2014-07-31

You Can See Why Developers Are Optimistic: 2000 Panic Buyers

This is the crowd that showed up to buy housing in Hangzhou once the buying restrictions were lifted. Vanke is selling a new property in Yuhang district of Hangzhou.

It is worth noting that Yuhang has a housing inventory that is well over half of Beijing's, but its population is less than 2% of Beijing's. All of Hangzhou has a population roughly one-fifth of Beijing's.

More photos at the link. The third photo shows all the homes sold out.

杭州房子随便买 楼市再现“日光盘”遭2000多人抢购

Developer and Govt Selling Rush

The moves to ease buying restrictions and some stronger GDP data have the developers itching to raise prices and local governments rushing land sales (in the article below it is Yuhang district of Hangzhou). Some sales are indeed jumping in Hangzhou and Wenzhou at the high end of the market, sparking big upticks in sales figures. No doubt there is some pent up demand, and it's logical that it would be at the high end due to limited supply. The question is how deep this demand goes and if we will also see buying pick up in the middle and low end of the market. The article notes that "third parties" are not as optimistic as developers and local governments.

Notable: the count of cities easing buying restrictions is now up to 30 of 46.

楼市松绑:开发商酝酿涨价 地方政府借势推地
The purchase of the property market deregulation make frequent opportunity yet to

Several cities to cancel the purchase after another came the news is.

Just this week, Zhejiang, Hangzhou , Wenzhou, Ningbo are gradually be relaxed for the purchase, the purchase in 46 cities nationwide, and has about 30 cities actually began deregulation policies to varying degrees.

Nonetheless, the property did not pick up signs, most cities in a "flash in the pan" type of peak-type deal. Medium and long term, property markets continues.

Restriction relaxed list will be expanded

In Zhejiang Province, the purchase of pre-existing cities including Hangzhou, Wenzhou, Ningbo, Zhoushan, Shaoxing, Taizhou, Zhoushan.

So far, only Zhoushan, Shaoxing, Taizhou, there is still a restriction policy. Yesterday, Ningbo also joined the relaxed camp.

Yesterday, Ningbo Municipal Construction Committee official microblogging news release said, starting July 31, the purchase of Ningbo City, county (city) and Yinzhou, Beilun, Zhenhai, high-tech zones housing (including commodity housing, second-hand housing), is no longer needed Family housing situation queries proof. Buy Haishu, Jiangdong, Jiangbei central city housing is no longer used to provide family housing situation queries proof.

This is considered to be the policy of Zhejiang restriction relaxed version of the most thorough one. Hangzhou 140 square meters or more, compared with just relaxed, Ningbo policies seem larger scale.

Moreover, the purchase of Wenzhou also be relaxed, this house prices fell by 34 months of continuous city in March this year, it intends to be relaxed, wait until the end of July, Hangzhou took the lead after deregulation, this joined with lightning speed relaxed camp.

Compared to the country's situation is somewhat similar with this, more than half of the city are on the deregulation policy. Previously, Hohhot, Jinan, Suzhou , Nanning, Haikou five cities to implement the purchase of the first to confirm the cancellation of official restriction.

In addition, Centaline Group research center monitoring shows that as of July 23, at 46 restriction cities in 26 cities for the purchase of the policy fine-tuning (limited purchase cancellation, partial cancellation, the implementation level to cancel or rumors of cancellation), urban restriction " relaxation "rate of nearly 60%.

This list is constantly expanding. "There will be more relaxed city to join the camp, but did not estimate the north of Guangzhou." Director of CB Richard Ellis, general manager of Hangzhou 马英枢 said pressure tier cities is relatively small, the larger northward wide demonstration effect, even if deregulation, the intensity is limited.

Deal a "rebound"

In Hangzhou, the market situation for example, as at 22:00 on the 29th, Hangzhou multiple mansions have the money for the transaction: Riverside City Star 6 sets of transactions, and homeland traded five sets, four sets of transactions Greentown orchid garden, the Arc de Triomphe turnover of a sets, a set of ten villas turnover ...... According to statistics, the main city of Hangzhou mansion volume more than 30 sets of turnover over 400 million yuan.

A similar situation also appears in the private market statistics relaxed week Wenzhou, Wenzhou market after last week, Wenzhou city's total turnover of real estate 875 sets of closing an area of 123,000 square meters, the ring than the second week of July of 542 units, 62,600 meters, respectively, an increase of 60% and 96%.

Compared with the confidence of developers, third-party organizations seem more rational, most thought it was the release of a stock.

"From this day transaction data can be seen, there are large units and the total characteristics of high." 马英枢 said, most of these customers before the purchase of deregulation has been a clear intention, before the market also has been rumored to be unbundled Therefore, the policy will be landing at the first time to the next one. The turnover of the entire inventory of Hangzhou accounted for very little and can not really ease the inventory to slow the problem.

In contrast, many developers seem to boost confidence, "It's more than two days, customers are single, and some still are hesitant to state, yet negotiated price customers fear the latter will also have the next single." Xiaoshan of a local developer, told reporters that the restriction is relaxed brings market confidence, so many people to become more active buyers.

However, many developers in Hangzhou also said, this does not relieve the market really caused problems, especially more than 140 square meters of the house before deregulation, the impact of this drop in the bucket.

Developers, government rob business?

A ranking TOP10 of the number of real estate developers are brewing its price adjustment.

"After the purchase of release, we intend to price adjustment. Currently the default solution is price 500 yuan / square meter." Where the person in charge of a project, told reporters that their current plan is to start from August 1 the price adjustment.

They will carry out its multiple real estate price increases, previously, if the purchase order has not relaxed, they were more often lower prices.

There are some developers tried to cut prices to "extension off", "some customers exist at this time intent, if the price is in place, it is likely to be the next single." Hangzhou local developers say they will in the near future a number of promotional units go Billiton passengers.

A developer to take advantage of low-cost three-TOP build off the opening, two hundred thousand suites source came the panic room, "with the intention of customers active in the market recently, so the recent price war is a good time."

Interestingly, not only the developers out to grab customers, the local government is also an occasion to push land.

July 29, Hangzhou has just declared that "the main city of Hangzhou, 140 square meters and over to unlock the purchase, Xiaoshan, Yuhang District, two full lifting of the ban," the local government will invite developers Yuhang District, its promotion of land. Yuhang district government in 2014 to read the manual, this manual is divided into west articles, north articles, Linping Vice City, Metro Chongxian four, pushing the amount is large, which only had 40 foxglove.

This is also a time to let go because of the restriction, the Government has followed out to grab business.


More critical is a good market last year due to Hangzhou, Yuhang District, sold a lot of high-priced land, and even lack of "Lord" plots. Gouzhuang deep plate Yuexiu Property [ 2.38% ] is a typical case, last year to 9,600 yuan / square meter of floor price won a residential land, and close to the North Chen light Vanke take their half of the land is not to.

However, some of the data and is not optimistic, Yuhang property land was very hot. According to statistics, in 2013 the amount of 26.637 billion yuan from land Yuhang, a record high. The annual transfer of buildable land area of ​​3.679 million square meters, this amount is nearly one-third over the same period in Hangzhou city, much larger than the Xiaoshan District, Hangzhou, the largest amount of land to sell all districts (counties) in.

As at 16:00 on the July 30, Hangzhou city's inventory is 134,579 units, of which 36,179 residential units. Yuhang District inventory 49,964 units, 41,327 housing units, housing accounted for 82.7%. The statistics show that the total volume 10,409 units during the first half of Yuhang, only a quarter of stocks.

It is worth noting that earlier this year, more developers Hangzhou Gouzhuang plate close price war, this sector for many developers shunned the land.

2014-07-30

How Zhou Yongkang Was Caught

A long and detailed look at the fall of Zhou Yongkang.
How Xi Jinping Swatted Flies to Trip Biggest China Tiger
Like peeling the layers of an onion, the Zhou project has worked through layers of associates. First his old comrades from when he led Sichuan province were rounded up. Next, investigators ran through his colleagues in the energy business. They picked up in-laws of his, and his son. After that, they took down his associates in the Ministry of Public Security. They left the toughest for last -- his inner circle of senior advisers and personal secretaries.

Wenzhou Ends Buying Restrictions

In Wenzhou, non-residents will be treated equally with residents when it comes to purchasing real estate.

温州楼市限购全面解禁 外地户籍与本地待遇同等
Known as an important barometer of China's property market in Wenzhou, known officially fully liberalized property purchase .

"Wenzhou Metropolis" official microblogging news shows, July 29 afternoon, the Wenzhou Municipal Construction Committee held a news conference to announce the purchase of Wenzhou release housing policies, housing transactions are no longer registered in the verification of existing housing situation, the policy from introduced after the conference.

This is also in Zhejiang province, following Hangzhou release official position after the second purchase of the city. It is understood that, as early as in 2011 when, 11 prefecture-level city in Zhejiang Province, Hangzhou, Wenzhou, there are eight announced the implementation of the " restriction order . " "Wenzhou property market declined almost bottomed out, then release the restriction to normal." Real Estate Institute of Zhejiang Province Academy of Social Sciences researcher Wang too on " Daily Economic News "reporter, said other cities in Zhejiang Province will continue to release publicly.

According to the official news release microblogging Wenzhou Metropolis Daily, except real estate transaction registration without verification of existing housing situation, the "outside Wenzhou" and "new Wenzhou" In the warm purchase permanent residents enjoy the same treatment in Wenzhou City, Wenzhou will also actively seek financial institutions to support the implementation of the first home loan deals.

In fact, last August, for the purchase of Wenzhou had a modest relaxation. According to its provisions, within the policy framework for the purchase of the State Council, Wenzhou, the local version of the restriction order to be adjusted to allow a local family residence in the city to buy second homes.

March 26 this year, investment in private enterprises in Zhejiang Province president Zhou German federation had said: "after two sessions, I heard that the municipal (Wenzhou) Construction Committee, led the drafting of a comprehensive program, has been reported to the provincial government."

"Later, Zhejiang authorities following statement is not supported nor opposed by the Wenzhou themselves decide." Wenzhou, a leading developer of local executives to the "Daily Economic News" reporter, said so.

Thereafter, on July 22, for the purchase of the property market in Wenzhou deregulation, the newspaper had published an article entitled "the purchase of the property market in Wenzhou quietly let developers waiting in the wings to take to prepare food," the article coverage.

It is understood that in the pre-purchase the full liberalization of the property market, the Wenzhou government departments had met study. Wenzhou Daily reports indicate that on July 28, the Wenzhou city government held its fifth plenary meeting, Wenzhou will release the "restriction" policy director Zhou Wenzhou Municipal Construction Committee also made it clear that the right to keep, Wenzhou want to make the purchase of the policy according to the actual situation some adjustments, mainly to support the needs of buyers of public improvements.

Credit Guarantee Firms Continue to Implode, Private Bonds Default

Much of the financial press focused on another potential corporate bond default last week, which was averted when Huatong Road & Bridge received a bailout. This doesn't mean the overall system is being bailed out. Private bonds are still defaulting and credit guarantee firms are still falling like dominoes. Multiple cases are unfolding across the country, with the big one in Sichuan and now one in Tianjin. The sums at stake are as large or larger than the averted default last week, but additionally these private markets are extremely regional. Losses are not diversified across public markets, but concentrated in one of China's regional economic zones.

From Sina Finance:
A private bond from a Tianjin composites manufacturer is headed for default. Employees at that composites firm said the company has no cash flow, unless you tear apart the factory and sell it off. The composite firm's parent company is involved in credit guarantees itself, to the tune of about ¥400 million, in addition to other debts it cannot repay. The underwriter of the bonds in question is China Securities Co. One private market analyst said these defaults do not affect the bond markets, but they are a major blow to the private debt markets. He estimates that this case will increase credit costs in Tianjin by 50 basis points. He also said that even good credit guarantee companies are failing due to systematic risk. Source: (海泰或失担保能力 投资人拒绝12津天联延期)

From 21st Century:
Also involved is Tianjin Hi-Tech Investment Guarantee (天津海泰)failing to make good on a credit guarantees. Although regulations say a credit guarantee firm cannot lever up beyond 10 times its capital, Hi-Tech is levered up to 13 times its capital of ¥500 million. The firm's legal representative has gone missing and employees at the firm are resigning one after the other. The firm is being sued by multiple banks and many borrowers. The borrowers cannot repay and are demanding that Tianjin Hi-Tech fulfill its guarantee to repay. There are more than 20 cases already underway, which combine for about ¥350 million yuan. Hi-Tech also made guarantees on the above mentioned private bonds.

“12津天联”兑付关口再沟通 海泰担保危机大起底
"Jin BBDO 12", "12 Kim Tae debt" incident sparked concerns about credit risks.

Informed sources, currently on "12 Jin BBDO 'bond reimbursement issues still under negotiation process to settle arrangements for follow-up programs have not been clear, but is actively coordinating relevant departments in Tianjin, investors are still on the government to do to help restore possible loss of more than something to look forward.

A source close to senior underwriters that according to the beginning of the bonds to raise the agreed point of view, July 29, 2014 implementation of the right to sell back the final deadline for investors. If the settlement before the close of the 29th, as long as the parties agree through negotiation, settlement, if not handled directly by the CSI board allow repayment of principal is not accounted for breach of contract.


However, the bad news is that, as was July 10 in Japan for a similar bond default interest "12 Kim Tae debt", to settle the issue is not fully implemented, is facing difficulties. The Commission made it clear that at a regular press conference on the 25th, and asked to "market, legalization" principle proper disposal, and suggests investors bonds issued in accordance with the contract, to actively seek arbitration, civil litigation and other legal means to safeguard their legitimate rights and interests .

The Shanghai Stock Exchange has requested the Issuer, the Trustee and effectively perform their duties, and with local government departments approached, safeguard the legitimate rights and interests of investors. Zhejiang Securities underwriters also have repeatedly organized bondholder meetings and major shareholder of the issuer to communicate, to seek ways to defuse the risk of default.

Difficult performance guarantee company

Wind data show Hitech guarantees for "12-chun BBDO" provide "full unconditional and irrevocable joint and several liability guarantee" from the date of the guarantee period for the "guarantee letter" in effect until the current private placement bonds related to the expiration of the debt date two years. But informed sources, Hi-Tech has secured through informal channels to 12 Tianjin BBDO confirmed the bondholders can not fulfill guarantee obligations.

According to Hi-Tech reporter obtained the guarantee of financial data, as early as the end of the first quarter of 2013, the registered capital of 500 million yuan guarantee balance of Hitech guarantees reached 7.592 billion yuan, up to a multiple of 13 times guarantee. According to the "Provisional Regulations financing guarantee company," the balance of the financing obligation secured financing guarantee company shall not exceed 10 times its net assets.

Debt Credit particular commented that due to the presence of defects in Hitech security aspects of risk management, resulted in a significant decline in profitability. 2013 was partially secured corporate event of default, due to assume security responsibility Hitech guarantee larger compensatory occurred, the company increased the provision rate guarantee compensation reserve, according to its 2013 audit report, the company accrued year guarantee compensation reserve 133 million yuan, resulting in its net profit fell sharply to -1.73 billion.

Also, if you take out the guarantee risk provisioning for each of the factors, net profit fell provision before 2013 the company is still very serious, partly because of a serious decline in 2013 revenue levels, while holding to maturity investments exist part of the entrusted loan impairment, the impairment of assets entrusted loans have risen sharply.

Litigation involving multi-pen

People are surprised that, in the issuer's legal representative Ji-group "lost contact" core staff have left, almost in closed state, unable to guarantee the company will not only compensatory, or even facing many lawsuits are subject to judicial freezing of assets, included in the national courts the debtor promises list, which sum bonds issued from just one and a half years.

According inquiry was informed 21st Century Business Herald reporter, Tianjin Hi-Tech Investment Guarantee Co., Ltd. in the National Court debtor information inquiry system has five information to be enforced, the filing period from May 2013 to February 2014 May 25, 2010. Involving an amount of 117 million yuan, of which there are two cases 3 700 million is still running.

Another reporter learned that, since 2014, Hi-Tech guarantees the defendant's case is also up more than twenty cases, involving 3.46 billion yuan. Most of them because Hitech secured as collateral, borrower can not repay the loan and requested jointly and severally liable. There is a sum of 66.87 million yuan of loans from its own natural Hitech guarantee Xu, since not returned and sued by creditors.

Because the majority of cases still pending, the creditor has applied to the court in advance asset preservation, freezing and seizure of banks guarantee Hitech corresponding assets. In several cases, execution, execution Hitech guarantee objections raised and asked the court to "suspend the deduction of funds to creditors in order to avoid the loss can not be recovered. Lifted or partially lifted bank account, allowing it to handle the normal corporate guarantee business, prevent the risk of further expansion, causing social instability. "

Hi-Tech to provide security guarantees because, unable to pay its creditors and the case to court, many creditors are banks. For example, loans to Tianjin Tianjin Branch of China Merchants Bank Co., Ltd. Top tires provided 13.24 million yuan. Huaxia Bank to Tianjin Xing Chuan Freight Co., Tianjin Mei Teng Copper Co., Tianjin East politics of concrete mixing Engineering Co., Ltd. to provide loans were 15.37 million yuan, 18.12 million yuan and 25.19 million yuan of. Tianjin to Tianjin Branch of Bank of Communications Science and Technology Development Co., Ltd., Baxter loan 18 million yuan. The fourth branch of the bank loans to Tianjin Tianjin Sheng Delong Garment Co., Ltd. and Tianjin New Technology Industrial Park O-Net Technology Co., Ltd. and 9,000,000 yuan to 13 million yuan, respectively.

In addition, some of Hitech back guarantee private lending companies and small loan guarantees. Tianjin Construction Union were limited by guarantee, 15.21 million yuan loan; Juhui Microfinance Ltd. of Tianjin, Tianjin Landmark Microfinance Ltd., Watson Microfinance Ltd., Tianjin Joint Venture Investment Guarantee Co., Ltd. has tens of millions of loans guaranteed by Hitech guarantee, the borrower is the medium most small businesses.

Particularly noteworthy is that in addition to 50 million yuan guarantee Hitech "12-chun BBDO 'private debt guarantees, but also for the issuers of bonds Composite Materials Co., Ltd. of Tianjin Binhai guaranteed another two pen financing. March 2014, creditors Parc Wealth Investment Management Limited Tianjin Binhai days because of the Allianz Group Co., Ltd., Tianjin Binhai two pen composites were 12.44 million yuan and 23.52 million yuan loan can not be returned, so apply to the court The debtor and the guarantor guarantees Hitech corresponding assets seized.

According to the lawsuit incomplete information, including the "12-chun, BBDO," including, Hitech provides a total guarantee amount guaranteed jointly and severally liable for up to 85,960,000 BBDO composites.

Or adverse impacts to fish

In late July after the 21st Century Business Herald reported that the first "12-chun BBDO 'principal and interest on the verge of default, to provide" full unconditional and irrevocable joint and several liability guarantee "security guarantee Fanghai Tai insolvent, there is pessimism for breach of contract The spread.

21st Century Business Herald reporter queried by Wind, in addition to "12-chun, BBDO," there is another two bonds guaranteed by the Hitech participation guarantee.

One of them is "12 Tianjin Binhai SMECN1", namely Tianjin Binhai Hi-tech SMEs year 2012 the first phase of a collection of notes from Tianjin Hi-Tech Investment Guarantee Co., Ltd. Tianjin Bohai Financing Guarantee Co., Ltd. joint guarantees, in 2015 2 January 3 officially expires. As the market in the inter-bank bond issuance sum, this may be the direct cause Dealers Association requires an understanding of the situation.

Another sum is "13 JH 01", ie Neptune Offshore Engineering Technology Co., Ltd. of Tianjin in 2013 SME private debt (Phase I), guaranteed by the Tianjin Hi-Tech Investment Guarantee Co., Ltd., in 2015 a May 9th maturity.

In addition, the parent company of Tianjin Hi-Tech Hi-Tech Guarantee Holding Group Co., Ltd. also issued a seven-year term in 2010, 1.5 billion yuan of corporate bonds. This should provide the sum bond rating report in 2013 to track this year, but the reporter did not check online information in Chinese bonds to the above report.

According to the 2012 Emirates International tracking its rating report, the Tianjin Hi-Tech Holding Group's 2012 net operating cash flow was -14.48 billion, net operating cash flow / total liabilities and net operating cash flow / current liabilities -6.91% and -15.08%, respectively, in 2012 the company invested net cash flow was -7.38 billion from January to March 2013, the company invested net cash flow and net cash flow from financing activities was -1.49 billion and $ 1.26, respectively, billion.

In fact, the first single issue since July 2012, private debt between two rapidly expanding market size, until the end of June reached 471, 59.697 billion yuan.

Xu Hanfei reminded intensive outbreak of a credit event has a negative impact on market sentiment. Overall, the market adjustment mark, intensive credit event disclosures on market sentiment bring further negative impact, especially in high-yield debt of private sector, the opportunity to profit-taking pressure is relatively large. This stage of the impact of market sentiment, investors Bukebufang.

2014-07-29

CASS Researcher: Real Estate Collapse in Second and Third Tier Cities Possible

Ni Pengfei, Director of the Urban and Real Estate Economy Research at the Chinese Academy of Social Sciences (CASS) and also the Director of Center for Cities and Competitiveness, says a collapse in some eastern second and third-tier cities is "entirely possible," though a national collapse is unlikely. Another researcher said housing demand won't peak until between 2020 and 2025.

Ni also said the lifting of buying restrictions would have little effect, though he said first-tier cities such as Beijing and Shanghai would not life restrictions because a lot of speculative money would come into the markets there, wiping out years of efforts to limit price increases.

社科院专家:部分二三线城市楼市崩盘完全有可能
Chinese housing market fell short inevitable, ordinary commodity housing prices will enter a period of 2-3 years of adjustment.

Yesterday, the Academy of Social Sciences Institute of Finance strategy, urban and Competitiveness Research Center released in 2014, "China Housing Development (interim) report" in Beijing, revealing view.

Although overall not collapse, but the editor of the report and director of the Academy of Urban Competitiveness Research Center Ni Pengfei believe that some of the higher prices rise, the amount of the early development of second and third tier cities in the eastern part of the larger "collapse entirely possible. "

Experts predict that the property market turning point will appear in 2020-2025 between.

Stage into a structural surplus property

Summarizes the characteristics of the housing market in the first half of this year, Dr. CASS Institute of Finance Strategy Zoulin Hua believes that large and medium cities showing the initiative to adjust the situation, the national property market into structural surplus stage.

January of this year, 70 cities, prices fell only 6, to June, a decline of cities has increased 55, fell face rapidly expanding, albeit still limited, only a city of Wenzhou rates price fell below the same period last year.

The National Housing turnover shrinking significantly in the first half of this year, the first half of this year, China commodity housing sales area and sales fell by 7.8% and 9.2%, respectively.

With sluggish sales and medium-sized cities nationwide housing prices declined slightly, 邹林华 said, the real estate business capital returns slower, development and investment growth continued to decline, to the first half of this year, the growth rate has dropped to 13.7 percent year on year.

The slowdown of the property market over the next decade

Whether prices will collapse? Zoulin Hua believes that the market in the short term active adjustment is inevitable, but it will not enter the ongoing recession and depression, "ordinary commodity housing prices will enter a period of 2-3 years to adjust."

Ni Pengfei further analysis, the overall property market collapse will not occur, but the "partial collapse is entirely possible." He believes that as housing prices rose too high, excessive pre-development of second and third tier cities, it could collapse, such as , Wenzhou, Zhejiang Province, in addition to some of the city outside, it is more risky.

"In the long term, the next ten years the property market slowdown in demand growth in 10 years." Director of the Academy of Social Sciences Research Center for City and Competitiveness Ni Pengfei said.

Then, when the property market will be the turning point? CASS Institute of Finance assistant researcher Dr. Li Chao strategy based on estimates believe that the inflection point roughly in 2020-2025, then, China's urban housing demand will no longer have a rapid increase in conditions.

Purchase whether full liberalization?

According to media statistics, since only in July, has been included in Jinan, Haikou, Hangzhou , Suzhou and other 10 cities relaxed the restriction policy. Whether the purchase of the property market will be fully liberalized?

"First-tier cities will not cancel the purchase." Ni Pengfei think that if Beijing, Shanghai and other cities to cancel the purchase of the policy, the influx of speculative demand will be immediately after the regulation effective on naught.

Previously, Beijing Mayor Wang Anshun in the first half of the economic situation analysis meeting, said Beijing would not loosen easily purchase and other measures, otherwise it will affect the sustainable development of cities.

Experts believe that in the case of bank credit policy has not changed significantly, the release bailout restriction policy had little effect. "But if there is change in the housing market and then passively release, you may be missing an opportunity, no need to bring to the market impact." Ni Pengfei that, for some real estate investments have fallen sharply, prices have fallen sharply, a significant increase in inventory areas, should By allowing local governments to take measures to release or discharge of the purchase, etc., to avoid unnecessary panic in the market and funding strand breaks.

2014-07-28

Hangzhou Eases Buying Restrictions, Developers Hope to Raise Prices

Hangzhou has eased buying restrictions on homes larger than 140 sqm. In Xiaoshan and Yuhang districts, buying restrictions have been eliminated. The news has boosted the optimism of developers, who expect an increase in sales. Some of even speaking of prices increases. This carried over into the stock market, where Chinese shares have been rallying.

July and August sales tend to be light, so these policy adjustments may produce some positive results in the data, but whether it sparks a reversal is another story. Once market sentiment has changed, almost nothing can change it back. These policy changes affect investors the most and they are the most sensitive to credit conditions and sentiment.



[This official microblogging news release, immediately caused a chain reaction of developers, local industry and even rumors developers to price adjustment news. However, these adjustments brewing developers did not disclose the price or how much, but said, depending on the market situation to be]

Around at 18:00 on July 28th, Hangzhou real estate circles in multiple micro-channel group biography, Hangzhou will be released the same day news of the ban on the purchase of the official website.

Subsequent 18:30, Paul lived in Hangzhou Housing Authority (Housing Security and Housing Authority) official microblogging issued a new message: "This year, the real estate market in Hangzhou overall smooth, but the housing supply and demand of regional and structural contradictions highlighted by the study, the municipal government agreed that from at 0:00 on July 29 onwards, the city purchased Xiaoshan District, Yuhang District, housing (including commodity housing, second-hand housing) without providing housing situation query records; bought the main city of 140 square meters and more housing (including commodity housing, second-hand housing) query records without providing housing situation. "

This official microblogging news release, immediately caused a chain reaction of developers, local industry and even rumors developers to price adjustment news. However, these adjustments brewing developers did not disclose the price or how much, but said, depending on the market circumstances. A Xiaoshan developer, said yesterday after the opening of the purchase, sending him a lap SMS, temporarily sold four houses. "These customers fear price increases, would also hesitant, a policy immediately" pay "the."

According to incomplete statistics, as of now, there are already more than 20 cities have liberalized the purchase. "From a market perspective, Hangzhou is the first release of the quasi-tier cities, many second-tier cities will be stronger than normal release of the citizenry." Managing Director of CB Richard Ellis Hangzhou Company 马英枢 said.

Long-awaited policy

The previous week, maybe a week most local developers suffering. "There was news that the policy will be out on Monday, he said later on Friday will be the policy." Hangzhou Xiaoshan A local developer of the " First Financial Daily "correspondent said many times before they were about local government talk.

Reporters learned yesterday from the Hangzhou Municipal Government led an internal seminar held again, and ultimately make a decision. The result: the main city of Hangzhou, more than 140 square meters (including 140) release the purchase, Xiaoshan District, Yuhang District, the purchase of a comprehensive ban.

This is the year after the "two sessions", a set of multiple sets of scenarios. Multiple developers told reporters, after the purchase of Hangzhou has been lifted in two versions, one of which is the release of Xiaoshan, Yuhang district, there is a more than 140 square meters, including the main city.

They have been holding the lowest expected value, it is unexpected that the scales yesterday in Hangzhou government policy for many developers feel the excitement. This is multiple developers that are living on the recent Minister of Construction , Chen Gao improve the real estate policy comments made ​​"in which the first is to do everything possible to digest inventory" implementation.

It is one of the cities of Hangzhou high inventory, before June this year, Hangzhou housing 4859 sets the average monthly contract, the average transaction price of about 15,000 yuan / square meter, according to the market rate of digestion before six months, 132,300 sets of Hangzhou property market housing stock , to melt cycle over 27.23 months.

This transaction sets, compared with the same period of the past six years, came in third from the bottom, just above the market regulation has just introduced in 2010 and 2011. The first half of last year, 41,061 sets of real estate transactions in Hangzhou, totaling 4,466,500 square meters, the average transaction price of 17,790 yuan / square meter. Compared with the first half of last year, housing turnover Hangzhou fell almost exactly one-third.

Developers want to raise prices crashed

Compared with the general mentality of the developers of the carnival, some third-party agencies seemed more rational. "We care about is whether to wait and see attitude can lift? Trading volume is to expand? Whether prices will go up?" 马英枢 said.

In this regard, the executive president of China Easy Home Dingzu Yu believes that the purchase of a subsequent relaxation of the problem is: in the end can not pull the deal?

Behind these fears is to invest in a slowing trend. Data show that in 2014 1 to June, the national real estate development and investment 4.2019 trillion yuan, up by 14.1% nominal growth (after deducting price factors, the actual increase of 13.1%), the growth rate down 0.6 percentage points lower than 1 to May. Among them, the residential investment 2.8689 trillion yuan, an increase of 13.7%, the growth rate down 0.9 percentage points, the proportion of real estate investment was 68.3%.

Real estate investment is decelerating many developers lack confidence. Yesterday's deregulation policy for many developers feel confident of recovery. "Xiaoshan, Yuhang stocks have been relatively large, so go stocks become the main theme of Hangzhou, Xiaoshan, Yuhang fully liberalized in favor of focusing the purchasing power of Zhejiang Province, the main city to adopt a" Paul just need "strategy, is conducive to maintaining the stability of the entire market. "A Xiaoshan local developer, told reporters this scale very well just the right policy.

"First of all, wait and see attitude short-term fluctuations may occur, resulting in a large apartment sales rose slightly in the short term, but it will not last long. Market is only a pre-release suppressed demand, but the demand itself does not significantly increase the oversupply melody has not changed From the market supply current to a small apartment just need disk-based situation, an increase in sales of large units can not effectively solve the inventory problem. "马英枢 told reporters destocking will be a relatively long-term task, and to cancel the purchase just sounded the opening percussion. And in the long-term task, expect prices back up it unrealistic.

However, some developers are trying to adjust prices. "Prior to the price war hit too hard, more than the smell of gunpowder in the area are more concentrated close combat name a price war, this time just to have the opportunity to tune a tune, now guaranteed pretty good." Yesterday, TOP10 of a developer told reporters that some of their real estate brewing price adjustment in the near future.

Previously, Hangzhou Gouzhuang plate, bridge plate competition is very fierce, and many developers are close to the cost of the opening price, the number of developers in order to tout brawl occurred many times. "The market is too difficult to do, particularly difficult this year." One developer Hangzhou Bridge plate revealed that many disk or to just be family-based, but this adjustment will bring confidence in the market implies that surface.

It is noteworthy that, just yesterday, Xuzhou quietly loose tie. Since August 1, the purchase of real estate is no longer available Xuzhou purchase inquiry proved to sign and print real estate is no longer need to enter queries proof number when the contract of sale. But there is no formal document issued only verbal notification, without saying anything. This means that the purchase of Xuzhou fully liberalized policy, regional policy implementation will no longer purchase.

Xi Willing To Accept Slower Growth

Xi Jinping comfortable with lower growth rate for China's economy
President Xi Jinping believes a slight slowdown in economic growth would be acceptable, Li Yang, a deputy head of the Chinese Academy of Social Sciences, told a briefing yesterday as the government think tank said growth could ease to as low as 6.4 per cent.

"[Xi] repeatedly said it wouldn't matter if economic growth slows a little bit. It's nothing worse than delivering a score sheet less pretty than that of the predecessors - even so, it would not be a big deal," Li said, referring to remarks Xi made at a meeting with government economists on July 8.

How Quickly the Sentiment Changes on Buying Restrictions; Beijing WIll Not Expand Affordable Housing

Only last month, the central government was pointing out that no city had publicly cancelled its buying restriction policies. Today, more than half of cities with restrictions have eased. It has now reached the point where the Beijing mayor had to come out and publicly state that Beijing will not ease buying restrictions due to still elevated prices.

Also, the Beijing Municipal People's Congress has passed a draft resolution saying the city will not build more affordable housing once the current wait list of 100,000 is exhausted. Instead, Beijing will focus on renovating shanty towns, with a goal to renovate homes for 150,000 families by 2017. One complaint with the affordable housing is that it is located too far from the city center, in areas with far less public transportation and infrastructure, which is one reason why many buyers are refusing affordable housing. The city also wants to avoid the creation of slums. New rules may "guide" developers to build cheaper housing at the same time they put up more expensive developments.

北京市长:房价还在挤泡沫 不会轻易放松限购
The face of the first half of the city's commercial housing turnover declining trend, Beijing Mayor Wang Anshun , said recently: To calm observation, we can not intervene, not easily introduce new real estate policy, and even take measures to relax the restriction and so on. Otherwise, it will weaken the power of structural adjustment, the impact of urban sustainable development.

Beijing recently held the first half of the economic situation analysis will be revealed in the first half of this year, the Beijing New housing contract to reduce the amount of 44.5% year on year price increase for eight consecutive months of decline; hand housing contract volume decrease of 52.6%, the price of the ring than three consecutive months decline.

Wang Anshun analysts say prices "flat to down" is the basic objective pursued over the years the real estate regulation, or behind the market play a decisive role in helping out in previous years, the accumulation of foam, and promote long-term healthy development of the industry. In the second half, Beijing should continue to focus on the trend of late, to ensure policy continuity, stability, deepen structural adjustment of real estate, and innovation to strengthen market supervision, give full play to the real estate in steady growth, improve people important role.

And electrical Beijing Municipal People's Congress recently filed for "Beijing urban basic housing security regulations (draft)" for consideration. Beijing Municipal Commission of Housing and Urban-Rural Development Director Yang explained at the time of Ordinances clear that existing affordable housing, commodity housing and other affordable housing for the record has been closed, in addressing the existing approximately 100,000 families waiting for housing After the difficult issues, Beijing will no longer build affordable housing and housing prices.

北京保障房新规将出台 或实施封闭式管理

2014-07-27

CASS Worried About Hot Money Outflow

CASS sees Chinese economic growth stable in 2H and monetary policy stable to a bit looser. In contrast, the U.S. economy is expected to strengthen and interest rates to rise, both of which will close the gap with China. The net result will be increased currency outflows.

社科院:我国下半年可能面临热钱流出压力

Capital Outflow in Q2 Marks Turning Point for Yuan

The headline is deceptive: China sees more capital inflows in H2, uncertainties linger
"The renminbi (yuan) exchange is now near equilibrium and two-way cross-border capital flows have become a new norm," he said.

......China was under pressures from capital inflows in the first quarter, but the tide turned in the second quarter as volatility in the yuan fuelled outflows, Guan said.

......China's central bank and commercial banks sold 88.3 billion yuan ($14.3 billion) worth of foreign exchange on a net basis in June, according to a Reuters calculation based on central bank data released on Tuesday.

China's current account surplus may widen in the second quarter, but net inflows under its capital account may decline sharply, or even show a deficit, Guan said.
The decline in June was the first new outflow in 10 months.

An end to forex inflows has implications for China's money creation. The central bank swaps renminbi for forex held by banks, businesses and individuals, but if capital inflows turn stable or even switch into reverse, money creation will need to come from other policy tools. Another factor is the cost: it is expensive for China to continue this system.

China’s trade surpluses and the cost of sterilization
China’s trade surplus in itself has become the driver of more rapid implementation of financial liberalization. The PBoC must sterilize a large portion of the capital inflows generated by trade surpluses that otherwise would create far too many renminbi deposits and ultimately to excessive domestic credit creation. Over the past 10 years of large surpluses, the PBoC has sterilized about 75% to 80% of its net capital inflows and, notwithstanding this huge intervention, domestic money supply consistently has increased 15% to 20% per year, well in excess of nominal GDP growth. After a decade of intervention, this sterilization has created US$3.1 trillion in deposit reserves held by the PBoC on behalf of state-owned banks plus about $700 billion in bonds issued by the PBoC to further withdraw bank liquidity. The PBoC must pay interest to the banks on these assets, which now carry a rate of around 3.7%. This subsidy to banks now amounts to 1% of GDP (see table below) and in my opinion has reached a tipping point whereby the PBoC needs to speed up financial liberalization both of the exchange rate and interest rates because the cost of the subsidy rises inexorably in tandem with the trade surplus. China was able to take its time in opening the capital account during the early years of large trade surpluses because bank's deposit reserves and the cost of sterilization were small. Now that the cost is escalating rapidly, however, China has little choice except to allow two-way capital flows and greater renminbi flexibility.

If capital flows do stabilize or reverse, how will the central bank inflate?

China central bank gives CDB 1 trillion yuan
China’s central bank has provided 1 trillion yuan ($171 billion) to China Development Bank (CDB) for re-lending to the reconstruction of shanty towns, Caixin reports.

The People’s Bank of China (PBOC) is channeling the funds via a new monetary tool called "Pledged Supplementary Lending" (PSL) to test medium-term interest rates according to China Business News.

The PSL is a new type of supplementary lending instrument backed by collateral that is used to inject liquidity into the market. It is hoped the tool can play the role of benchmark interest rate in the medium term.

PBOC Mulls New Tool for Regulating Money Supply, Guiding Rates
For most of the past decade, the central bank's monetary policy has largely hinged upon the condition of foreign capital inflows, which were mostly converted into the yuan at banks.

When inflows surged, the central bank would strengthen operations to mop up excess liquidity; when they ebbed, it would make up the shortfall by increasing money supply through open market operations and other ways.

The growth of foreign capital inflows has slowed and started fluctuating widely in the last two years, raising the demand for the central bank to manage money supply more actively than by just responding to changes in cross-border capital flows, the source said.

Here is Yu Yongding on China's capital account situation and the risks of capital outflows: China’s experience in capital account liberalization

More Beijing Residents Give Up Affordable Housing Rights

The previous anecdotes of Beijing residents giving up their affordable housing rights were on target. Of 300 people who won the latest lottery, only 47 chose the affordable housing, less than 16% of winners. Very important to note is where the housing is located though. A friend of mine won the recent lottery in the western part of Chaoyang (close to the city center) and I suspect 100% of the people took the housing there because it is impossible to buy cheaper. However, the project in this case is 15 km south of the sixth ring road, only 15 km from Langfang.

Home prices are moving lower, but the main story here is that once again, government fails. Affordable housing projects in Beijing are coming to market in greater numbers at a time of already rising inventory. Sales volume is down and new projects are coming to market in large numbers. Some of the projects are in undesireable locations, so far away from the city center that they might as well be in Hebei province. If you live in Hebei province, you don't need to enter a lottery in order to obtain a license plate.

北京自住房出现大比例弃购:前300中签号仅47户选房

This news may be one reason why Beijing is considering letting more buyers into the affordable housing market.

Poor take priority with social housing
A draft regulation on affordable housing has been stirring controversy in Beijing over recent days. Much of the fury is focused on a proposed rule that would cancel income limits normally imposed on social housing applicants.