The Zhitong Finance App learned that Huachuang Securities released a research report saying that China has gradually entered the era of stock housing. Since 2023, second-hand housing transactions have increased dramatically, and demand for intermediary services has also increased rapidly. As long as the intermediary fee is less than the sum of information search costs, transaction costs, and learning costs, intermediaries will exist. The high proportion of intermediary transactions in the mature stock housing markets in China and the US also confirms the value of intermediaries. Leading intermediary companies with the ability to continuously update the real listing system have formed a deep moat, which is expected to benefit from increased demand and is expected to achieve beta and alpha resonance. It is recommended to pay attention to leading agencies such as Seashell-W (02423), I Love My Family (000560.SZ), etc.

▍ The main views of Huacheng Securities are as follows:

Second-hand housing transactions have high search costs, transaction costs, and learning costs. C2C transactions are difficult, and the central role of intermediaries is to reduce the three major costs.

Second-hand housing transactions have three major costs: 1) High information search costs. Second-hand housing has non-standard attributes and is extremely opaque in quality, and false listings can also take additional time; 2) High transaction costs, complicated transaction processes, many contacts, and high risk of capital and property transfer. 3) High learning costs, difficult to understand regional housing, industrial development, population, market conditions, etc. in a short period of time. The above costs make C2C transactions extremely difficult, and the significance of intermediaries is to reduce the above three costs, such as reducing search costs through real estate platforms and brokerage services, reducing transaction costs through fund escrow processes, and reducing learning costs by providing advice on purchasing and selling.

Theoretically, as long as the intermediary fee is lower than the above three costs, the second-hand housing transaction intermediary business has value, and the organizational model of the second-hand housing brokerage business reduces the above three costs in the most efficient way and improves the efficiency of matching transactions. The mature stock housing market also mainly deals through intermediaries. For example, second-hand housing sold through brokers in the US accounts for 90% of total second-hand housing transactions. In 2021, the penetration rate of second-hand housing agents in China exceeded 88%, confirming the value of intermediaries in second-hand housing transactions.

Second-hand housing transactions in the US are coordinated through MLS systems, Internet information platforms, professional agencies, and unilateral brokers.

1) On the basis of MLS guarantees real listings, Internet information platforms introduce MLS listings, provide online house viewing, and agent visits to reduce information search costs.

2) In terms of reducing transaction costs, the United States has agencies responsible for property rights investigation, credit evaluation, housing inspection, and fund supervision to provide professional and fair services throughout the process to ensure the safety of property rights and funds.

3) In terms of reducing learning costs, on the one hand, agents help negotiate prices, and on the other hand, senior agents provide professional purchasing and sales consulting services.

Second-hand housing transactions in China mainly reduce the three major costs through intermediary companies, internet platforms, and bilateral brokers.

1) In terms of reducing information search costs, China mainly relies on housing systems provided by internet platforms and traditional agents to reduce search costs for buyers. China has formed multiple models such as Internet information platforms, Internet trading platforms developed by traditional intermediaries, and direct sales platforms for landlords. Among them, Internet trading platforms have the highest degree of authenticity, timeliness, and richness of listings, mainly because intermediary companies solve real property authenticity issues through their own transformation.

2) The reduction in transaction costs mainly depends on safety guarantees such as capital supervision and housing leak insurance provided by some intermediaries, as well as process services such as property rights inspection, basic housing inspection, and transfer processing provided by traditional brokers.

3) In terms of reducing learning costs, traditional agents mainly provide negotiation services and more basic consulting services, while procurement and sales consulting services are mainly provided by emerging self-media real estate agents.

The self-media house viewing business mainly provides professional advice at the stage of purchasing a home. The essence is to reduce learning costs. Most of them do not directly participate in later transaction processes.

1) China is gradually entering the era of housing stock. Housing listings are high, housing prices are divided in different regions, and the importance of housing valuation is increasing. Before buying and selling houses, it is even more necessary to understand professional knowledge about policies, markets, housing valuation, industrial development, customer base structure, etc., and the demand for buying and selling consulting services is increasing dramatically.

2) Self-media real estate agents export market conditions, regional development, and sector characteristics expertise through live broadcasts and tweets to attract customers, enter the early stage of home purchase decisions, and provide consulting services.

3) Its essence is to reduce the learning costs of second-hand housing transactions. Most of them do not directly participate in later housing inspection, price negotiations, and process service processes.

Risk warning:

The tightening of real estate brokerage policies exceeded expectations, and the market decline exceeded expectations.