China Real Estate News： The property market has entered a major historical moment, and heavy policies will be exhausted.

At the end of April, the area of commercial housing for sale was 745.53 million square meters, a year-on-year increase of 15.7%. Among them, the residential area for sale increased by 24.5%. Digesting the stock of commercial housing has become a big battle that must be won well. What is certain is that more cities’ state-owned assets will buy the stock of commercial housing in the future and adopt different mechanisms to revitalize the market around the real needs of local residents.

May 17th, 2024 is destined to be the most colorful day in China real estate history.

On the morning of this day, a video conference was held in Beijing. He Lifeng, member of the Political Bureau of the Communist Party of China (CPC) Central Committee and Vice Premier of the State Council, stressed at the meeting that we should seriously study and understand the spirit of the important speech of the Supreme Leader General Secretary, thoroughly implement the deployment of Politburo meeting of the Chinese Communist Party, deeply understand the people’s and political nature of real estate work, continue to adhere to the policy of the city, do a good job in dealing with the risk of unfinished commercial housing, and solidly promote key tasks such as ensuring the delivery of housing and digesting the stock of commercial housing.

Subsequently, the People’s Bank of China issued a notice to adjust the minimum down payment ratio of personal housing loans and the interest rate policy of commercial personal housing loans: for households who purchase commercial housing with loans, the minimum down payment ratio of the first set of commercial personal housing loans is adjusted to not less than 15%, and the minimum down payment ratio of the second set of commercial personal housing loans is adjusted to not less than 25%. In terms of the interest rate of commercial personal housing loans, the lower limit of the interest rate policy for the first and second sets of commercial personal housing loans at the national level was cancelled.

On the afternoon of the same day, the State Council Information Office held a policy briefing. The heads of the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, the People’s Bank of China and the State Financial Supervision and Administration Bureau will explain the latest policy deployment of real estate. Introduce the relevant situation of supporting policies for ensuring the delivery of houses.

At present, the property market is still in deep adjustment. On the same day, the National Bureau of Statistics released the basic situation of the national real estate market from January to April 2024, and the indicators of real estate investment, sales and financing continued to decline.

"From the main data in the real estate field in April, real estate continues to be in an adjustment period." Liu Aihua, spokesman of the National Bureau of Statistics, chief economist and director of the National Economic Statistics Department, said at the press conference held by the Bureau on the same day that in the next stage, policies and measures to digest existing real estate and optimize incremental housing should be studied as a whole, and a new model of real estate development should be built to promote high-quality real estate development.

From the investment point of view, from January to April, the national real estate development investment was 3,092.8 billion yuan, down 9.8% year-on-year, and the decline rate was 0.3 percentage points higher than that from January to March.

From the sales point of view, from January to April, the sales area of new commercial housing was 292.52 million square meters, down 20.2% year-on-year, and the decline rate was 0.8 percentage points higher than that in January-March; The sales volume of newly-built commercial housing was 2,806.7 billion yuan, down 28.3% year-on-year, and the decline narrowed by 2.4 percentage points.

From the perspective of housing prices, from January to April, the average sales price of commercial housing nationwide was 9595 yuan/square meter, up 1.8% from the previous month, but the year-on-year decline was still as high as 9.2%. National housing prices have increased to some extent, which in the eyes of the industry is mainly due to the good sales of high-end projects in some cities, which objectively brings the appearance of stabilizing housing prices, but the foundation is not solid.

The new start-up and investment willingness of housing enterprises are at a low point. From January to April, the housing construction area of real estate enterprises decreased by 10.8% year-on-year; The newly started area of real estate decreased by 24.6% year-on-year, which has been declining for 31 consecutive months.

The capital side is also not optimistic. From January to April, the funds in place of housing enterprises reached 3,403.6 billion yuan, down 24.9% year-on-year, and the decline was 1.1 percentage points narrower than that in January-March. The financing environment of housing enterprises is still weak.

Judging from the sources of funds received by real estate enterprises in April, personal mortgage loans, deposits and advance receipts declined the most, down by 39.7% and 37.2% respectively. These two indicators are the main components of sales rebates, accounting for more than 40% of the sources of funds of real estate enterprises, providing developers with the main hematopoietic function. The sharp decline of these two indicators shows that residents’ willingness to buy houses is still low.

Central bank data also proves this trend. In April, RMB loans increased by 730 billion yuan, an increase of 11.2 billion yuan over the same period of last year. However, the scale of social financing decreased by 198.7 billion yuan, showing a rare negative growth. Insufficient demand for physical credit has once again been confirmed. Among RMB loans, household loans decreased by 516.6 billion yuan, of which short-term loans decreased by 351.8 billion yuan and medium-and long-term loans decreased by 166.6 billion yuan. Among them, the medium-and long-term loans in the household sector are mainly affected by two factors, namely, new loans (housing loans) and repayment. At present, the latest two indicators are declining.

In April, the new scale of corporate bond financing was only 49.3 billion yuan, a year-on-year decrease of 244.7 billion yuan, behind which the new financing of urban investment was strictly restricted and the issuance of real estate bonds was still difficult.

Kerui data also shows that in April, the total financing of 65 typical real estate enterprises was 28.007 billion yuan, a decrease of 29.5% from the previous month and a decrease of 56.5% from the same period last year; The total amount of financing in the first four months was 124.7 billion yuan, a year-on-year decrease of 58%. Among them, the amount of bonds issued by central enterprises and state-owned enterprises accounts for the majority.

At the same time, in 2024, it is still at the peak of housing enterprises’ debt repayment, and the pressure of debt repayment and the demand in bond swap are both great. According to institutional data, the first and second quarters of 2024 are still the peak of maturity, and the maturity scale is above 150 billion yuan. In the first half of the year, the debt pressure of housing enterprises is still relatively high.

"Within one month, two housing enterprises, Dongyuan and Agile, defaulted on their debts, reflecting the operational difficulties faced by housing enterprises with weak second-tier and third-and fourth-tier cities in the context of oversold market. Previously, most defaulting housing enterprises were also highly correlated with the above factors. Therefore, it is suggested that strong second-tier cities should have more efforts to rescue the market, so as to activate the demand of the property market as soon as possible to reduce the inventory of the property market. Only when the fundamentals of the property market in these cities improve, the overall property market will be truly improved, and the operating pressure of enterprises will be reduced, which will reduce the risk of corporate default. " Zhang Hongwei, founder of Mirror Consulting, suggested.

Politburo meeting of the Chinese Communist Party, held on April 30th, proposed to study the policies and measures to digest the existing real estate and optimize the incremental housing. Since then, some first-tier and new first-tier cities have successively optimized their purchase restriction policies, such as Beijing, Shenzhen and Tianjin, and Hangzhou and Xi’ an. The bottom of the industry policy has already appeared, but it still takes time to transmit it to the investment and sales side.

According to the statistics of the Central Reference Institute, the effect of policies in some cities has appeared slightly recently, and the number of new house projects and second-hand houses in core cities has increased. In particular, the cancellation of purchase restrictions in core areas in Hangzhou and Chengdu has a positive impact on the improvement of regional market activity.

What the market expects is that the high-standard and heavy meeting will be held on May 17th, and the policies and measures to digest the existing real estate and optimize the incremental housing will be introduced quickly and forcefully.

It is reported that the Ministry of Housing and Urban-Rural Development, the State Financial Supervision and Administration, state-owned commercial banks and other ministries and institutions have respectively transferred their key personnel in the real estate field and set up a joint working group; The scope of assistance for "guaranteeing the delivery of houses" will be further expanded, and the method of purchasing existing houses is also in the pipeline. Hangzhou has previously issued purchasing and storage policies and measures, taking the lead in the country. Judging from the scheme disclosed by various places and the effect after the pilot, it is certain that more cities will acquire stock houses in the future, and adopt different mechanisms to revitalize the stock houses and the rental market around the real needs of local residents.

This had a direct positive effect on real estate, and the stock market took the lead in responding positively. On the morning of May 17, domestic housing stocks in Hong Kong stocks continued to be strong. Among them, Jing Rui Holdings rose more than 85%, Sunshine 100 China rose more than 28%, and Dexin China and Fantasia Holdings both rose more than 20%.