On September 29, the central bank and the Bancassurance Regulatory Commission issued a notice that for cities where the sales prices of newly built commercial housing declined continuously from June to August in 2022, they can independently decide to maintain, lower or cancel the interest rate floor of the local first housing loan by the end of 2022.

Affected by the news, Hong Kong internal housing stocks rebounded today$R&F PROPERTIES (02777.HK)$Increase by more than 11%$COUNTRY GARDEN (02007.HK)$Increase by more than 10%$CIFI HOLD GP (00884.HK)$Increase by more than 8%$SEAZEN (01030.HK)$Up nearly 5%.

At least 23 cities meet the criteria

According to the house price index data of 70 large and medium-sized cities released by the National Bureau of Statistics, at least 23 cities meet the requirements of the central bank's new policy, including second-tier cities such as Wuhan, Tianjin, Kunming, Wenzhou, Dalian, Shijiazhuang and Harbin.

It is worth noting that, considering that official statistics on house prices in cities other than 70 cities are not available, sales have been under pressure and house prices have been weak since July 2021.It is expected that a larger number of third-and fourth-tier and lower-energy cities are basically in line with the continuous downward category of house prices in the past three months, and should also be regarded as qualified cities.

As a result, Shen Wanhongyuan believes that the number of cities that actually meet the conditions and can enjoy the lower limit of mortgage interest rates will significantly exceed 23, which will drive first-home mortgage interest rates to continue to decline and boost confidence on the demand side.

Mortgage downgradeAdvance in strength

This is the fifth time that mortgage interest rates have been lowered this year after lowering the LPR three times and the lower limit of first home loan interest rates in May, and this regulation allows eligible cities to remove the lower limit of first home mortgage interest rates, which is stronger than before, and sets the conditions that house prices need to fall compared with the previous month, so the regulation tends to be precise, but this time the lower limit of second home loan interest rates has not been lowered, and the demand for improvement has not been fully opened.

According to the statistics of KE Holdings Inc. Research Institute, the interest rate on first home loans in 103 key cities was 4.15% in September. Citic Construction Investment saidAfter the lower limit continues to be lowered, the interest rate on first home loans in eligible cities is expected to fall below 4%, the lowest level in history.

Citic Construction Investment: real estate sales are expected to improve significantly in the fourth quarter.

According to the calculation of CITIC Construction and Investment, the sales of commercial housing in qualified cities in 2021 are about 8 to 10 trillion, accounting for 50% to 60%. The interest rate reduction covers a wide range of areas. The city government can independently regulate and control the lower interest rate according to the changes in the local real estate situation, which is more flexible, can prescribe the right medicine to the case, and help to further stimulate the vitality of the market. Real estate sales are expected to improve significantly in the fourth quarter.

The trend of real estate policy remains the same, the current market bottom has gradually emerged, and sales are expected to gradually recover. In the process, the agency is bullish on the three high housing enterprises: high performance, high interest-bearing debt growth and high land acquisition intensity. These real estate enterprises are expected to benefit significantly in the follow-up market recovery and credit repair process.

Hong Kong stocks recommend:$China Overseas Land & Investment (00688.HK)$、$CHINA RES LAND (01109.HK)$、$LONGFOR GROUP (00960.HK)$、$C&D INTL GROUP (01908.HK)$、$YUEXIU PROPERTY (00123.HK)$、$GREENTOWN CHINA (03900.HK)$、$CHINA JINMAO (00817.HK)$. In addition, CITIC Construction Investment is also optimistic about the agent construction companies that have the ability to participate in the disposal of bad projects.$GREENTOWN MANAGEMENT HOLDINGS COMPANY LIMITED (09979.HK)$。

Shen Wan Hongyuan:The policy opens more room for relaxation and maintains the "bullish" rating of the sector.

Shen Wanhongyuan believes that in the short and medium term, the basic bottom of real estate has already appeared, and the follow-up fundamental improvement path may show a "√ flexibility" trend, and will deduce a stronger structural flexibility than in the past, including core cities and high-quality housing enterprises, and it is expected that first-and second-tier cities will enter policy sales resonance, and high-quality housing enterprises will enter long-term and short-term growth resonance.

In the medium and long term, the follow-up development path of China's real estate industry may be similar to the pattern of "total weakening + pattern optimization" of American real estate industry and Chinese liquor industry, and it is expected that after pattern optimization, the growth space of high-quality real estate enterprises will be opened again, which is expected to achieve both quantity and quality.

The agency maintains a "bullish" rating on the real estate sector, with Hong Kong stocks recommending:$CHINA RES LAND (01109.HK)$, China overseas Development, Jianfa International, Longfor Group, Xuhui Holdings, Country Garden Holdings, and suggest to pay attention to: Greentown China, Yuexiu Real Estate; and maintain the "optimistic" rating of the property management plate, recommend:$China Overseas Property (02669.HK)$、$POLY PROPERTY DEVELOPMENT CO., LTD. (06049.HK)$、$China Resources Mixc Lifestyle Services (01209.HK)$、$Country Garden Services Holdings (06098.HK)$、$New DaZheng Property Group (002968.SZ)$、$Ever Sunshine Lifestyle Services (01995.HK)$、$Greentown Service Group (02869.HK)$、$Powerlong Commercial Management Holdings Limited (09909.HK)$。