the central bank's "gift package" has injected a "boost" into the property market, and developers are preparing for the "golden september and silver october"
2024-09-24
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coinciding with the "golden september and silver october" in the real estate market, the central bank issued a series of major new policies before the holidays, injecting a "booster" into the real estate market.
on september 24, pan gongsheng, governor of the people's bank of china, said that the interest rates of existing mortgages will be lowered and the minimum down payment ratio for mortgages will be unified, guiding commercial banks to lower the interest rates of existing mortgages to near the interest rates of newly issued mortgages, with an average drop of about 0.5 percentage points. at the same time, the minimum down payment ratio for second home loans at the national level will be lowered from 25% to 15%.
"the real estate industry released positive news today, and the company's sales offices in many locations have seen an increase in popularity." said a person from a private real estate company.
the current market situation does need to be boosted. according to cric, the new home market continued to bottom out in august, with the absolute transaction volume reaching the second lowest level of the year. after entering the traditional peak sales season, the scale of new home transactions remained sluggish, and the project launch sales rate continued to fluctuate at a low level.
after the central bank made an important statement today, the industry believes that the new policy will not only reduce the pressure of buying a house, but will also help stimulate housing consumption. whether you have already bought a house or are buying a new one, it can reduce financial pressure and reduce costs. in addition, the policy has the orientation of stimulating consumption and preventing risks, and can stabilize domestic demand by increasing real estate activity.
developers prepare for the "golden september and silver october"
"golden september and silver october" is traditionally the peak season for real estate sales, but this year's market conditions need to be boosted.
according to the monitoring data of the linping residential big data research institute, as of september 22, 2024, 39,296 newly built commercial residential units were sold in the 15 key cities, a decrease of 12.77% from the same period last month and a decrease of 25.86% from the same period last year.
from the perspective of weekly average transaction, cric data shows that the weekly transaction of new homes in september fell by 20% compared with the weekly average of the year. the sales rate of new projects also fluctuated at a low level of around 30%. most of the projects launched in beijing, suzhou and hangzhou are located in the suburbs, and the overall sales rate of new projects has dropped significantly. only 9% of a single project in beijing was sold, and only 14% in suzhou. hangzhou also fell from a relatively high level to 34%.
new homes are not selling well, making it increasingly difficult for developers to sell their inventory. according to cric's monitoring data, the scale of completed inventory of typical real estate developers continued to grow in the first half of 2024. as of the first half of this year, the 43 companies that published inventory details had completed inventory of 1.6 trillion yuan, a year-on-year increase of 1.8%, and the scale of completed inventory reached a historically high level.
"inventory is the main liquid asset of real estate companies. when the market is down, the ability to convert inventory into cash is directly related to the survival and development of the company. if the proportion of inventory assets is too high, it will not only cause capital occupation due to 'hoarding' and increase liquidity pressure, but also face impairment pressure, which is also a major challenge for the company." cric said.
in order to increase project sales and promote cash flow, developers have come up with various strategies as the "golden september and silver october" approaches. some have promoted sales by slashing prices, while others have withdrawn discounts and announced "price increases" to attract market attention.
recently, a real estate company in chengdu announced that it would increase the unit price of all residential projects on sale by 2%.
one of them is chengdu jiahexing real estate development co., ltd. the document shows that the company decided to increase the unit price of all projects on sale under the group, including "jiahe huafu", "jiahe binhu song", "jinsha yipin", "xinchen yipin" and "jiahe chenfu" by 2% from october 1 after comprehensively considering factors such as the chengdu real estate market dynamics and development and construction costs.
another company, chengdu western jinsha ludao real estate development co., ltd., also issued a statement saying that after comprehensively considering the current real estate market dynamics and the company's cost factors, the group company's board of directors has decided that from october 1, 2024, the unit price of all the company's projects on sale will be increased by 2%. the date of the signing of both documents is september 20.
chengdu jiahexing real estate development co., ltd. is an affiliated brand of chengdu west jinsha ludao real estate development co., ltd. according to the china index academy's top30 list of chengdu real estate companies in terms of land acquisition scale from january to july, jiahexing and jinsha ludao ranked 20th and 29th on the list respectively, and their combined scale of 183,000 square meters ranked 12th.
this local private real estate company is preparing to "raise prices", what is the reason behind this? several local agents responsible for the sales of its projects said that although the above company document is called "price increase", it is actually to withdraw the previous discount. "the increase of two points is actually to withdraw the previous discount. the price difference is not big. we can also find a way to get the internal preferential price."
another local real estate person said that chengdu's overall property market is relatively stable, and promoting "price increases" is an individual marketing method. most projects are still stepping up their promotional efforts. except for projects with better sales rates, projects with average surrounding locations are still being sold at a reduced price.
in first-tier cities like beijing, the "price war" in the new home market has not stopped. recently, many projects in beijing have reported price cuts, including both just-needed projects and high-end improvement projects with a price of more than 10 million yuan.
market information shows that silicon valley one, a property located in the north fifth ring road, recently launched a batch of special-price houses, with an average price of 36,000 yuan per square meter, while the average price publicly disclosed on its platform is 47,000 yuan per square meter. "the first batch of special-price houses has been sold out, but the floor location is average. the second batch is under application and detailed prices will be announced in a few days," said the agent.
another high-end improvement project, junlizhu, is located in fengtai district. the average price on the platform is over 100,000 yuan. recently, it has quietly launched special price houses. "the average price of this project was about 100,000 yuan when it was launched last year. now the average price of some low-floor special price houses can reach more than 70,000 yuan. the developer needs to collect the money in september, so the discount is large. however, it is not allowed to be publicized. the house source and price must be negotiated on site." the agent said.
the most relaxed loan restriction policy in history has emerged
property price cuts are happening one after another, showing that the new home market still needs a major boost.
on september 24, the central bank launched a policy package to support the market with two major policies. the first is to lower the interest rate of existing mortgage loans, guiding commercial banks to lower the interest rate of existing mortgage loans to near the interest rate of newly issued mortgage loans, with an average reduction of about 0.5 percentage points.
the interest rate of existing mortgage loans is related to the property holding costs of home buyers and can directly affect the household consumption structure. prior to this, my country has experienced two reductions in the interest rate of existing mortgage loans, the most recent of which was in 2023, when the resident sector saw early loan repayments and loan replacements. the policy focused on "guiding borrowers and lenders to adjust and optimize assets and liabilities in an orderly manner and regulate the order of the housing credit market."
the "china regional financial operations report (2024)" released by the people's bank of china in july this year pointed out that since the implementation of the policy in 2023, the interest rates of more than 23 trillion yuan of existing mortgage loans have been lowered, with an average decrease of 0.73 percentage points, reducing borrowers' interest expenses by about 170 billion yuan each year, which has played a significant role in reducing early repayments and stimulating consumption growth.
now that the interest rates of existing mortgage loans have been lowered again, what impact will this have on the market? "lowering the interest rates of existing mortgage loans and narrowing the gap with the interest rates of issued loans may alleviate the pressure of residents to repay their loans in advance to a certain extent, reduce the psychological gap of residents, and also achieve consumption transfer to a certain extent, so that the saved costs can be used for other consumption, which is of great benefit overall," said yi han think tank.
it is worth noting that the reduction of existing mortgage interest rates depends on the independent decision of commercial banks, and the ultimate reduction in the existing mortgage interest rates of residents will depend on the actual situation. "after all, reducing the existing mortgage interest rates is, on the surface, contrary to the interests of banks, and the central bank has also made a decision to reduce the reserve requirement ratio to reduce this impact," the above-mentioned institution said.
the policy of reducing the down payment ratio for second homes is more directly related to the market. the central bank said that it would reduce the minimum down payment ratio for second home loans from 25% to 15% nationwide, unifying the minimum down payment ratio for first and second home loans.
dongguan securities said that the minimum down payment for second homes has been reduced significantly to the same level as the first home. the policy strength exceeded expectations and is rare in history. it is believed that it will better release the demand for improvement in home purchases and support sales growth.
guan rongxue, senior analyst at linping residential big data research institute, said that the minimum down payment ratio for second mortgage loans has been reduced from 25% to 15%, which means that the down payment ratio for second mortgage loans will reach a historical low and the threshold for improvement home purchases will be greatly reduced. "this announcement is undoubtedly a shot in the arm for the market, which meets the current market demand and is not only helpful in alleviating the pressure of home purchases and stimulating housing consumption, but also an important part of the central bank's economic stabilization policy, which helps reduce the risk of credit defaults and promote financial stability."
in the face of this real benefit, some developers have already taken action. longfor told china business news that with the favorable real estate policies issued today, the company's sales offices in many locations have shown an increase in popularity. in conjunction with the upcoming national day holiday, it will offer limited-time discounts, fixed-price high-quality housing and other benefits, as well as autumn garden parties, national trend markets and other activities on site.
overall, the policy intensity is unprecedented, including lowering the interest rate on existing mortgages to around the interest rate on newly issued mortgages and lowering the minimum down payment ratio for second mortgages to 15%. the industry believes that it will accelerate the bottoming out and recovery of the fundamentals of the real estate industry.
china index academy said that the central bank has released a number of major positive factors, which will have a positive impact on the macro economy and the real estate market. reducing the reserve requirement ratio and interest rates will boost the economy by releasing liquidity and reducing funding costs. reducing the interest rates on existing mortgage loans will further stabilize buyers' expectations of home purchases and repair market wait-and-see sentiment; lowering the minimum down payment ratio for the second home will also significantly lower the threshold for residents to buy homes. the combined efforts of multiple measures are expected to stabilize housing prices and accelerate the bottoming out and stabilization of the real estate market.
(this article comes from china business network)
