Can "recognizing a house but not a loan" reignite the enthusiasm of the Yangtze River Delta real estate market?
These days, a screenshot of a friend's circle from a salesperson of a real estate project in Suzhou - "Wake up at night, the eighth set, new policies introduced, and the lakeside of Xingyue became popular" - has been widely circulated on social media. The media called the sales department of the project and was informed that over 20 new houses were sold last Saturday and Sunday.
Similar hot selling situations are not uncommon in Suzhou, as sales personnel from multiple local projects have reported a significant increase in their viewing and transaction volumes in the past week. According to statistics from the Kerry Research Center, in the 36th week of this year, the opening and closing rate of key monitoring cities increased to 67%, an increase of 14 percentage points from the 35th week. Among them, the transaction area of Suzhou City in the 36th week was 82000 square meters, an increase of 8.4% compared to the previous week.
And this can be attributed to a series of stimulus policies recently introduced by the government towards the real estate market: from lifting purchase restrictions, reducing down payments, continuing tax refunds for purchasing new homes, lowering interest rates on existing housing loans, to the latest first home loan policy of "no need to subscribe"... Especially the last one, even the most "reserved" four major first tier cities have been implemented in a timely manner.
Afterwards, more second and third tier cities such as Suzhou and Hangzhou followed suit and joined the ranks of adjusting and optimizing real estate policies based on city specific policies. Some cities have optimized the previously implemented "house recognition but not loan recognition" policy, no longer requiring that loans from other areas have been settled, such as Hangzhou; Some cities have lifted purchase restrictions across the entire area, such as Nanjing. The recovery of the Suzhou real estate market mentioned above happened against such a backdrop.
However, from the current results, even within the same region of the Yangtze River Delta, there are still differences in temperature between different cities. For example, in Jiaxing, Zhejiang, known as the "backyard of Shanghai", more than ten days have passed since August 25th, when the first shot to cancel double restrictions was taken nationwide. However, the market's response to this has not been obvious, and the performance of the real estate market is still calm. Many real estate agents have expressed that they are waiting for "golden September and silver October" to see if there will be any improvement due to the new policy.
As for Kunshan, which has a closer connection with Shanghai, although the number of second-hand houses listed has increased, many intermediary platforms added hundreds of new listings within one or two days after the "house recognition but not loan recognition" policy was issued. However, further understanding reveals that most customers want to sell local houses and exchange them for Shanghai.
Of course, considering that the relevant new regulations have only just been implemented, it is difficult to reach a conclusion on whether the final effect is good or bad. On the positive side, in the past three years, a large amount of "idle funds" have entered safe haven channels, and bank deposits increased significantly in the first quarter of this year, even leading to a wave of early repayment. These idle funds certainly include a portion of potential housing demand, and it is reasonable to release a wave of potential demand after policy relaxation.
Especially when it comes to recognizing a house but not a loan, it is still very helpful in boosting the demand for replacement type improvements. In the past, under the policy of recognizing both houses and loans, many people, even though they did not have a house locally, were recognized as having a second home because they had a loan record in another city. The loan interest rate was generally high, and there was also greater pressure to repay the loan in the future.
Taking Kunshan, Suzhou as an example, if a homebuyer had a house in another city and had a loan, they would need to make a 40% down payment and a loan interest rate of 4.8% when purchasing a house in Kunshan. However, after the new policy was introduced, the maximum down payment now is only 30%, and the interest rate has also decreased to 4.4%. This will undoubtedly stimulate those who have a replacement demand to accelerate their entry into the market.
However, it should also be noted that the new regulations mentioned above only stimulate the sales side of the market, which is the so-called "three guarantees" of market protection, building protection, and main body protection, and have not yet benefited the vast number of real estate enterprises currently in dire straits. As many industry experts have pointed out, simply stimulating the sales side is not enough to change the overall predicament of the real estate industry.
Because the premise of protecting the market is to ensure the delivery of the property. If you spend money to buy a house and it ends up being abandoned, in this case, homebuyers have no confidence in going to the market to buy a new house, and sales recovery will also be greatly discounted. The premise of guaranteeing the delivery of a building is to guarantee the main body. If real estate companies, especially high-quality private real estate companies, are allowed to collapse one by one, then guaranteeing the delivery of a building will become a flower in the mirror and a moon in the water.
Therefore, many people suggest that the focus of the market rescue policy should shift from protecting the market and property to protecting the main body, so that the real estate industry can stabilize. Yao Yang, Dean of the National Development Research Institute at Peking University, even believes that compared to the three red lines that remain unchanged, accepting a house or not a loan is just a small joke.
Of course, whether it is protecting the market or the main body, both still belong to short-term behavior at the policy level. Although these measures can temporarily stimulate the real estate market and prevent the industry from continuing to decline, considering the slowdown in economic growth and the shift from positive to negative population growth, the real estate market still lacks long-term support.
After all, the real estate market looks at finance in the short term, land in the medium term, and population in the long term. Unlike the situation in the 2016 round of price hikes and destocking, when the second child policy was fully implemented, the new population for the year reached 17.86 million, a new high in the past 20 years. Now, the population situation has undergone significant changes. With the decrease in total population, even in developed coastal areas such as the Yangtze River Delta, the total inflow of population is significantly decreasing.
For example, in recent years, Hangzhou has maintained its position among the top three in the country in terms of annual population growth due to its industrial attractiveness. However, the growth rate has decreased from an average of 4.5 million people around 2018 and 2019 to less than 200000 people last year. However, other second and third tier cities such as Suzhou, Nanjing, Ningbo, and Wuxi only have tens of thousands. As for Shanghai, its population has been experiencing negative growth for several consecutive years.
In addition, with the current economic downturn, high unemployment rates among young people, and a household debt ratio of over 140%, which has nearly doubled from a decade ago, even if people have some idle funds in their hands, they are not willing to invest aggressively like in the past. As a result, it remains to be seen to what extent the current series of loosening policies can stimulate a rebound in the real estate market and reignite the enthusiasm for the real estate market in the Yangtze River Delta. Fortunately, at this stage, the original intention of the policy is only to stop the decline, not to rebound. "Housing is for living, not for speculation" is still the goal pursued by the future real estate market regulation.
In this regard, we can say that it is sooner or later for the real estate market to weather the crisis. In fact, at Vanke's 2023 midterm performance meeting on August 31, the Chairman of the Group's Board of Directors, Yu Liang, had already stated that "the real estate market has clearly fallen too far, and current policies are also being implemented.". As for thinking of taking advantage of the low point in the real estate market and entering the market to make a profit, it's better to wash your hands and sleep. After all, the era of speculation in the real estate market has really passed.
