to cooperate with real estate brokerage firms to select new properties for their new developments.

3. Real estate development enterprises, real estate brokerage firms, and potential clients sign a tripartite agreement and pay a deposit of interest for the new house project.

4. Real estate brokerage firms conduct verification, inspection, and actual survey of existing housing.

5. Intended customers complete the procedures for purchasing a new house.

The core bottom line measure is that if the existing housing is not sold within the agreed time, the real estate development enterprise should refund the deposit.

Can exchanging old for new save money?

Can the "trade in" policy in Zibo save money this time?

Yan Yuejin, the research director of E-House Research Institute, stated in an interview with China News Service that such practices have received high market attention due to their presence in cities like Zibo with their own traffic. There are also some new pressures in the current real estate market in Zibo, and compared to the market situation around March this year, we need to actively boost it. Such measures are beneficial for the revitalization of second-hand houses and have very good value. At the same time, such practices have a positive effect on real estate companies to accelerate inventory reduction and better address the release of demand for improved housing consumption.

Zhang Dawei, Chief Analyst of Zhongyuan Real Estate, stated in an interview with China News Agency Guoshi Direct that he also paid attention to the measures advocated by Zibo to "sell the old and buy the new", but did not find any points that allowed homebuyers to actually receive "benefits". It was more like a "fancy" marketing strategy developed by developers.

What is the practical significance of the "trade in old for new" hassle free purchase in Zibo? What other adjustments or upgrades can be made to better utilize such practices?

Is "trade in old for new" appropriate?

The staff of the Zibo Real Estate Brokerage and Evaluation Association introduced to China News Service that "trade in old for new" is a promotional activity launched by them after conducting research on the local real estate market and referring to the "priority purchase" measures introduced by neighboring cities. Moreover, this is not the first initiative of Zibo, as many cities such as Jinan and Qingdao have already taken similar measures.

Zhang Dawei also stated that if the practice of "selling old to buy new" is not accompanied by measures such as tax reductions or government subsidies that allow homebuyers to actually make a profit, it is nothing more than falling into the trap of "unsold second-hand houses" to replace "unsold first-hand houses". Because locking in the property for one to three months and signing a contract for a second-hand property that cannot be sold will result in a refund of the deposit. If the developer takes advantage of the sold property to participate in this activity, it may actually affect sales due to the possibility of a refund of the deposit.

Zhang Xia, a randomly selected contact person, answered the call from the "trade in" contact person list published by the reporter in Zibo. Zhang Xia said that on the second day of the launch of this activity, a homebuyer took the initiative to call the public hotline and participated in the activity. They chose a house with a unit price of 10000 yuan and 155 square meters in the high-tech zone and hung up their two second-hand houses without elevators in the city.

Yan Yuejin believes that the generally more effective "trade in" approach is not simply intermediary work helping sell second-hand houses or buying new houses. The important difference from past transactions is that there is a fallback mechanism for the sale of such second-hand houses, which means they can definitely be sold or relevant institutions will hold them. This will increase the certainty of successfully achieving a house exchange through "trade in".

The reporter also answered the phone with Wang Shan, another randomly selected contact person, among the contacts for the "trade in" worry free purchase announcement in Zibo. Wang Shan said that as a sales platform, they can purchase and hold second-hand houses that have been involved in the "trade in" effort free purchase but have not been sold through third-party evaluation. But the price is usually around 10% -20% lower than the market price, which is much higher than the price of second-hand houses that were sold urgently due to various troubles such as legal auctions, which were previously purchased at around 50% of the price.

Will exchanging old for new bring about high housing prices?

Can exchanging old for new increase housing prices? "There will not be a significant price increase in real estate," Zhang Dawei said. The current situation in the real estate market is driven by complex factors, and some "no pain, no itch" policies are difficult to achieve significant results in a short period of time. Because the country will adhere to the policy of "housing is for living, not for speculation" for a long time, it is necessary to stimulate the vitality of the real estate market while controlling housing prices within a reasonable range. Although it may seem like a contradiction between one and the other, it truly tests the wisdom of policy makers. If the "sell old and buy new" policy includes a series of "real gold and silver" policies such as interest subsidies, interest rate cuts, and tax exemptions, so that homebuyers can truly benefit, it is possible to truly activate the real estate market.

Wang Shan stated that there are three benefits to participating in the "trade in" worry free home purchase activity:

One is that second-hand houses cannot be sold, and the deposit can be refunded without any loss;

Secondly, second-hand houses participating in the activity will be given priority recommendation by institutions, because once the intermediary facilitates a "trade in" transaction during the activity, they can also earn two commissions;

Thirdly, some developers who participated in the activity offered discounts, and the property with the highest price reduction could reach 100000 yuan.

Meanwhile, Wang Shan also stated that some discounted properties are not eligible for profit sharing. Because the local government has a "price limit" policy, even if developers are willing to lower prices to sell, housing prices below the government's limit will not be able to "sign online".

During an interview, Zhang Xia also stated that the client who successfully participated in the "old for new" activity has been preparing to change houses for a long time and hopes that their second-hand house can be sold before purchasing a new one. However, even if it cannot be sold, it is still possible to purchase a house that has already paid a deposit because his desire to improve the house is urgent. The specific content of "old for new" attracts him to make a purchase decision in advance.

Zhang Dawei stated that in order to further stimulate the vitality of the real estate market, governments and institutions at all levels have continuously introduced various policies and measures. However, the premise of "housing is for living, not for speculation" remains unchanged, and housing prices will not rise significantly in principle. Homebuyers should not have a "speculation" mentality, otherwise the gains and losses will be outweighed.