Source: Broker China
If real estate is stable, then the economy is stable!
Today, the real estate index suddenly surpassed 2.5%. The rise in assets such as banks and RMB also has a strong correlation with this. So why is there a sudden explosion in real estate? Analysts believe it is related to some market rumors.
On March 22, Premier Li Qiang of the State Council presided over an executive meeting of the State Council, pointing out that it is necessary to further optimize real estate policies, continue to carry out the work of securing buildings, people's livelihood, and stability, further promote the implementation and effectiveness of urban real estate financing coordination mechanisms, and systematically plan relevant support policies to effectively stimulate potential demand.
This morning, there was a market rumor that real estate documents will soon be issued, and they will focus comprehensively on two directions: one is to completely abolish restrictive policies in core cities, and the other is to promote the implementation of financing coordination mechanisms. According to the brokerage firm's Chinese reporter from the industry, the purchase restriction policy for non-core areas of first-tier cities may be lifted, but it may still be in the research stage. Meanwhile, a financing coordination mechanism is being implemented.
Real estate stocks rallied
In early trading today, A-share real estate stocks suddenly picked up. Real estate stocks such as Beijing Investment Development, Binjiang Development, and Huafa Co., Ltd. made collective efforts, and the real estate index also rose sharply by nearly 2.5%. Hong Kong stocks and domestic housing stocks fluctuated and strengthened in the afternoon.$BJ PROPERTIES (00925.HK)$Up nearly 19%,$SKYFAME REALTY (00059.HK)$An increase of more than 9%,$LONGFOR GROUP (00960.HK)$,$POWERLONG (01238.HK)$,$GREENTOWN CHINA (03900.HK)$Follow the trend.
Judging from last week's data, sales of new homes rose month-on-month and declined year-on-year, and key cities are gradually recovering. Last week (3.16-3.22), commercial housing transactions in 35 cities totaled 3.27 million square meters, up 35% from week to week and -43% from week to week. Among them: first-tier cities grew 14% month-on-week, down 53% week-on-week; second-tier cities grew 44% month-on-week, down 41% week-on-week; third-tier and fourth-tier cities grew 22% month-on-week and fell 18% year-on-week.
Second-hand housing transactions increased month-on-month and declined year-on-year, and second-hand housing continues to be repaired. Second-hand housing transactions in 15 cities totaled 1.99 million square meters last week (3.16-3.22), up 13% from week to week, and down 27% from week to week. Among them: first-tier cities grew 5% month-on-week and decreased 23% week-on-week; second-tier cities grew 14% month-on-week and fell 30% week-on-week; third- and fourth-tier cities grew 29% month-on-week and 42% week-on-week.
However, in the week of March 22, Guoxin High Frequency Macro Diffusion Index A remained negative, and Index B continued to decline markedly. Looking at the breakdown, the consumption and investment sector has declined somewhat this week, and the real estate sector has not changed much. Judging from seasonal comparisons, Index B continued to decline this week after standardization. The performance was lower than the historical average, indicating that the upward momentum of domestic economic growth is still weak.
Judging from January-February data, the country invested 1184.2 billion yuan in real estate development, a year-on-year decrease of 9.0%. Over the same period, the country's fixed asset investment growth rate reached 4.2%. This means that real estate has indeed dragged down the economy to a certain extent. Therefore, the strengthening of this sector also means that economic support will increase dramatically. If the real estate market continues to improve, it will also drive the upward trend in RMB assets and attract foreign investment into the Chinese market.
The benefits came
So, what else would be beneficial and stimulating?
On March 22, Premier Li Qiang of the State Council presided over an executive meeting of the State Council, pointing out that it is necessary to further optimize real estate policies, continue to carry out the work of securing buildings, people's livelihood, and stability, further promote the implementation and effectiveness of urban real estate financing coordination mechanisms, and systematically plan relevant support policies to effectively stimulate potential demand.
Liu Qinghai, a real estate researcher at Fangzheng Securities, said that the conference clarified the status of real estate as a “pillar industry” and promoted “stable and healthy development” before mentioning it. The National Standing Committee pointed out that the real estate industry has a long chain and covers a wide range of areas. It concerns the people's immediate interests, the overall economic and social development situation, and once again clarifies the “pillar” status of the real estate industry. At the same time, it was emphasized that it is necessary to promote the steady and healthy development of the real estate market. The National Standing Committee emphasized the importance of the real estate industry to the country's economy and people's livelihood, proving the need to ensure that the industry does not experience systemic risks and to promote the steady and healthy development of the industry.
Further optimize the real estate policy, and look forward to continued policy maintenance. The National Standing Committee pointed out that it is necessary to further optimize real estate policies, continue to carry out the work of securing buildings, people's livelihood, and stability, further promote the implementation and effectiveness of urban real estate financing coordination mechanisms, and systematically plan relevant support policies to effectively stimulate potential demand and increase the supply of high-quality housing. Since the beginning of 2024, against the backdrop of local authorities being given full autonomy in regulation, first-tier cities and core second-tier cities such as Hangzhou have successively relaxed their purchase restriction policies, setting the tone for policy relaxation in 2024.
This time, the National Standing Committee once again mentioned the need to optimize real estate policies, while clarifying that policies will be “planned systematically,” which may mean that in the second quarter, all regions will once again usher in more effective supply and demand optimization policies. At the same time, the Federal Reserve recently released expectations of interest rate cuts. China's mortgage interest rates are expected to further open up downward space, and the stabilization of the industry will have a more perfect policy environment.
Improve the “market+guarantee” system and focus on building a new development model. The National Standing Committee pointed out that it is necessary to adapt to the development trend of new urbanization and changes in the relationship between supply and demand in the real estate market, speed up the improvement of the “market+guarantee” housing supply system, reform basic systems related to commercial housing, and focus on constructing a new model of real estate development.
The statement continues the requirements of the government work report. The words “focus” further reflect the central government's positive attitude towards constructing a new model of real estate development, and plans to promote guaranteed housing in various regions may be accelerated in 2024. Along with the continuous implementation of rental housing loan support programs, I am optimistic that various regions will successively acquire projects to be used as guaranteed housing, helping to build a new model while digesting property market inventory and improving the relationship between supply and demand.
This morning, there was a rumor circulating in the market: real estate documents will soon be issued, and they will focus comprehensively on two directions: one is to completely abolish restrictive policies in core cities, and the other is to promote the implementation of financing coordination mechanisms. However, according to the brokerage firm's Chinese reporter, there is indeed a possibility that the purchase restriction policy for non-core areas in first-tier cities will be lifted, but it may still be in the research stage. The key to this is how to define a “core area.” Moreover, according to bank sources, a financing coordination mechanism is currently being implemented. However, in the future, it will be necessary to observe whether the scale of financing can be effectively expanded.
Prior to the two meetings, it was also reported in the market that relevant parties would set up a fund to store the existing housing stock to a certain extent. In fact, a year ago, Chongqing made a similar move. At that time, Chongqing initiated the establishment of the Chongqing Housing Rental Fund. The fund was registered and established on March 17, 2023, with an initial scale of 3 billion yuan, of which the Chongqing Development Company pledged 40% of the capital and the Jianxin Housing Rental Fund (limited partnership) pledged 60% of the capital.
According to the Chongqing Development Notice, the fund will acquire existing assets such as residences and commercial properties in accordance with the principles of marketization, legalization, and commercial sustainability, transform them into affordable rental housing or market-based long-term rental housing, exit mainly by issuing public REITs, and explore the formation of a new sustainable rental housing supply model with market-based investment, specialized operation, and securitization exit.
editor/tolk