The Zhitong Finance App learned that Huatai Securities released a research report saying that real estate “trade-in” is expected to push the real estate supply and demand relationship towards a faster balance. After the Politburo meeting in April set the tone, the urban scope and policy strength of real estate “trade-in” is expected to increase. By directly consuming inventory, it will have a greater impact on balancing real estate supply and demand. In the future, we need to pay attention to the scale of collection and storage and pricing methods, as well as the support for long-term low-cost funding from the central government. According to estimates, the inventory for sale that consumes 10% to 30% in high-inventory cities requires investment of 0.56-1.68 trillion yuan in acquisition capital.

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The main views of Huatai Securities are as follows:

How many types of real estate “trade-in” models are there?

The trigger for this round of real estate inventory removal or housing “trade-in”. Currently, more than 30 cities have voluntarily introduced relevant policies, which can generally be divided into three types of models: government storage, housing exchange subsidies, and optimized transactions. Government collection and storage refers to the acquisition of second-hand housing owned by residents by housing enterprises or urban investment platforms while enabling residents to buy newly built commercial housing; housing exchange subsidies mean that local governments give certain subsidies to residents who complete two “selling old” and “buying new” transactions within a specified period; optimized transactions mean that local governments coordinate housing enterprises and intermediaries to provide transaction facilities such as cancellation protection periods and housing promotion for housing “trade-in”. Judging from the policy development context, the strength of housing “trade-in” policies and urban energy levels have improved since April '24.

How is government collection and storage being implemented, and what are the results of the pilot?

Both Zhengzhou and Nanjing introduced the government's “trade-in” model in April. Due to the city's high energy level and large storage scale, it has attracted a lot of attention from the market. We have summarized the concerns of the two city government collection and storage plans. Overall, the Zhengzhou plan has a greater influence on market supply and demand. The entry standards for buying new homes are relatively relaxed, but they have set stricter housing acquisition standards. The government collection and storage model of Zhengzhou and Nanjing received a positive response from local residents: on the Zhengzhou side, 368 applications were registered as of the end of April, of which 194 units were eligible for purchase, accounting for 38.8% of the pilot quota. On the Nanjing side, from the launch on April 27 to May 5, the WeChat Mini Program “Ninghuanxin” platform registered 3,610 groups of registered intentions, and 2,947 groups met the conditions in the initial review.

The follow-up focus on real estate “trade-in”, in particular, how much money will it cost for the government to collect and save?

Real estate “trade-in” is still in the pilot phase due to urban policies, and models vary greatly from place to place. Follow-up attention is still needed: First, the scale of collection and storage and pricing methods affect the final results. From the perspective of the extent of influence on the relationship between supply and demand in the real estate market, government collection and storage > housing exchange subsidies > convenient transactions, but the corresponding financial burden on local finance also ranges from large to small; if the government collection and storage model is promoted, there are still many details to be discussed, such as acquisition scale, acquisition standards, and new housing exchange standards. How to fairly price second-hand housing is one of the major difficulties of this model.

Second, improving the model requires the help of long-term low-cost funding. Local financial resources are limited, and attention needs to be paid to whether there are policy banks or other central funds to provide further support for local collection and storage. To consume 10%-30% of the inventory for sale in high-inventory cities with a removal cycle of more than 18 months (corresponding to a 10-30% reduction in the removal cycle), Huatai Securities estimates that it will need to invest 0.56-1.68 trillion yuan in second-hand housing acquisition capital.

Risk warning: industry policies, declining industry fundamentals, operating risks of some housing enterprises.