On June 20, Standard & Poor's, the world's three major rating agencies, made three judgments on China's property market in 2024.
The first is to continue to find the bottom. In the second half of the year, the property market will continue to find the bottom under the guidance of a new round of policies.
The second is a 15% decline. China's commercial housing sales are expected to fall by 15% in 2024.
The third is more than 9 trillion. The annual sales in 2024 are expected to be 9.5 trillion ~ 10 trillion!
According to S&P's forecast, compared with the peak of 18 trillion yuan in national commercial housing sales in 2021, it will drop by nearly half.
There will definitely be many people who have questions, why the "bailout" policy in the first half of the year was so intensive and so strong, and why market sales will decline?
In this issue, we will focus on the property market in the first half of the year and the market forecast for the second half of the year in the form of data plus analysis.
NO. 1|壹
The national property market in the first half of 2024
First, the land market
In the first half of the year, the transaction floor area of operating land in 300 cities across the country was 296 million square meters, down 16% from the same period in 2023, once again refreshing the same period in history. In terms of price, due to the decrease in the proportion of transaction scale in first- and second-tier cities, the average floor price of land transactions in the first half of the year was 2,556 yuan/square meter, a decrease of 20.9% year-on-year. On a monthly basis, except for January, the year-on-year transaction scale in the rest of the months was declining.
In terms of energy levels, the land transfer fees in second-, third- and fourth-tier cities have decreased by more than 40%. In the first half of 2024, the area of residential land launched in first-tier cities will drop by more than 50% year-on-year, of which Shanghai, Guangzhou, and Shenzhen will all decline by about 70%, and the land transfer fees in second-, third- and fourth-tier cities will all drop by more than 40%. Some cities have sold high-quality land parcels at higher premiums, while sentiment in most cities or suburbs remains low. Only the first-tier cities saw a year-on-year increase in transaction floor prices, while the rest of the cities fell to varying degrees.
In terms of land auction rules, more flexible and market-oriented auction rules will be adopted from 2024 onwards.
First, Shanghai relaxed the "70/90" policy in March, Shenzhen followed up to cancel the "70/90" policy and reduce the shared area of residential buildings, and Fuzhou optimized the balcony area rules in February.
Second, on April 30, the highest premium rate of Yongfeng South plot in Haidian, Beijing was raised to 20%, and the previous premium rate was up to 15%, and on June 7, Shanghai issued four commercial housing land transfer announcements, canceling the upper limit of 10% of the premium rate of commercial housing land. At the same time, Hangzhou has also made corresponding optimizations in terms of sales price limits and Qingdao in terms of payment deadlines for the balance of land transfer fees.
Let's take a look at the 2024 commercial residential land supply plan in key cities. According to the data of 19 cities monitored, the main reason is that, on the one hand, at the end of April this year, the Ministry of Natural Resources issued the "Notice on Doing a Good Job in the Supply of Residential Land in 2024", which mentioned that the supply of new commercial residential land should be reasonably controlled, and cities with large inventories should suspend the transfer of new residential land. On the other hand, it is also the main reason, the city's land auction is not hot, and the enthusiasm of local land pushing is not high.
In terms of the characteristics of land acquisition by real estate enterprises, central state-owned enterprises are still the main force in land acquisition, and the proportion of local state-owned assets in some cities is relatively high. Among them, the proportion of land acquired by central state-owned enterprises in Beijing, Shenzhen, Guangzhou, Shanghai, Xiamen and other places is about 80%, and the proportion of central state-owned enterprises in Hefei and Tianjin is also more than half, all of which have increased compared with the whole year of 2023. Fuzhou and Zhengzhou account for a relatively high proportion of local state-owned assets, and the proportion of land acquisition is about 70%, and both are higher than the proportion of the whole year in 2023. The amount of land acquired by local private enterprises in Hangzhou exceeded 7%.
Second, the new housing market
According to the data released by the National Bureau of Statistics,
In terms of inventory,
Source: National Bureau of Statistics
According to S&P forecasts,
Source: National Bureau of Statistics
For home buyers, when housing prices rise, everyone rushes to buy a house, worrying that the cost of buying a house will be higher if they buy late. On the contrary, when housing prices are in a stage of stagnation or decline, people generally choose to wait and see, worried that prices will fall later.
Source: National Bureau of Statistics
Third, the second-hand housing market
From January to May 2024, the sales of off-plan commercial housing were 250 million square meters, a year-on-year decrease of 31.0%; The sales of existing houses were 110 million square meters, a year-on-year increase of 23.0%, and the performance was significantly better than that of off-plan houses. In terms of proportion, the sales area of existing homes from January to May 2024 accounted for 30.6% of the total sales area, an increase of 8.1 percentage points compared with the whole year of 2023. In terms of sales prices, second-hand houses are also showing a downward trend. Among them, the decline in first-tier cities is significantly higher than that in second- and third-tier cities.
Source: National Bureau of Statistics
NO. 2|贰
Real estate market forecast for the second half of 2024
1. After the introduction of the 517 policy, the market has recovered significantly
After the introduction of the "5.17" new policy, the market decline slowed down, but the trend of trading changes diverged. First, the second-hand housing market, Shanghai, Beijing, Guangzhou, Hangzhou and other first- and second-tier cities have been boosted, but the transaction area of the new housing market is still generally declining, and the second-hand housing market has not yet been transmitted to the new housing market. However, in second-tier cities and below, the transaction area of new homes has increased, while the second-hand housing market has generally declined to varying degrees. But on the whole, the 517 New Deal has indeed boosted market confidence and driven the market to recover.
Second, the high-level "bailout" is firmly determined, and the 517 policy is just the beginning
。 First-tier cities have optimized policies in terms of purchase restrictions, loan restrictions, and provident fund loans. Second-tier and third- and fourth-tier cities continue to optimize demand-side policies in terms of canceling purchase restrictions, improving the criteria for identifying second homes, optimizing provident fund loan policies, optimizing sales restrictions, and issuing housing purchase subsidies.
Judging from the current high-level actions, the determination to "save the market" is very firm, so the policy may be increased according to the real estate market situation in the future. This will also improve homebuyer expectations to some extent.
The current situation is that in the context of the intensive introduction of favorable policies, the second-hand housing market is far better than the new housing market. On the one hand, the main reason behind this is the price reason, and the main reason is that the thunderstorm of a large number of real estate companies has caused the demand for new houses to spill over to second-hand houses. Therefore, ensuring the delivery of real estate has always been a very important part of real estate regulation.
In fact, one of the important reasons why the progress of the previous work of guaranteeing the delivery of the building was slow was that the financial problem was not solved. Now, the source of funds for the delivery of the building is relatively clear:
If the funds are in place, it can alleviate the problem of financial difficulties of some enterprises, so that the work of ensuring the delivery of the building can be implemented smoothly, and I believe that the market will be repaired soon.
The main reason for the current decline in housing prices is the dramatic change in the supply and demand of real estate. From the previous shortage of supply to the current oversupply. Therefore, the high-level clearly wants to speed up the digestion of the stock of housing.
Judging from the current policies issued by the land side in various places, it is necessary to increase land use support for improved or high-quality residential buildings, further reduce the cost of land purchase or land use, and make greater concessions in land transfer fees. To provide high-quality conditions for real estate enterprises to build "good houses", these are all supply-side reforms. In addition, for cities with high inventories, it is required to stop supplying land, but the specific rules have not yet been released. Supply-side reform is one of the important means of real estate regulation and control, and it will continue to be implemented in the future.
Lowering the down payment is to allow customers who do not have sufficient funds but have needs to get on the bus, so that those who did not have purchasing power before can become effective needs. Interest rate cuts are to reduce the cost of purchase and repayment of loans for home buyers. Beijing's 517 policy has finally landed, which also means that the 517 new policies in the four first-tier cities have all been implemented. From the perspective of the adjustment direction of the new policy in first-tier cities, the core is to reduce down payments and mortgage interest rates, and relax purchase restrictions. In addition to the above policies, in fact, there is still a lot of room for imagination in the current bailout policy. For example, at present, the highest call for reducing the interest rate of existing housing loans.
NO. 3|叁
Hefei market analysis and forecast
First, the policy side
In the first half of 2024, Hefei will introduce support policies in the fields of provident fund, new house lottery, and housing purchase subsidies.
In January, Hefei extended the policy of supporting the withdrawal of provident fund to pay down payment for 2 years.
On May 15, Hefei introduced ten new policies, mainly including: the implementation of housing subsidies, the minimum subsidy for the purchase of new houses is 1%, the maximum subsidy for new citizens, "old for new" and other groups is 2%, cancel the lottery, urban commercial housing projects no longer implement notarization lottery public sales, by the enterprise independent sales, increase the amount of provident fund loans, the maximum loan amount of the housing provident fund normally paid by both parties is adjusted to 1 million yuan, unilaterally adjusted to 700,000 yuan.
On May 21, Hefei adjusted the down payment ratio to the lower limit stipulated by the state, that is, the down payment ratio of the first home loan was reduced to 15%, the down payment ratio of the second home loan was reduced to 25%, and the interest rate of the first home loan was also reduced to 3.45%.
Second, the land side
According to the statistics of the AI property market index system of the First Housing Research Institute, from January to June 2024, a total of 20 residential land transfers have been transferred in Hefei urban area, with 14 transactions and 6 termination of transfers. The turnover was 12.35 billion yuan. From January to June 2023, there were 24 residential land transactions in Hefei City, amounting to 25.85 billion yuan. In terms of the number of parcels, there were 4 fewer parcels than the same period last year, but in terms of amount, it was basically half less. In terms of popularity, this year's land is not as hot as last year. It can be seen from yesterday's land auction that in the current land market in Hefei, real estate companies are more cautious about taking land, and they are more enthusiastic about taking land in the core sector, and they dare not take too high expectations to get land for areas with greater uncertainty. The new houses in Hefei have fully entered the improvement type, especially in the core area, the products are becoming more and more "volume", and the house type is getting bigger and bigger, which is no longer just what buyers can afford. As for the current logic of land acquisition, where it is suitable to do large-scale improvements, the product will be acquired where the land is acquired
Data source: AI property market index system of the First Housing Research Institute
Second, the new housing end
In the past year and a half, the average monthly supply of new houses in Hefei urban area is 312,000 square meters, the average monthly transaction volume is 303,000 square meters, and the average transaction price is 22,398 yuan/square meters, and the supply and demand are almost flat. On a monthly basis, starting from June 2023, the market has been bottoming out for a long time. In terms of average transaction price, it has risen steadily in the past year and a half. It can be seen that the buyers in the new housing market are more inclined to choose high-priced products in the high-energy sector, and at the same time, after the price limit is relaxed, the market price has a significant upward trend.
Data source: AI property market index system of the First Housing Research Institute
3. Market forecasts
Judging from the land transactions in Hefei urban area in the second half of 2023 and the first half of 2024, they are all located in the core sector, and there are many high-end residential projects.
Buyers in Hefei, from the transaction structure analyzed in the previous article, can be seen that the degree of preference for school districts is higher than that of other supporting facilities. In the past few years, with the implementation of education collectivization and the upward trend of the property market, there have been "famous schools" and "school district houses" everywhere for a while. Nowadays, with the popularization of education collectivization, buyers are becoming more and more rational about the problem of school districts, so some schools that have no time to precipitate and no performance support have been successively excluded from the category of "school district housing".
NO. 4|肆
epilogue
Wang Renhua, President of the Research Institute of Yifang Think Tank and President of the Advanced Research Institute of Urban and Real Estate of Anhui Province, views the following points:
At present, the high-level "bailout" is determined, and there may be more blockbuster "big moves" in the property market in the second half of the year. The policy may continue to provide financial support from ensuring the delivery of buildings, and work together at both ends of supply and demand. In addition, at present, the call for reducing the interest rate of existing housing loans is high, and the later policy will not rule out starting from this aspect. For Hefei, the real estate market in 2024 has also ushered in a continuous rise of 4-5 months under the gradual easing of the overall policy environment.