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From China Securities

It has been a month since the new real estate policy was introduced in Beijing on June 26, and the policy effects have attracted much attention.

"Since the new policy, the transaction volume of second-hand houses in Beijing has increased significantly, and it is mainly 'trading price for volume'." A staff member of a real estate agency store in Dongcheng District, Beijing told the Securities Times and China Securities Journal reporter.

The market reaction is relatively positive

Guo Yi, chief analyst of Heshuo Institution, also said in an interview with Securities Times and China Securities Journal that Beijing's new policy of lowering down payment ratios and mortgage interest rates has significantly boosted Beijing's second-hand housing market transactions. From July to now, the second-hand housing transaction volume is about 12,000 units, and the transaction volume for the whole month of July is expected to reach more than 15,000 units. The transaction volume of the second-hand housing market has been growing steadily, and at the same time, the price is also in a state of consolidation at the bottom. The bargaining space between buyers and sellers is constantly narrowing, and some second-hand transaction prices have risen in some sectors.

According to statistics from the official website of Beijing Municipal Housing and Urban-Rural Development Commission, the Beijing Lianjia Research Institute found that since the introduction of the new policy in Beijing (June 27 to July 24), the number of second-hand residential properties signed online in Beijing has been 14,966, an increase of 11.8% compared with the comparable period before the policy was introduced (May 30 to June 26).

Leng Hui, an analyst at Beijing Lianjia Research Institute, told Securities Times and China Securities Journal reporters that since the introduction of Beijing's new policy on June 26, the market has responded positively, with transaction volume increasing compared with the previous period and the average transaction price remaining generally stable.

Leng Hui further stated that in the second quarter, second-hand housing transactions in Beijing experienced a process of "first outside and then inside". On April 30, Beijing optimized its purchase restriction policy, allowing families that met the purchase restriction to purchase an additional house outside the Fifth Ring Road. From April to the first half of July, second-hand housing transactions in the urban development new areas outside the Fifth Ring Road were relatively hotter, and the proportion of transactions in the outer areas also increased. Since July, with the steady operation of the replacement chain, the transaction heat in the outer areas has begun to transfer to the inner ring. Since July, the transaction of low-priced and high-priced houses has increased at the same time. The proportion of transactions of houses with a total price of less than 4 million yuan has increased by 1.7 percentage points compared with June, and the proportion of transactions of houses with a total price of more than 10 million yuan and high unit prices has increased, driving the transaction structure to move up.

The price trend is generally stable

In terms of price, data from Beijing Lianjia shows that the price trend of second-hand housing in Beijing has been generally stable since the second quarter, with market prices rising by around 0.5% month-on-month in June. In July (as of the 24th), the average transaction price of second-hand residential properties in Beijing Lianjia rose by 0.4% month-on-month.

As for the reasons for the price increase, Leng Hui said that it was mainly due to changes in transaction structure, while the prices of comparable housing were relatively stable. This was mainly due to the reversal of new customers and new housing sources. Although the supply and demand relationship still favored buyers, it was more balanced than in the first quarter, which was conducive to the relative stability of prices. This was also the case from the data. Since April, the average transaction price of second-hand housing has remained stable for four consecutive months, with an average monthly fluctuation of less than 1%.

Leng Hui believes that, on the whole, the "6.26" new policy in Beijing has a positive effect on the further recovery of the real estate market. The good policy rhythm and appropriate policy strength have enabled the city's second-hand housing market to reach a relatively ideal state of increasing volume and stable prices, which has lasted for some time.

Zhang Dawei, chief analyst of Centaline Property, also predicts that under the influence of policies, the number of online signings of second-hand houses in Beijing in July is expected to exceed 15,000, reaching the highest point in more than a year.

From the perspective of the new home market, statistics from the China Real Estate Research Institute show that from June 26 to July 25, the online signing volume of new residential properties in Beijing was 4,501 units, up 38.8% from 3,243 units from May 27 to June 25.

However, Guo Yi told the Securities Times and China Securities Journal that compared with last year, the monthly transaction volume in Beijing's new home market is still hovering at the bottom. From the perspective of price performance, there is no phenomenon of discount withdrawal and price increase. "The recovery of transaction volume in Beijing's second-hand housing market has room for improvement in the conversion effect to new home transactions."

As for the reason for this phenomenon, Guo Yi believes that the core is that the overall real estate market in Beijing is still experiencing a sluggish cycle, including the cycle from land investment, development, construction to completion, and the cycle of replacement from new to second-hand houses. To make the entire cycle smooth, more precise regulatory policies are needed. For example, Beijing’s recent “old for new” policy and the adjustment of the bidding rules for the Mentougou land plot that has just been listed have just begun. In the future, such regulation may effectively boost the new home market, and will also help to form a virtuous cycle from the land, new home, and second-hand housing markets as a whole, driving the market to develop more steadily and upward.

Optimization of land auction rules

It is worth noting that on July 26, Beijing made three optimizations in the land auction rules for the Mentougou New Town land parcel it supplied.

Zhang Kai, head of land market research at China Index Academy, pointed out that the first is the optimization of bidder qualifications: for member companies under the same group, there is a certain relaxation in the bidder qualification requirements during the bidding stage. However, if the land parcel is auctioned to the lottery stage, among the member companies under the same group, only one member company (or multiple members in a consortium) with the first deposit to be received is allowed to participate in the lottery. In other words, the rules of the lottery stage are consistent with the previous land auction rules, and in the bidding stage, it is no longer the case that only one member company can sign up to participate in the auction, but all member companies under the same group have the opportunity to participate. The optimization of this rule, on the one hand, ensures the fairness of the lottery stage, and on the other hand, creates more opportunities for member companies under the same group to participate in Beijing's land auction.

"Second, the bidding ladder is optimized: the bidding ladder is adjusted from 5‰ of the original starting price to 1‰, which greatly reduces the threshold for price increase during the bidding stage, which is conducive to bidders to make more accurate bids based on their own bidding ability." Zhang Kai said, third, the ultra-low energy consumption building standard is optimized: from the previous requirement of meeting Beijing's building energy-saving design standards, it is optimized to be implemented according to national standards. This adjustment can reduce the development costs of real estate companies to a certain extent, freeing up more cost resources for real estate companies to use in the creation of "good houses".

Editor: Peng Bo

Proofreader: Peng Qihua