Chinese Cities Launching Housing Market Rescue Plans

If the Federal Reserve can flood the market with liquidity during a roaring bull market, then Chinese cities that experienced rapidly rising prices in the last round surely can lead the housing "rescue."

It was only yesterday that I posted Will China Have One Final Melt-Up Before the Crack Up? Housing Policy Easing Expected and now it is confirmed with Wuxi and Xi'an slashing their housing restrictions and even introducing subsidies. Shenzhen and Guangzhou have also eased regulations on the housing market. This comes as the government lifts credit restrictions on small companies. Prior rounds of stimulus flooded into real estate...

Among the policies in Wuxi are delayed repayment on loans and taxes, subsidies and lifting of pre-sale restrictions. The latter is important because companies can use pre-slae funds to stay afloat now and it won't cost the government or the banks. This is the channel that may open to speculators and companies that have been severely restricted from the market in the past couple of years. For now, "housing are for living in, not speculating on" remains the policy across the nation, but perhaps local officials are more worried about growth today than a potential wrist slap in 6 months because they look the other way when speculative capital rolls in.

Real estate offices have been closed to prevent the spread of coronavirus. A reversal of this policy would also be a boon for the industry, but comes with the risk of spreading the virus and setting back economic rescue efforts.

iFeng: 无锡西安首发,地方房地产“救市”打响了!
In addition to the catering and tourism industries, real estate is also an industry heavily affected by the new crown epidemic.

Since February 10, although developers have resumed work one after another, there is not much they can do. Hundreds of cities across the country have closed sales offices, suspended land auctions in many places, and the property market transactions have basically stagnated. The Spring Festival Golden Week transaction fell by 95% year-on-year.

According to CRIC monitoring, the new supply during the Spring Festival holiday in 84 cities was only 250,000 square meters, which was a 95% drop from the week before the outbreak (taken by the closure of Wuhan on January 23).

Sales and funds are the lifeblood of developers. Many of them will experience a break in the capital chain when they stop working for a long time. At this time, their "rescue soldiers" are coming.

On the evening of February 12, new policies broke out in Wuxi and Xi'an, and they began to "rescue the city."

In the middle of the night on February 12, Wuxi first introduced 17 subsidy measures for real estate companies, becoming one of the earliest cities to propose specific support policies to the housing market during the epidemic.

These market rescue policies include extension or reduction of tax for developers, loans and financial support, and relaxation of supervision of pre-sale funds. For example, companies with difficulty in repayment with loans coming due by June 30, 2020, and the loan period is one year Within the loan implementation, there is no repayment of principal and repayment; you can apply for deferred land delivery and deferred payment of the transfer fee.

This is a full range of support for housing companies. The policy from the night awakened many real estate people. Yan Yuejin, research director of the Think Tank Center of the E-House Research Institute, believes that there are three innovative regulations: one is the advance payment of pre-sale funds. For buildings that have received construction permits due to the impact of the epidemic, they can apply for cross-node allocation of supervision funds. In fact, the content of the supervision of pre-sale funds was relaxed, which objectively accelerated the speed of return of pre-sale funds.

Second, relax pre-sale conditions. On the basis of satisfying the 25% investment amount, commercial housing can be pre-sold, which objectively makes the pace of sales of housing enterprises faster.

There are also heavy facility work cycles. Compared with the practice of allowing projects to be postponed in some cities, Wuxi clarified the construction cycle setting, allowing housing companies to streamline investment routes and project rhythms, and has positive significance for subsequent project development.

At about the same time, Xi'an also sent a signal to rescue the city. Xi'an introduced ten measures to promote the land market. Compared with Wuxi's rescue policy, Xi'an's rescue policy was not so “big move”, but there were also “bright” regulations. .

If the policy clarifies the land transfer payment installment policy, that is, 50% of the land transfer price will be paid in the first month after the transfer contract is signed, and the rest can be paid in installments within the next year.

Many housing companies have paid great attention to this policy. Yan Yuejin believes that this policy objectively reduces the cost of land for housing companies, and has a positive effect on housing companies' ability to acquire land in the near future and effectively spend special periods; and the policy is clear. Enterprises will also provide various support in handling planning permits and real estate registration procedures.

As the second-tier cities, Wuxi and Xi'an took the first shots to help the property market, which will undoubtedly help the housing market that has not yet "thaw" to open a new year to boost market confidence.

The real estate "market rescue" boom has also spread from second-tier cities to first-tier cities. Shenzhen and Guangzhou also opened the door to "market rescue".

On the evening of February 12, Shenzhen launched four major measures to make it possible to apply for an extension of the provident fund loan, which will help the buyers.

On February 13, Guangzhou Nansha also followed up on the city rescue policy, introduced ten caring companies, reduced real estate taxes and urban land use rights in accordance with the law, and strengthened financial support.

Of course, this is only a policy issued by the local government to support specific industries in a certain period of time, and it cannot be tantamount to relaxing real estate regulation.

In addition to the policies implemented in some cities, the real estate industry organizations in some provinces are also "calling to rescue the market." Recently, Anhui and Jiangxi Real Estate Chamber of Commerce proposed to relax restrictions on purchases and prices and reduce the proportion of mortgage down payment.

However, these recommendations have not been implemented so far. Some insiders pointed out that the weathervane of loosening the purchase price limit is of great significance, which means that major changes in the basic tone of housing and housing in the past three years should not be easily introduced.

The above-mentioned new policies or recommendations undoubtedly reflect the general aspirations of housing enterprises, and they are also a survival act of seeking to "live".

Yan Yuejin predicts that these new policies will strengthen the market confidence of various housing enterprises in the near future. Allowing housing companies to quickly change from a shutdown to a resumption of work will help to boost the performance of housing companies in the future, as well as the stability of the capital chain of housing companies.
iFeng: 楼市重磅!无锡紧急救市政策刷屏,17条措施力挺房企
The rise of real estate stocks against the market is related to the recent relaxation of the property market in some cities. Some cities are formulating relevant policies to support the development of the real estate industry.

Today, the Shanghai Composite Index fluctuated lower, closing down slightly by 0.71%, and the GEM Index was down by 0.99%. As for the industry, only 4 of the 28 Shenwan Tier 1 industries became popular. Benefiting from the expectation that some cities will relax the regulation of the property market, the real estate sector rose 1.36%, leading the two cities .
Individual developers are also offering deals to spur sales. Evergrande announced that until the end February, if the price of a home drops by May 10, the difference will be refunded. iFeng: 恒大:签署购房合同起至5月10日,若楼盘降价可以退差价
On February 13th, Evergrande Group announced that from the date of signing the "Commercial Housing Sales Contract" to May 10th, buyers enjoyed the lowest price housing rights, and if the purchase price is reduced, they can be compensated for the difference.

As a result of the pneumonia epidemic affected by the new coronavirus, many places have introduced measures to suspend the opening of commercial property sales offices and intermediary companies in order to reduce the concentration of personnel. As a result, many real estate companies have turned offline sales into online sales.

Evergrande has also taken measures to sell all its real estate across the country online. Buyers can conduct VR viewing, online housing selection, online housing purchase, etc. online. Evergrande stated that from now until February 29, buyers only need to pay a 5,000 yuan deposit on the "Hengfangtong" platform and sign the "Commercial Housing Online Subscription Book" to book the listing, and promised that buyers will Buy property at the lowest price.

In addition, from the date of signing the "Commercial Housing Sale Contract" and "No Reason to Check Out Agreement" to any time during check-in, buyers can enjoy the right to check out without reason.

Hengfangtong is a real estate app launched by Evergrande Group in 2015. Evergrande stated that it has so far paid nearly 10 billion yuan in commissions. During the period from February 10th to February 29th, anyone who has registered or recommended the Hengfangtong platform will receive a 1% commission bonus on the total transaction amount if there is a transaction.

1 comment:

  1. Nice articles with good info. I was wondering why stocks like TAO and Vanke and 3333 were not going down very much.

    It is also quite incredible that 7:1 has not been breached on the renminbi