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Recently, the official platform of Tianjin Housing Association announced that it would launch a housing "old for new" campaign. Thus, Tianjin officially kicked off the one-year "old for new" campaign, which will run from July 15, 2024 to July 14, 2025. With the official announcement of Tianjin's policy, market attention has increased, and some units have responded positively.

What is housing “trade-in”?

The housing "old for new" policy refers to the government-designated agencies or real estate companies encouraging and helping existing homes to be sold and replaced with new ones through acquisition, replacement, subsidies, etc.

The introduction of the old-for-new policy will help old houses sell quickly.

Background of the launch of the housing "old for new" policy

In April this year, the State Council issued the "Action Plan for Promoting Large-Scale Equipment Renewal and Consumer Goods Trade-in", and "trading old for new" became a hot word. Subsequently, Changsha, Guangzhou and other places launched the model of housing trade-in. So far, more than 85 cities across the country have successively launched housing "trading old for new" policies, hoping to activate the real estate market. At present, the "trading old for new" measures in some cities have produced certain results.

Which group of people are targeted by Tianjin’s “old for new” housing policy?

It is mainly aimed at residents who plan to sell their second-hand homes and buy new ones, that is, the "sell one and buy one" replacement population, and the next house must be a new one.

The first batch of 15 real estate companies and 4 real estate agencies participated in the "old for new". A total of 34 new projects participated, distributed in 12 administrative districts of Tianjin. The "Tianjin Real Estate Association" also advocated that all real estate companies increase their preferential policies during the "old for new" period.

How to implement the “old for new” housing policy in Tianjin?

After the launch of Tianjin's housing replacement policy, brokerage agencies will work online and offline to optimize services, obtain priority promotion rights, and shorten the house selling transaction cycle. House changers can buy their favorite new houses at a more favorable price.

specific process:

1. Homebuyers must first reach an agreement with the real estate developer on purchasing a new home and pay a deposit for the new home. The real estate agency will then prioritize the sale of their old home. After the old home is successfully sold, the new home transaction will be completed as agreed.

2. Real estate developers participating in the "old for new" program promise that if the old house is not successfully sold within a certain period of time, the homebuyer can unconditionally terminate the contract and return the deposit. At the same time, the real estate agency promises to "promote the old house of the homebuyer throughout the city and give priority to selling it."

How is the market response to Tianjin’s “old for new” housing policy?

After the Tianjin Housing Association announced the initiative, we learned from relevant intermediary agencies that many second-hand housing replacement customers did go to the stores to learn about the relevant execution information and the rate discounts signed with the intermediary, which had a certain market response. However, more customer feedback focused on the time of the second-hand housing transaction cycle and the space for second-hand housing pricing, especially in the current market where second-hand housing prices are more competitive and the market second-hand transaction prices are more transparent. Overall, the price of new houses is higher than that of second-hand houses in the area. How to ensure that second-hand houses can be traded within a certain price range is what the old-for-new customers are most concerned about.

Secondly, some customers care about what kind of additional discounts can be offered for the old-for-new model of new houses, and whether there is room for greater discounts. Some residents have improvement needs and are more concerned about whether there will be more popular projects in the city center that they like and whether they can participate in the old-for-new projects in the future.

In addition, one week after the policy was released, the market reaction continued to heat up. Real estate agencies quickly adjusted their marketing strategies, integrated resources through online and offline channels, increased publicity efforts, and attracted potential customers to participate. Many banks also responded positively, providing "green channels" to further reduce the burden on home buyers and promote transaction activity.

In this housing "old for new" activity, new housing projects in six districts of Tianjin also participated, marking the first stop of the old for new discount. It is understood that the project also specially approved 5 "old for new" housing sources, with a maximum subsidy of 500,000 yuan.

The national housing "old for new" model

For some time, the number of cities that have launched the "old for new" housing program has continued to expand. By the end of June 2024, more than 85 cities across the country had launched the "old for new" housing program.

Looking at cities across the country that have introduced housing replacement programs, there are generally four models:

❶ Encourage intermediaries to vigorously sell houses, and at the same time work with real estate developers to offer specific discounts. Shanghai and Shenzhen both use this model.

❷The national team directly acquires the cities, such as Zhengzhou, Nanjing, etc.

❸ Convert second-hand houses directly into guaranteed rental houses, and the government will pay the rent.

❹ Subsidy for “selling old and buying new”, up to 20%of。

What kind of model does Tianjin’s “old for new” policy belong to?

Obviously, Tianjin's "trade-in" is a Shanghai model. You can buy a new house first, encourage intermediaries to give priority to selling second-hand houses, and real estate developers to give some discounts. If the second-hand house is sold, everyone is happy and the "trade-in" is completed; if the second-hand house is not sold as scheduled, the subscribed new house can be returned.

The effectiveness of the "agents help sell" model depends largely on the market operation. In the current "buyer's market", the uncertainty of the second-hand housing sales link in this model is relatively large, and the overall effect is relatively limited. In contrast, "state-owned enterprise acquisition" has achieved certain results in some cities.

In general, the housing "old for new" policy has certain market potential, but issues such as market demand, old house valuation, and acquisition funds still need to be highly valued. Only when all key factors form a virtuous interaction can the "old for new" policy achieve maximum effectiveness.

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