real estate stocks generally rose to meet expectations of a reduction in mortgage interest rates, and institutions said that real estate asset prices have reached the bottom
2024-09-19
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the real estate sector rose collectively again. on september 19, most of the hong kong-listed chinese real estate stocks performed strongly, with gemdale properties, r&f properties, and c&d international rising by more than 10%, and agile, china resources land, sunac china, and yuexiu real estate rising by more than 7%; in terms of a-shares, tiandiyuan and electronic city rose strongly to the daily limit, and gemdale group and zhongzhou holdings also rose by more than 6%.
behind the collective strength of real estate stocks is the fed's interest rate cut. on september 19, beijing time, the us federal open market committee (fomc) announced that it would lower the target range of the federal funds rate by 50 basis points to 4.75% to 5.00%.
this is the first rate cut by the fed since march 2020, and the magnitude is also higher than market expectations. the industry believes that although it will not be the norm to continue to cut interest rates by 50 basis points, it is expected that the fed will continue to promote rate cuts in the future, and the cumulative rate cuts this year are expected to reach 100-125bp.
huatai securities' macro research report said that the federal reserve's launch of a continuous interest rate cut cycle is expected to further alleviate the pressure of foreign exchange outflows on the rmb exchange rate caused by interest rate differentials and open up domestic monetary policy space.
lian ping, chairman of the china chief economist forum, predicts that this round of the fed's interest rate cut cycle may last for 14-16 months, with 6-8 interest rate cuts. against this background, my country's monetary policy tone has gained a rare time window for adjustment, and has room to promote a new round of reserve requirement ratio cuts and interest rate cuts.
in the interpretation of august financial statistics, the head of the relevant department of the central bank also stated that they will "increase regulatory efforts" and "start to introduce some incremental policy measures to further reduce corporate financing and household credit costs and maintain a reasonable level of liquidity." this time the federal reserve's interest rate cut has released greater room for my country's subsequent monetary policy adjustments.
chen wenjing, director of market research at china index academy, predicts that in the current context, my country's subsequent adjustments to reserve requirement ratio and interest rate cuts may be implemented faster, further reducing the financing costs of enterprises and residents. for the real estate market, the lpr for more than 5 years is expected to be further reduced, and the cost of housing purchases for residents will also fall accordingly.
li yujia, chief researcher at the housing policy research center of the guangdong provincial urban and rural planning institute, also believes that the fed's interest rate cut has effectively alleviated the concerns and constraints of the domestic implementation of monetary easing policies regarding the depreciation of the rmb and the further decline in rmb asset prices. this indicates that the subsequent channels for reducing the reserve requirement ratio and interest rates will be wider, such as there will be more room for further regulation of mortgage rates, which will help ease the tight capital chain of developers, reduce mortgage costs for home buyers, and promote housing demand.
in fact, since the implementation of the "517 new policy" this year, the mortgage interest rates for first and second homes have continued to fall. according to statistics from the centaline property research institute, the average interest rate for first homes in the country fell to 3.25% in august, and the average interest rate for second homes was about 3.6%.
at present, the interest rates for first-time home loans in most cities are between 2.9% and 3.4%. among them, the highest mortgage rates for first-tier cities with a term of more than five years are in beijing and shanghai, at about 3.4%, while guangzhou is as low as 2.9%; second-tier cities are generally 3.1%, and nanjing is as low as 2.95%. mortgage rates have reached their lowest level in history.
one of the reasons for the surge in real estate stocks today is the market's expectation of a further reduction in mortgage rates. on september 20, the new lpr quotation will be released, and the market expects that the lpr may drop by about 20bp. at the same time, expectations for a reduction in existing mortgage rates are also strengthening.
he fan, senior researcher at the macro market department of industrial bank research company, and others wrote an article pointing out that as the federal reserve enters a rate cut cycle, my country still has room for rate cuts this year. the policies that may be introduced in the future include: first, continue to lower the interest rates of existing mortgage loans, which may be done by directly reducing the markup of existing loans; at the same time, there is still room for further reduction in the lpr, and considering that the interest rates of personal housing loans and provident fund loans in some areas are already relatively close, the interest rates of provident fund loans may continue to decline in the future.
lu ting, chief economist of nomura china, said that the upcoming series of interest rate cuts in the united states provides my country with an opportunity to cut interest rates, but it is expected that the scale of the interest rate cut will not be large, and the focus should be on reducing the interest rates of existing mortgage loans.
according to lu ting's estimation, the scale of existing housing loans during the period 2015-2022 is about 30 trillion yuan, and the average interest rate of existing housing loans is estimated to be about 5.2%; after a 73 basis point reduction in 2023, it is currently estimated to be 4.5%, which is still about 100 basis points higher than the current level of new housing loan interest rates.
in addition to more room for adjustment in mortgage interest rates, domestic assets are also expected to attract more funds. li yujia believes that with the opening of the us dollar interest rate cut channel, expectations for continued capital inflows to the united states will ease, and expectations for asset prices denominated in rmb will also ease.
according to the shanghai e-house real estate research institute, after three years of deep real estate adjustments, the prices of existing real estate assets have fallen by roughly 30%, and prices have basically fallen to the bottom.
li yujia said that current real estate prices are at a historic low. after the us dollar interest rate cut channel is opened, it is expected that foreign capital will increase its acquisition of domestic bulk properties. on the one hand, this is based on the advantage of entering the market at a low price, and on the other hand, it is based on the advantage of the us dollar still being at a high value. in addition, there is also international capital's prediction of operating existing properties and increasing premium income.
yan yuejin, deputy director of shanghai e-house real estate research institute, also believes that in the past two years, domestic investment in office buildings, shopping centers, long-term rental apartments, and logistics parks has fluctuated. it is expected that with the entry of a new round of foreign capital, large-scale investment in the real estate sector will heat up. at the same time, with the development of a new round of macroeconomics and industrial economy, the demand for commercial office properties will also increase.
however, li yujia also said that in recent years, the autonomy and independence of domestic monetary policy have been strengthened, and housing and stock market asset prices are mainly affected by domestic factors, which are more closely related to rectifying the financial and real estate order, focusing on promoting economic transformation, and "no strong stimulus, no loosening of monetary policy." therefore, the fed's interest rate cut will not change the domestic fundamentals that determine the trend of asset prices.
(this article comes from china business network)
