Optimism Abounds in China Housing Market as Restrictions and Mortgage Interest Declines

21st Century: 成交量明显回暖 “因城施策”进一步深化
According to the statistics of comprehensive multi-agency institutions, since the Spring Festival, cities such as Beijing have taken the lead in showing signs of recovery. According to the data on the Anjuke line, the increase in January was 18% in January, and the increase in the third- and fourth-tier cities was even more obvious at 22.6%. In March, the heat of finding houses in third- and fourth-tier cities continued to increase. Hengyang, Jiujiang, Yueyang, Shantou, Hengshui and Huizhou were all cities with high activity in recent housing. From the heat performance of different cities, the city level has an impact, but the impact is greater on the shed reform policy and regional planning. The urban market in which the sheds have been continuously implemented has remained relatively hot, and the recent “Hong Kong, Macau and Macau Bay Area”, which has a strong sense of topic, has affected the heat of finding houses in Huizhou and Zhuhai, and has led to an increase in the volume of transactions in the region.

Can a short-term warm recovery continue? This is the industry's current biggest concern. Hu Ruoxiang, vice president of Longhu Group, predicted that the real estate market this year is “both optimistic and cautious”. “The optimistic side, regardless of the strength of the policies introduced now, the market is developing in a loose and favorable direction. In addition, the financial environment is gradually loosening. The interest rate of the first suite in the country has been falling for two consecutive months. The interest rates of the second suite have been continuously Three months down, this is also the reason why the market is gradually stabilizing in February; on the one hand, the market challenge in 2019 is still relatively large. It is expected that in the future, even in different sectors between cities, market differentiation will be very obvious. There will be a certain window period in the market, but in which cities, when, and how long this market window will last, the uncertainty of these issues is very strong."

...With the loosening of the overall regulatory environment, the property market has indeed begun to show a warming trend.
One analyst sees an upturn in Beijing. First-tier cities have historically led the national housing market:
Guo Yi believes that the current market situation needs to be analyzed in detail. "This is actually a problem at two levels. One is the second-hand housing market and the other is the new housing market. Take Beijing as an example: For the new housing market, the most important reason for the increase in trading volume is the increase in supply. The listing of limited-competition houses and the listing of some high-value, optimistic expectations of the public's expected value have led to a wave of overall market sales. Therefore, from the perspective of new houses, based on the single-selling case, Some projects have been promoted, which has formed relatively good feedback on the overall market transaction. In addition, some projects have made some adjustments and concessions on the price, and the cost performance has increased, which has also driven the volume of transactions; Differently, the second-hand housing market is actually heating up the overall demand. At the same time, from the current point of view, the demand for improving the sale of old or new ones, or the sale of old ones, has ushered in a new market after a period of market savings. A round of release opportunities. The key point that prompted this round of volume increase is still the regulation and control policy. A loose state, so that confidence in the market outlook has increased, resulting feedback to the transaction data. "
iFeng: 楼市房贷利率“连降三级”打折不远 房价会涨吗?
The property market regulation policy has been reversed. The interest rates of mortgage loans across the country have been continuously lowered. The real estate control policies have been relaxed and the signals for buying houses have been encouraged.

The reporter learned that the five major banks in Xiamen's first home loan interest rate fell to the benchmark, before the floating has been canceled; the five major banks in Shenzhen, the first home loan interest rate was reduced to 5%, other cities have also been continuously lowered. Last year, the first home loan interest rate benchmark was up 20% or even 30%. What is the difference? A house with millions of loans can save hundreds of thousands of interest rates today.

“The interest rate of mortgage loans has returned to the benchmark and even discounted. It is possible, and it will take time, not so fast.” A Shenzhen-based loan manager of a joint-stock listed bank told the China Times reporter.

In the past, in order to encourage the purchase of houses, the bank mortgage interest rate can be used at a discount of 30%. Now this trend is coming back.
Xiamen and Shenzhen are two cities that led the housing rebound in 2015 and 2016.

Not everyone is sure about a rebound in the market though.
The China National Index Research Institute expects the real estate market in 2019 to assume that the overall operation of the national real estate market will be under pressure in 2019. The annual sales scale is expected to fall between 5.0% and 7.0%, and the probability of a slight rebound in the sales area of ​​first-tier cities is relatively high. The second-tier cities have achieved significant differentiation, and the support base of the third- and fourth-tier markets is relatively weak, and the downward pressure on sales areas is relatively large. In terms of price, as the price stability expectation is further consolidated, the price of commercial housing will be stable, and the possibility of a slight decline will not be ruled out, but the decline will be controlled within 2.5%.

The most authoritative is to look at the government work report published during the two sessions, which set the tone for real estate in 2019, mentioning “promoting the stable development of the real estate market”, “renovating the shantytowns”, and “collecting land for collective construction”. “Central cities and urban agglomerations”.

In the 2018 government work report, the key words are “Room and Housing”, “Real Estate Tax” and “Leasing and Selling”.

Comparing the two-year government work report, it can be seen that this year's stable housing prices replaced the last year's control of housing prices. This is also the purpose of the continuous reduction of mortgage interest rates. Stabilizing housing prices does not fall, and even some housing prices in some cities are ok. As for the tolerance of the rise in housing prices, some experts believe that it can be maintained in the income growth rate of residents or the growth rate of GDP.
The Chinese housing market has slowed and will continue slowing. Sales turned negative year-on-year in the January-February period. Policy easing takes time to kick in. The difference with the prior cycles is there's no credit stimulus yet. Some point to the 2017 spike in TSF, but the real boost started in 2015 (back to 2014 if you count the stock market bubble) and then again in early 2016. The spike in 2019 appears like a one-off event.

Without monetary or credit stimulus, the housing market will either continue slowing or stabilize in the second-half, depending on your macro view. However, if stimulus does come along and credit controls fail or are weakened, it is easy to see another round of home price inflation. The foundation for one is being laid right now.

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