The Zhitong Finance App learned that Fangzheng Securities released a research report saying that Guangzhou's optimized purchase restriction policy is in line with expectations. The speed and intensity confirm that autonomous control rights at the local level have been fully granted, indicating that the central government is unwavering in its determination to stabilize real estate. Guangzhou may be a “testing ground” for first-tier city policies. The drastic optimization of Guangzhou's purchase restriction policy may lead to a new wave of policy loosening in first-tier cities. Property market control policies in cities such as Beijing, Shanghai, and Shenzhen are expected to be followed up and loosened at an accelerated pace. Core concerns: Poly Development (600048.SH), Tiandi Source (600665.SH), I Love My Family (000560.SZ), Pudong Jinqiao (600639.SH).

Incident: On January 27, the General Office of the Guangzhou Municipal People's Government issued the “Notice on Further Optimizing Policies and Measures for the Stable and Healthy Development of Our City's Real Estate Market” (hereinafter referred to as the “Notice”). The “Notice” covers various aspects such as ① optimizing purchase restriction policies; ② increasing housing security; ③ supporting housing enterprise financing; ④ strengthening real estate market supervision.

Fangzheng Securities's views are as follows:

Guangzhou took the lead in responding to the central government's call, highlighting efficiency and strength.

Guangzhou's current optimized purchase restriction policy includes: ① lifting purchase restrictions for large apartments over 120 square meters; ② supporting “rent one buy one” and “sell one buy one”; ③ supporting “integrated transfer and merger registration processing; ④ commercial service properties are no longer limited to transfer targets. The bank mentioned that the Ministry of Housing and Construction meeting gave full regulatory autonomy at the local level, and purchase restrictions in first-tier cities are expected to be lifted at an accelerated pace. Guangzhou's optimized purchase restriction policy this time is in line with the bank's expectations. The speed and intensity confirm that autonomous control rights have been fully granted at the local level, showing that the central government is unwavering in its determination to stabilize real estate.

As a “testing ground” for policies, Guangzhou's exemplary role may lead other first-tier cities to speed up follow-up.

Judging from the policy easing period for first-tier cities that began in the second half of last year, after Guangzhou announced the implementation of “housing approval without loan” on August 30, 2023, Shenzhen, Shanghai, and Beijing followed suit; after Guangzhou took the lead in optimizing the purchase restriction policy on September 20, 2023, Shanghai followed suit and relaxed purchase restrictions in Jinshan District the following month. The bank believes that Guangzhou may be a “testing ground” for first-tier city policies. The drastic optimization of Guangzhou's purchase restriction policy this time may lead to a new wave of policy loosening in first-tier cities, and property market control policies in cities such as Beijing, Shanghai, and Shenzhen are expected to be followed up and loosened at an accelerated pace.

By liberalizing purchase restrictions for units of 120 square meters or more, demand for improvements will be released on priority, helping commercial housing return to commercial attributes.

According to the new policy, within the restricted area, purchases of houses with a construction area of 120 square meters or more (excluding 120 square meters) are not included in the scope of purchase restrictions, and houses with a construction area of 120 square meters or more already under the name are not included in the calculation of the number of housing units already owned under the name. The bank believes that among commercial housing transactions in the restricted purchase area of Guangzhou in 2023, the average price of residential transactions of 120 square meters or more was 7,2445 yuan/square meter, while the average transaction price of 120 square meters or less was 41,579 yuan/square meter, indicating that the current optimized purchase restriction policy directly benefits the improved high-end commercial housing market, while improved products are more commercial and fully absorbed by the market are in line with the development direction of the new real estate model.

The “Notice” emphasizes supporting the supply of affordable housing, taking another big step forward in the new model of real estate development in conjunction with the liberalization of purchase restrictions on improved products.

The “Notice” clarifies plans to build 10,000 affordable housing units for sale and 100,000 affordable rental housing units in 2024, distribute housing rental subsidies to 18,000 households, and liberalize purchase restrictions for units over 120 square meters. The bank believes that Guangzhou's current new policy indicates that the two major goals defined in “Document No. 14” (① home ownership; ② return of commercial housing to commercial attributes) are being actively implemented at the local level, and the pace of progress in the new model of real estate development is expected to continue to accelerate.

The “Notice” actively explores real estate financing coordination mechanisms, combined with the continued loosening of purchase restriction policies, and sales in the Guangzhou property market are expected to pick up at an accelerated pace.

The “Notice” clearly establishes a real estate financing coordination mechanism with city leaders as team leaders, housing, urban and rural development departments, agencies dispatched by the General Administration of Financial Supervision and other relevant departments as member units, to establish a communication platform between government, banks, and enterprises to coordinate and resolve the difficulties and problems existing in real estate financing. The bank believes that second-hand housing transactions in first-tier cities represented by Guangzhou began to rise in mid-2023, indicating that demand for structured real estate in first-tier cities is still strong. However, demand-side concerns about credit risk of housing enterprises may be released to the new housing market in order to influence their demand, and with the continuous implementation of real estate financing coordination mechanisms at the local level, industry credit may be repaired at an accelerated pace, compounded by the continued loosening of purchase restriction policies, and the Guangzhou property market is expected to continue to pick up.

On the target side, the core focus is: Poly Development, Tiandi Source, I Love My Family, and Pudong Jinqiao. In addition, it is recommended to focus on: ① Urban Village Renovation Yuexiu Real Estate (00123), Tianjian Group (000090.SZ), Chinese Enterprises (600675.SH); ② Stock Housing Circuit Seashell-W (02423); ③ High Quality Private Enterprise Xincheng Holdings (601155.SH), Longhu Group (00960); ④ Pattern Optimization, C&D Shekou (001979.SZ), Huafa International Group (01908). 600325.SH

Risk warning: Policy implementation falls short of expectations; the stock market may be at risk of adjustment; the recovery of the property market falls short of expectations.