Real Estate Rage is Back

The price was cut 22 percent and it triggered pissed off buyers who paid higher.

房价从1.8降价4千，泰州“华樾花园”交付维权pic.twitter.com/N88XQBLqdZ

— 财经数据库 (@caijingshujuku) August 31, 2023

I could not confirm via news, although a search for the city and project did turn up listings at the 18,000 yuan/sq ft price. This type of news would get covered years ago. I don't know for certain, but suspect this will run afoul of the new guidelines. In that case, take everything with a bit of salt until you see some confirmation because there are anti-CCP forces in the West that hype this type of news, show old videos claiming it is new and so on. I am fairly confident this is real because a busy season is coming in late September as both Mid-Autumn Festival and the Golden Week align. It would make sense for some developers to try discounts now to beat what all signs say will be a disappointing season.

Here is a post from 2019 speculating on this very timing: Will Real Estate Rage Return in 2019? Developers Slashing Home Prices Ahead of Mid-Autumn and National Day

Here's a protest from 2014. Link is dead now unfortunately, but I grabbed a picture: Real Estate Rage in Wuxi

Here's 2014, when it looked like the bubble might finally burst. Everything has been pushed back a decade and made far, far worse if this is indeed the bust: China Real Estate Rage Is Back; Ghost Cities Everywhere; Offshore Yuan Plunges; Talk of Falling Real Estate Prices Across China

This was my first real estate rage post from 2011. Home buyers in Shanghai angry at massive price drops, smash offices

More than a decade of this behavior thanks to the housing bubble requiring ever higher prices, insanely unaffodrable homes and developers need to move inventory to meet debt payments. Incredible to me that they did not deal with this in the interim. Instead here we are with the world economy holding its breath. Or at least, those in the world who are paying attention. Judging by the Nasdaq and social media, most of the U.S. doesn't care.

Troubles in China: Developers Going Down, Province Needs a Bailout

Here we are again, at the starting line for a crisis: Chinese Developers Going Down Like Dominoes

Chinese Real Estate Digs for Hope

Qiushi 求是 is the Chinese communist party's internal and external magazine.

Its goal is to "to publicize the governing philosophy of the CPC" with content that reports on political, economic, cultural and social issues, while providing analysis of world politics and China’s foreign relations". About 60% of its articles are written by political leaders.

In late February, Qiushi published part of a speech written by Xi Jinping in which he discussed the need for stable real estate growth along with repeating the line that "houses are for living in, not speculation on." As a result, hopes for a floodgate of easy money and regulatory policy evaporated. Since then however, the industry found a new hope: China's 5 percent GDP target for 2023. In a nutshell,

On the other hand, the main expected goal of this year's development is to increase the GDP by about 5%. Li Yujia said that this means that real estate at least cannot form a drag. To boost economic growth, real estate needs to perform well in investment, construction, and consumption this year.

iFeng: 房地产重磅！中央最新定调，关键信号来了

The Ride Never Ends: China to Inflate Housing Again

It seems like the world is out of ideas.

iFeng: 楼市重磅！央行、银保监会：新房价格连降3个月，可放宽首套房贷利率下限

Reuters: China property shares firm on more policy support, easing curbs

The central bank said on Thursday that for cities where the selling prices of new homes fall month-on-month and year-on-year for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases.

China is also planning to relax restrictions on borrowing for property developers by dialing back the "three red lines" policy, Bloomberg News reported on Friday.

The property sector, which accounts for a quarter of China's economy

What is Left Unsaid

The top story in the finance section at iFeng is...America's mortgage rates. Housing is of great interest to Chinese.

iFeng: 美国房贷利率创14年新高！刚需负担一年翻倍

As the Federal Reserve continues to raise interest rates violently, U.S. mortgage interest rates continue to soar, more than doubling in a year.

The average rate on a 30-year fixed mortgage in the U.S. has topped 6 percent this week, the highest level since 2008.

The average interest rate on 30-year fixed mortgages climbed to 6.02% this week, up from 5.89% last week, a survey of lenders released by US home mortgage finance giant Freddie Mac showed on the 15th. 2.86% a year ago. On the other hand, despite weakening demand amid high interest rates, U.S. home prices are still running high, with the average home now just under $370,000, still higher than a year ago.

Another top headline (below the above) is about how the Chinese housing market could be rebounding because the sales drop has narrowed for three months.

iFeng: 房地产多个指标回升！销售额降幅连续3个月收窄，房企资金状况有改善

Two real estate bubbles ready to burst in the two largest economies in the world.

Chinese Govt to Shore Up Domestic Bond Market

STCN: 监管推进有担保发债试点 房地产股债大涨

On August 16, it was rumored that the regulator held a closed-door meeting with some developers, and planned to designate state-owned enterprises to guarantee and underwrite demonstration housing companies to issue bonds to provide liquidity support for housing companies.

A number of real estate companies and people in the capital market confirmed the authenticity of the news to the Economic Observer Network. However, given that the bond market has been extremely sensitive recently, and the pilot has not really been implemented, the possibility of variables cannot be ruled out. Therefore, the regulators hope to participate in To keep a low profile.

Marketwatch: Chinese property stocks rally on reports of government bond issue

Chinese regulators have reportedly ordered state-owned China Bond Insurance Co. Ltd to guarantee onshore bond issuances to a number of developers in the struggling sector, according to Reuters.

Stock prices in the named shortlist bounced up in response to the news, with Hong-Kong-listed shares in property developer Country Garden Holdings up as much as 18% to 2.74 Hong Kong dollars early in the trading day and pared its gains later on Tuesday to a 9% rise

Shares of Gemdale Properties rose 5% while investors snapped up shares in Longfor Properties which reached highs of HK$26.40, a rise of almost 19%, and CIFI Holdings which rallied 12.9% to HK$2.22.

China Bond Insurance Co provides financial guarantee services and will provide “full amount, unconditional and irrevocable joint liability guarantee” to the medium-term notes for a number of developers, according to the Reuters sources.

Shenzhen Will Buy Back Homes If Prices Fall

Tencent: 罕见！深圳推出共有房，房价跌了企业保底

In order to make young people feel more at ease to buy a house, Shenzhen has launched a "shared housing plan for young talents". Young people who meet the requirements can buy a house at half price. After 3 years, when the house price rises, they can buy the other half of the property at the original price. If the house price falls, the company will guarantee the original price. If the home price falls, they will buy back the homebuyers's half.

...It is understood that the plan was jointly issued by Shenzhen Enterprise Human Resources Development Promotion Association and Shenzhen Anjiajian Industrial Development Co., Ltd., and will open 50 sets of industrial apartments in Baoan District, Shenzhen to young talents who meet the standards. It is expected to be completed by the end of this year.

This should be seen in the context of the "war for talent" in China. There aren't enough young people and fewer talented young people to meet demand. I'm not saying this plan is a good idea, but it should be viewed in context of cities paying bonuses to attract human capital. Contrast with the U.S. where the Federal Reserve and USG funnel cash to scum outfits like Blackrock who buy up homes and price young people out of homeownership.

Homebuyers Not Paying for Unfinished Homes, How Bad is China's Real Estate Market?

For more than a decade, the death of the Chinese real estate has been greatly exaggerated in the past. How about now?

ZH: "The Damage Could Be Huge": Chinese Banks Tumble, Swept Up In Mortgage Nonpayment Scandal As Borrowers Revolt

China Central Television said on its WeChat page that the regulator will guide financial institutions to participate in risk disposals based on market conditions, after researcher China Real Estate Information Corp. reported that home buyers had stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, spurring concerns that the quality of home loans is in rapid decline and could culminate in a 2007-like credit/housing bubble blow up.

Still, as Bloomberg Markets Live reporter Ye Xie writes, the grassroots movement of Chinese homebuyers boycotting mortgage payments isn’t exactly akin to the US subprime crisis of 2008. That said, no matter what Beijing does to address the latest chapter in China’s housing crisis drama, banks are likely to share the burden.

In the wake of a surging number of homebuyers who refuse to pay mortgages on construction projects that have stalled, China’s banking regulators said Thursday that they are coordinating with other agencies to support local governments in working to ensure the delivery of housing units. Separately, Bloomberg reported that policy makers held emergency meetings with banks to discuss the issue amid concern that it may worsen.

The boycotts raise the risk of mortgage defaults, a new set of troubles for banks that are already squeezed by exposure to ailing property developers. Mortgages make up almost 20% of total bank loans outstanding, amounting to about 39 trillion yuan ($5.8 trillion).

More at the link. It is serious enough that real estate professionals have started calling for a ban on pre-sales.

iFeng: 是否应当适时取消商品房预售制度，改为现房销售？

In the long run, the general abolition of the pre-sale system of commercial housing is the general trend. On the one hand, the pre-sale system naturally has many risks. For example, under the pre-sale system, once the capital chain of real estate development enterprises breaks, the project will not be carried out normally, resulting in a bad situation. The end of the building will damage the interests of the buyers; the buyers have paid all the house prices in advance by paying the down payment and bank mortgage loans, and assumed almost all the risks of the purchased houses in the future; the pre-sale system can ease the pressure on project development funds, extremely The development threshold has been greatly lowered, resulting in inefficient and disorderly competition in the industry; there are risks such as illegal sales and unfair transactions. Only by canceling the pre-sale system of commercial housing can we completely eliminate these risks, ensure the stable, healthy and long-term development of the real estate industry, and protect the interests of the people.

The pre-sale of commercial housing first appeared in Hong Kong and the pre-sale system of commercial housing in Hong Kong is called "sell off-the-plan". Due to the rapid population growth in Hong Kong at that time, there was a serious shortage of housing, and the Hong Kong government and developers had insufficient liquidity. On the one hand, this new sales method could raise construction funds for housing developers in a timely manner, and on the other hand It allows buyers to enjoy certain discounts on the purchase price, adapting to the capital situation and market needs at that time, making this model develop rapidly in Hong Kong and later spread to mainland China. In my country, the "Urban Real Estate Administration Law" in 1994 and the subsequent "Urban Real Estate Management Regulations", "Administrative Measures for the Advance Sale of Commercial Houses" and other legal documents clearly stipulated the pre-sale system of commercial houses. This new house sales method is widely used and has been It has become one of the core management systems for the operation of China's commercial housing market, and is the main mode of new housing transactions in my country.

There are a lot of back and forth arguments in the Chinese press, between those who say it helps homebuyers and those who want it banned because of the risk. My sense is it only makes homebuying affordable when there is a bubble, such that waiting 2 years for the finished home (or longer) results in a cost 20-50 percent higher. Yet, the pre-buy system fuels the bubble. Seems simple to me, probably also to the CCP.

iFeng: 防范延期交房，西安率先出手！沧州提出“购房款不进入监管账号合同无效”

On July 14, in order to effectively prevent the delayed delivery of commercial housing, five departments including Xi'an Housing and Urban-rural Development Bureau jointly issued 13 measures, including ensuring the compliance of land purchase funds, monitoring the whole process of project construction, and fully accounting for pre-sale funds. , strict payment standards, consolidate bank responsibilities, improve real estate credit management, etc.

In addition, Cangzhou, Hebei Province recently issued the "Cangzhou City Commercial Housing Pre-sale Fund Supervision Measures" (draft for comments), which clearly stated that all pre-sale funds of commercial housing should be deposited into the supervision account. After the supervision account is established, it must be noted in the commercial housing sales contract Ming: "The purchase price does not enter the supervision account, this contract is invalid, and the buyer and seller can cancel it at any time".

Industry insiders believe that the Xi'an policy is the first policy in the country aimed at delayed delivery of houses, which has released a very strong signal meaning. Its core content is to strengthen the supervision of pre-sale funds, and at the same time, strictly control the aggressive behavior of real estate companies from the land purchase process to prevent real estate companies from illegally acquiring land and creating risks; the establishment of a "one project, one file" system has a binding effect on the operation of real estate; The standardization and management of pre-sale work can help prevent illegal real estate from entering the real estate market, resulting in the transmission of risks to home buyers.

The Paper: 取消商品房预售制，该进入实操层面了

Recently, a number of property owners announced the suspension of loan repayment due to the delayed delivery of the property, which has attracted widespread attention. A number of banks issued announcements in response, saying that the scale and proportion of personal housing loans involved in risky real estate are relatively small, and the overall risk is controllable. The person in charge of the relevant department of the China Banking and Insurance Regulatory Commission said yesterday that they will guide financial institutions to participate in risk disposal in a market-oriented manner, and support local governments to actively promote the work of "guaranteeing the delivery of buildings, protecting people's livelihood, and maintaining stability".

With the intervention of many parties, I believe that the loan suspension crisis will be resolved in a benign direction.

The delivery of off-plan houses bought by home buyers has been delayed, or even completely unfinished, so that they must take the risk of sacrificing personal credit to protect their rights. This sympathetic experience has led many people to target the root cause of the unfinished business - the pre-sale system of commercial housing. For a time, the voice of "cancelling the pre-sale system of commercial housing" resurfaced.

The atmosphere is all set here, cancel the pre-sale system of commercial housing, is it time to enter the practical level?

Conclusion: China's real estate market has developed to where sale of only finished construction should be allowed.

Homebuyers refuse to pay mortgages on undelivered homes cannot be divorced from China's lockdown policy. Real estate in China is always a potential trigger for a crisis, but this pre-sale issue doesn't look like a crisis by itself. If the lockdowns trigger a crisis, it will emerge from somewhere else, or from a build-up of many smaller issues such as this one.

Chinese Cities Now Subsidizing Home Buying

Boom-bust cycle is all that's left in China.

iFeng: 多地以财政补贴提振楼市：购房最高补贴房款2%，契税全免

Taking Yiwu, Zhejiang as an example, on May 26, the Office of the Leading Group for the Steady and Healthy Development of the Yiwu Real Estate Market issued the "Implementation Rules for Yiwu Deed Tax Subsidy for House Purchase in 2022". The detailed rules stipulate that the purchased house is a commercial house that has obtained a commercial house pre-sale license in Yiwu City, and the citizens who sign the commercial house sales contract online from now until December 31 can receive a deed tax subsidy ranging from 60% to 100%. .

Among them, from now until September 30, the first set of commercial housing will be subsidized according to 100% of the local retained part of the deed tax paid; the purchase of two or more sets of commercial housing will be subsidized by 80% of the local retained part of the deed tax paid. During the period from October 1st to December 31st, for the purchase of the first set of commercial housing, 80% of the local retained part of the deed tax paid will be subsidized; for the purchase of two or more sets of commercial housing, 60% of the local retained part of the deed tax paid will be subsidized subsidy.

Taiyuan in Shanxi also issued a similar policy. Taiyuan stipulates that from May 20, 2022, the first housing area of ​​less than 90 square meters will be fully subsidized by the finance deed tax. The first set of housing with an area of ​​90-143 square meters (inclusive) shall pay the deed tax by 80% of the financial subsidy, and the deed tax shall be paid by 50% of the financial subsidy for the area of ​​more than 143 square meters.

China Tries to Keep Plates Spinning Amid Lockdowns

China Daily: Regulations eased to boost property market

As of April 20, more than 85 cities had eased their home buying regulations, with measures ranging from looser purchasing restrictions, loan limitations and sales curbs to lowering the down payment proportion, cutting home loan interest rates, providing support via provident fund loans, and others, according to calculations by the Zhuge Real Estate Data Research Center.

"On the one hand, these policies have unleashed rational home demand, while on the other they have boosted home buyers' confidence in the market outlook, which will help increase transactions in the coming months," said Wang Xiaoqiang, chief analyst with the research center. She added that as the measures gradually take effect, the market will heat up step-by-step.

iFeng: 央行、银保监会表态资本市场、房地产、平台经济：及时优化地产信贷政策

1. Encourage large banks and other high-quality listed banks with relatively high provision levels to reduce provision coverage ratios in an orderly manner and release more credit resources.

2. Promote the increase in the amount of financing, the expansion of the scope, and the price reduction of small and micro enterprises, support the relief of difficult industries such as foreign trade, service industry, and civil aviation, and increase financial support for technological innovation, specialization, specialization, and new enterprises.

Credit growth rises when it flows into housing, or it doesn't rise much. Will it be different this time?

As for the lockdowns, the public thinks they're all about the virus: 关键时刻 中央开了一次很不寻常的会议

At a critical moment, the central government held a very unusual meeting!

Biggest unusual:

First, the time for the conference draft is not the evening news broadcast, but 12:30 noon, which is very rare;

The second is the wording of the meeting. From the beginning to the end of the Xinhua News Agency's press release, a strong sense of urgency and mission was felt.

For example, the Xinhua News Agency's report on the Politburo meeting on April 29, in addition to pointing out that this year's "achievements were hard -won ," immediately judged the current situation:

The meeting pointed out that the new crown pneumonia epidemic and the Ukraine crisis have led to increased risks and challenges, the complexity, severity and uncertainty of China's economic development environment have increased, and stable growth, employment, and prices are facing new challenges. It is very important to do a good job of economic work and to ensure and improve people's livelihood. It is necessary to strengthen confidence, overcome difficulties, and ensure that the major policies and principles of the Party Central Committee are implemented in place.

The situation this year is indeed not optimistic. I believe that everyone is well aware of it.

Two of the most important risk challenges: Covid-19, Ukraine crisis.

What matters?

Do a good job of economic work, and effectively protect and improve people's livelihood.

Development is the last word, and people's livelihood is the biggest politics.

The center is very awake.

So, the next sentence is very important:

The meeting emphasized that the epidemic must be prevented, the economy must be stabilized, and development must be safe, which is a clear requirement of the Party Central Committee.

Please note that the epidemic must be prevented, the economy must be stabilized, and development must be safe. These 15 words are the clear requirements of the Party Central Committee.

Point out directly, without ambiguity, not to grab one and put the other, but three, we all want.

That's confidence, that's the mission.

Officials at all levels, do you understand?

Of course, the most important thing is how to do it?

I believe that for many of my friends, the biggest headache right now is the epidemic.

Because of the epidemic, many people's long-awaited May Day holiday has become a home tour; many families, separated from each other, are temporarily unable to reunite.

When I woke up, the neighborhoods next to me were temporarily under control, and my friends there would all have a special Labor Day.

There is no way to do this. The situation of the epidemic is indeed severe, and we cannot afford to take it lightly.

How does the center judge?

Xinhua News Agency's press release, the central government has this paragraph:

According to the new characteristics of virus mutation and spread, it is necessary to efficiently coordinate epidemic prevention and control and economic and social development, unswervingly adhere to the people first, life first, adhere to external prevention of import, internal prevention of rebound, insist on dynamic clearing, and protect people's lives to the greatest extent. and health, and minimize the impact of the epidemic on economic and social development.

A very meaningful sentence.

1. Now that the epidemic has new characteristics, we must adapt to changes according to the mutation and spread of the virus, not static.

2. It is necessary to coordinate epidemic prevention and control and economic and social development, and to coordinate efficiently . Once again, it is not just one and no other.

3. Three insistences and unswerving support: 1) People first, life first; 2) External defense input, internal defense rebound; 3) Dynamic clearing , these three points cannot be ambiguous, and it is also our success in the past three years. the key.

4. The final goal, using two top-level words, two maximum degrees:

To protect people's lives and health to the greatest extent possible,

Minimize the impact of the epidemic on economic and social development.

Clear and loud.

China's fight against the epidemic has entered a new stage.

The good news is that, according to Li Bin, deputy director of the National Health and Medical Commission, the epidemic situation in Jilin and other places has been effectively controlled.

Just yesterday at the press conference of the State Council Information Office, a great expert Liang Wannian said, and I believe many of my friends have also seen it: Fighting against Omicron does not mean that the whole city must be tested for nucleic acid, much less that it must be Citywide lockdown.

This should also be very targeted.

According to the requirements of the central government, the mutation and spread of the virus have changed, and we really want to change, but the three insistences cannot be changed, and the goal cannot be changed.

Officials at all levels, do you understand? Everyone, do you understand?

The Shanghai Composite climbed back above long-term support after the May Day holiday today. (The chart below updates after the close.) The 3000 is both a psychological level and below long-term support. Next support would be around 2300.

Haidilao Rolling Over With China

So much for that idea if this keeps up. The weather will save China from the lockdowns, but then it all depends on if there is a recovery.

Snack Empire has a better setup if it can break higher. I have been holding this one for quite some time.

The big question for China is whether the government stimulus efforts will pay off.

Bloomberg: China Cabinet Vows Monetary Stimulus, Saying Risks Worsening

Officials will use multiple monetary policy tools at an “appropriate time” to support the real economy, according to a readout from a meeting of the State Council chaired by Premier Li Keqiang on Wednesday. The “complexity and uncertainty of domestic and foreign environments have intensified, and some have exceeded expectations,” the meeting said.

The State Council, China’s Cabinet, didn’t mention specific easing steps, like reducing the reserve requirement ratio. It previously gave signals for a RRR cut in July and December days before the People’s Bank of China cut the ratio.

Chinese authorities have made repeated vows to stabilize the economy in recent weeks as Covid restrictions curtail spending and business activity. A gauge of sentiment in the services sector fell in March to the lowest level in about two years, while the country’s financial hub Shanghai is in total lockdown. That’s putting the government’s ambitious growth target of about 5.5% for this year in doubt.

The State Council said that while the economy is still moving in a reasonable range, new downward pressures have intensified, with more frequent virus outbreaks, a slowing global economic recovery and fluctuating commodity prices. The government should promptly introduce measures that are conducive to stabilizing market expectations and bring forward some policies laid out in the government work report, it said.

Top financial leaders pledged last month to ease regulatory crackdowns, support property developers and stimulate the economy through monetary policy. However, few concrete steps have been taken so far.

Credit easing doesn't work because of debt problems and restriction on housing speculation. Credit grows if there is a housing bubble, otherwise not. The government has to force investment if it wants more growth. They are talking about front-loading spending, but not doing any major stimulus yet.

iFeng: 燕郊首付降至20%？被套的北漂买家：五年前赶着上车，如今房价跌了一半

However, Yanjiao is not Beijing after all, and it is difficult for the needs of "beijing drifters" to support the huge stock market. Recently, there has been news that Yanjiao is trying to relax the housing purchase policy to stimulate the property market, reducing the down payment ratio for the first house to a minimum of 20%, and the down payment ratio for the second house to a minimum of 30%. Prior to this, the down payment ratio for the purchase of a house in Yanjiao was 30% for the first set and 50% for the second set.

Times Finance learned from the local real estate agency in Yanjiao that the store has indeed received a notice that the down payment ratio has been reduced, and many real estate agencies have begun to use "low down payment" as a gimmick to persuade customers to "get on the bus" as soon as possible. However, on April 7, news came again from the Yanjiao market that some banks stopped the reduction of the down payment, and the real estate agency also told Times Finance that the "down payment reduction" may have to wait.

One anecdote from the market:

Cai Zhiqiang works in Wangjing, Beijing. During the morning and evening rush hours, the commute time from Yanjiao to Wangjing is at least an hour and a half. When there is a serious traffic jam, the time is even more unpredictable. In the evening, in order to avoid the rush hour, Cai Zhiqiang always worked overtime on his own. He waited until the road conditions improved after 9 pm before leaving home, which was often late at night.

The fatigue of commuting is not the main reason why Cai Zhiqiang regrets buying a house in Yanjiao. What he did not expect was that the Yanjiao property market was in full swing in 2017. After just three or four years, the hot situation was completely reversed, and house prices fell all the way. Last year, Cai Zhiqiang's neighbor listed a second-hand house with the same size of 73 square meters, and the price had fallen to 1.5 million yuan.

"Watching the housing prices in Yanjiao keep dropping in recent years, I feel like I've been deceived. The listing price of 1.5 million yuan can be said to be a blood loss. As far as I am concerned, the unpaid loan plus interest is still there. 1.2 million yuan. Moreover, few people came to see the house after it was listed. It has been listed for almost a year, and it has not been sold yet.”

Assuming he made a 30 percent down payment, his loan-to-value ratio has fallen over the past 5 years. He has 300,000 yuan in equity, down from the roughly 900,000 yuan down payment he would have dropped in 2017 if the 30-percent down payment as in effect.

The marketing director of a real estate company in Beijing told Times Finance that the property market in the north has not been ideal in recent years. Even in Beijing, it is in a stable state, with few sharp rises and falls. The investment logic of the property market around Beijing is attached to the Beijing market. After the market stabilized, the premium space of the Beijing-based property market was curbed, which caused a large market shock.

"Whether it is a home buyer or a real estate company, as long as they rushed into the Beijing-based property market at a high level a few years ago, most of them can't escape the fate of being 'set'. Now real estate companies will still selectively deploy the Beijing-based property market, with sufficient funds. In contrast, many private housing companies are significantly reducing the frequency of taking projects around Beijing.”

Elsewhere, banks are offering six months of mortgage relief because of the lockdowns.

iFeng: 银行纾困房贷还款：最长延期半年

Liao Xing, who has been working in Shanghai all the year round, did not expect that the spring of 2022 would be spent in Shangrao, his hometown.

"The mortgage is about to be repaid, but I still don't know when I will go back to work. The bank can give me some time to slow down." Since buying a commercial house in his hometown last year, Liao Xing has taken on a mortgage of about 3,000 yuan per month. . When the epidemic hit, Liao Xing's income dropped sharply, and the pressure on loan repayment increased sharply.

This may be the epitome of some people who have bought houses at present. Recently, information about asking for help due to the impact of the epidemic on income has been frequently seen on the Internet, and discussions on "deferred mortgage repayment" have also rushed to the hot search.

"It's so necessary, it's time to embody the bank's sense of social responsibility!" On social platforms, the voices that banks should give support are getting louder.

Industry insiders pointed out that the current epidemic has an impact on personal cash flow, and a reasonable extension is better credit protection for individuals, reduces the impact on future financial activities, and is conducive to better support for people's livelihood development.

According to the reporter of Caijing, many banks, including large state-owned banks, joint-stock banks, and urban and rural commercial banks, have responded to this. Some banks have introduced targeted measures, including grace period and credit protection protection, for areas severely affected by the epidemic. However, in general, there is no unified policy issued by each bank at present. Industry insiders believe that due to the large number of details involved, it is unlikely that banks will fully implement loan deferrals.

Emphasis in the original.

Chinese Banks Compete For Dwindling Pool of Homebuyers

iFeng: 楼市新变化！首套房贷利率0加点、当天放款、首付溯源审核简化

Purchasing wealth management products can reduce the interest rate of mortgages, apply for a loan and give legal consulting services... Following the "interest rate cut wave", some banks have launched "fancy" customer solicitation activities.

China Securities Journal • China Securities Taurus reporter recently investigated and found that the mortgage interest rates in Guangzhou, Nanjing, Suzhou and other places have dropped significantly, and Suzhou has even experienced a rise in interest rates. In terms of the lending cycle, the lending review of banks in various regions is relatively optimistic, and some banks even said that the procedures are complete and they can lend on the same day.

In addition, some banks adjusted loan review requirements on a prudent basis, and appropriately simplified the review of down payment sources, social security, and running water.

Guangzhou area "fancy" interest rate cut

The reporter learned from the survey that the interest rate of the first-home commercial loan of the state-owned banks in Guangzhou has remained at around 5.4%, which has remained basically stable after the reduction last month, but there are still many joint-stock banks and city commercial banks that have staged "fancy" interest rate cuts. Strategy.

Zhang Hua (pseudonym), the personal loan manager of a joint-stock bank in Guangzhou, said: "The loan interest rate for the first home has just been adjusted recently, and it is currently 5.35%. However, if you upgrade to a VIP customer, the loan interest rate can be reduced by another 5 basis points; upgrade to a private bank. Customers, you can try to apply for the lowest interest rate of 5.25%.”

The reporter learned that the bank's standard for VIP customers is that the average daily deposit amount reaches 500,000 yuan per year, and to become a private bank customer, the average daily assets need to reach 6 million yuan in the month of applying for a loan. "Banks are more inclined to provide loans to customers with better credit status. Therefore, more interest rate concessions will be given to customers with stable capital flow and better asset quality." Zhang Hua said.

A business employee from another joint-stock bank in Guangzhou revealed: "The current interest rate for the first home loan is 5.3%, and the second home loan interest rate is 5.6%. However, if you can buy new 1 million yuan of funds to purchase the bank's wealth management or deposits and other products, you can apply for a loan interest rate drop. A 10-20 basis point discount.”

In addition to domestic banks, foreign banks have also made great efforts to "cut interest rates".

Credit consultants of many foreign banks in Guangzhou said that the loan interest rate for the first home can even be as low as 4.8%, and the loan interest rate for the second home can be as low as 5.2%. However, some foreign banks said that the housing listings that can apply for the lowest loan interest rate are limited to properties located in some high-quality locations and within 20 years of age.

In addition, a number of banks in Nanjing have launched a "price war". The reporter's survey found that the current first-home loan interest rate has dropped to between 5.4% and 5.6%, a reduction of about 20-30 basis points.

In the Suzhou area, there is a situation where the interest rate is 0 plus points. A personal loan officer from a joint-stock company in Suzhou told reporters: "Currently, the interest rate for the first home and the loan-free second home can be applied for at least 4.6%, and there is no increase on the basis of the 5-year LPR, which is almost the level of three years ago."

The mortgage interest rates in Beijing, Shanghai, Shenzhen and other regions were relatively stable, fluctuating within 5 basis points, and there was no significant reduction.

Disburse as soon as the day

A staff member of the personal loan center of the Beijing branch of a state-owned bank told reporters: "Now the result of the approval can be obtained in about a week, and there is no need to queue up. The loan can be completed within three weeks after the transfer."

A personal loan officer from a joint-stock bank in Beijing said: "The approval is very fast, and it can be completed in two or three working days. At present, the mortgage loan amount is sufficient, and the loan of less than 5 million yuan can be released on the same day as long as the preliminary procedures are complete."

The overall lending speed in Guangzhou has also increased significantly. Many banks have accelerated the lending speed to within one month after the transfer of accounts, and some banks have stated that "the loan will be released in about 3-4 working days after the deposit is issued".

Down payment traceability audit is simplified

In terms of loan review, the Guangzhou region made some adjustments on the basis of prudence.

"Now the review can be completed within two weeks, and the results will be available within 5 working days at the earliest," Zhang Hua revealed to reporters, "The review is still very strict, but some unnecessary links are simplified. For example, parents In the case of transferring money to a child to buy a house, the source of the down payment used to be traced back to the parent’s account review flow, but now it is only necessary to submit the relevant proof that the source of the buyer’s money is the parent.”

A number of banks in Guangzhou said that since February this year, the review policy has been continuously fine-tuned. "When we come back this year, we have simplified the review of social security and account flow, mainly to see if there are bad credit records, or important indicators such as loans and foreign debts." said a loan manager of a joint-stock bank.

A real estate brokerage consultant told reporters that some banks had previously required lenders to have a monthly turnover higher than twice the monthly payment, limiting the amount and duration of loans that homebuyers could borrow. Simplifying the review of social security and bank accounts now is good for homebuyers.

Another Guangzhou joint-stock company said: "At present, there are no restrictions on the customer's work unit, and the income can meet the approval threshold. The requirements for monthly turnover are not high. When the customer handles the transfer, we also provide legal counsel services from professional lawyers."

Housing Policy Easing Expected in China

Caijing: 多地降低首付比例 楼市“小阳春”仍难再现

In order to repair the sluggish real estate market, local governments and financial institutions have successively introduced various easing policies from the end of 2021 to the present. In recent days, a bigger stimulus than lowering personal home loan interest rates has been unfolding in some cities.

On February 25, Jinzhong, Shanxi Province lowered the down payment ratio for second-home provident fund loans to 20%; on February 18, Nanning, Guangxi lowered the minimum down payment ratio for second-home provident fund loans from 40% to 30%.

Not long ago, Jinzhong, Heze, Nanning and other cities also lowered the down payment ratio for the first home loan.

"Financial Eleven" statistics found that in this round of adjustment, the first to introduce policies to reduce the down payment ratio of housing loans are basically low-level cities below the third and fourth tiers. Most of the adjusted down payment ratio for the first house can be reduced to 20%, and the down payment ratio for the second house is mostly concentrated at 20%-40%.

According to incomplete statistics from the China Index Research Institute, from December 2021 to now, more than 40 cities in China have regulated the real estate market in terms of reducing the down payment ratio, increasing talent introduction, granting housing subsidies, and increasing the amount of provident fund loans.

Many interviewed experts believe that more cities may introduce similar policies in the future, but first-tier and strong second-tier cities will most likely not follow suit. The restoration of the real estate market is affected by multiple factors. After the introduction of one or two policies, the market will not improve immediately. It is unlikely that a "little spring" will appear nationwide in March and April this year.

...Taking Heze as an example, according to the data of the China Index Research Institute, since June 2021, the sales of commercial residential buildings in Heze have experienced a year-on-year decline for eight consecutive months, and in the second half of 2021, they will fall by 45% year-on-year; in January 2022, the price of new houses in Heze will fall by 0.5% year-on-year. , second-hand housing prices fell 2.7% year-on-year.

The downturn in the real estate market has led to a decline in the willingness of real estate companies to acquire land. According to data from the 58 Real Estate Research Institute, the scale of land transfer fees in Heze in 2018 was about 24 billion yuan, while the figure in 2021 was only 6.7 billion yuan.

At the same time, Heze's local finance is increasingly dependent on land transfer income.

According to the data of the National Bureau of Statistics, the proportion of state-owned land transfer revenue in Heze to the general fiscal revenue increased rapidly from 21%-34% in 2012-2015 to 53%-64% in 2017-2020. The national average for 2020 is just 31%.

Local govermnents still rely on land sales for financing infrastructure investment plans.

China Slowdown: Real Estate Investment Drops 13.9pc YoY in December

The Chinese government likes to report cumulative year-to-date growth totals. I used to dig into the numbers and look at single-month year-on-year data because it gives a quicker signal around turning points. I stopped spending time on it because China kept changing data sets and making it harder to calculate. It also became pointless with increased manipulation in the economy. However, once in awhile it pays to go a little deeper because as the chart below shows, growth is rapidly decelerating in Chinese real estate.

In December 2020, real estate investment increased 11951亿元 or 1195 billion RMB. The increase in December 2021 was 10288亿元, a decrease of 13.92 percent.

The prior post was China Reveal Comes in March. I'll go through how that's going to play out with real estate. The first print of the year comes in March because January-February is combined. Spring Festival is a two-week holiday that moves with the lunar calendar. The two-month total gives a clean number that requires no statistical adjustment. The increase of 38.3 was an easy comparison in Jan-Feb 2021 because it compared to the pandemic period. A comparison between December 2020 and Jan-Feb 2021 shows that increase was 17 percent month-on-month.

How much growth from December 2021 to January and February 2022 is needed to produce a positive print in the first reported real estate investment number in March? Answer: 35.94 percent. If real estate investment increases only 20 percent from December's total, the first number will be negative 11 percent. The government can avoid this by frontloading investment similar to 2021. The cumulative YTD growth total will decline as it did last year, but it will remain positive for many months, perhaps all of them if stimulus is launched during 2022.

I don't want to overstate the relevance of this data. What matters isn't this one data point, but the context. Back in 2014, when I paid close attention to provincial data, I noticed Liaoning's real estate investment plunged: Liaoning Sounds Warning on Chinese Economy. The province relied on higher stage production, industrial raw materials. After the 2011 peak in commodities, all of northeast China was slowing, but Liaoning was more acute. To make up for it, they shifted investment into real estate. Liaoning eventually had a brief headline recession as more dominoes fell. Banks were still failing in 2019. The government could deal with it all because growth elsewhere was strong.

What else was going on in 2014? The Federal Reserve's taper. The month that Chinese financial news clued me in to Liaoning's situation was the same month the taper concluded: October 2014. History is rhyming. Pay close attention. Even if China steers through it all again, the prior period included plunging commodity prices, a soaring U.S. dollar, "surprise" yuan depreciation and major headwinds for U.S. equities. It didn't end until 15 months later, when in early 2016 global central banks informally agreed to the Shanghai Accord.

China Real Estate Investment Slowing

Same deal as fixed asset investment, the cumulative growth figure for the year is steadily dropping indicating an accelerating slowdown in the second half of the year.

NBS: 2021年1—11月份全国房地产开发投资增长6.0%

Chinese Developers Quitting Real Estate, BigTech Moves In

iFeng: 楼市寒冬！绿地、恒大：我不做房地产啦！字节、快手、波司登：我来

However, perhaps as someone in the industry said, "Real estate is like a besieged city. People inside are miserable, but people outside want to come in." Contrary to the continuous transformation of real estate companies and the sale of assets, some Internet giants have entered the real estate industry one after another .

For example, ByteDance has accelerated its deployment of real estate business since this year, and has successively established 8 companies with real estate brokerage services through the establishment of new companies, the acquisition of equity, and the change of business scope . On October 25, Kuaishou also announced its entry into the real estate industry .

Prior to this, Internet giants such as Alibaba, JD.com, and Xiaomi have entered real estate . Even just a few days ago, apparel companies Bosideng and Hongxing Erke were also rumored to have entered the real estate industry, and related news rushed into hot searches on Weibo.

What can the entry of these Internet giants bring to the real estate industry? Obviously, it is traffic and digitization.

However, judging from the current general environment, the real estate market today is cold and windy. It remains to be seen whether the Internet giants enter the game.

Golden Week Home Sales Slow, Shenzhen Records Four Existing Home Sales

iFeng: 惊呆！深圳二手房凉了？国庆期间仅成交4套 新房也在打折促销…

New home sales were strong in Shenzhen, but that was boosted by huge price cuts:

According to data from Shenzhen Centaline Research Center, during the National Day this year (October 1st to October 7th), the transaction of new houses in Shenzhen was 1081, a year-on-year increase of 163%. However, in the eyes of industry insiders, there may be reasons for the delay in online signing of this data.

Recently, the supply of new houses in Shenzhen has increased sharply, but the "new craze" has been uneven. There are not only the new “Sunlight” of Shajing Internet celebrity, but also the price-cutting promotions of rigid demand and investment disks that have attracted attention. In particular, Kaisa Yiduhui, located in Buji, Longgang District, became the focus of Shenzhen's property market during the National Day. Recently, Kaisa Yiduhui launched a second- and third-level linkage to launch a discounted house purchase activity. The original house price of 1.2 million yuan once dropped to 750,000 yuan, with an average price of about 19,000 yuan per meter, which maxed out the real estate agency’s WeChat circle of friends.

Shenzhen saw only four existing home sales recorded during the holiday week:

In terms of second-hand housing, there were 4 transactions in Shenzhen during the National Day, with a total of 351.22 square meters. This figure hit a record low for many years, and during the National Day holiday last year, due to the impact of regulatory measures, the volume of second-hand housing transactions in Shenzhen also fell by nearly 47% year-on-year. In addition, data from the Shenzhen Association of Real Estate Agents shows that from September 27 to October 3, Shenzhen's second-hand housing network signed only 303 sets, a decrease of 18.5% from the previous month.

"Most of our store managers choose to take vacations because business is very poor." In the Futianyuanling area, a real estate agency manager told reporters that there were not as many customers as usual, and with the increase in new houses, second-hand houses almost entered. Quick freezing period.

Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, said that there is no need to be overly pessimistic about the current real estate market. The recent credit policy can be considered to have ushered in an inflection point. Although the interest rate decline is not obvious, it is expected that the bank quotas will increase in the fourth quarter, which will obviously help support the market transaction volume. At the same time, judging from the actual process, under the control of various policies in the third quarter, there were obviously fewer actions to buy houses into the market, and various wait-and-see sentiments increased. With the advent of the fourth quarter, various types of housing demand will continue to be released, which will also help various housing companies to destock their projects. Based on this, it can be considered that although the market is still showing signs of fatigue during the November holiday, the pessimism has been significantly reduced.

Dongguan also cooled.

iFeng: 房价直接腰斩？东莞发布二手房指导价 楼市寒冬何时过境?

According to data from the Zhuge Housing Search Data Research Center, 48 second-hand houses were sold in Dongguan during the Mid-Autumn Festival this year, while only 27 units were sold in Dongguan during the "October" holiday. The transaction volume fell 44.3% compared with the Mid-Autumn Festival holiday and 88.9% compared with the same period last year.

Zhang Dawei, chief analyst of Centaline Real Estate, believes that preventing the property market from cooling too quickly is likely to become a future policy trend. In the past two years, the property market has become more and more stringent. On the one hand, there is a “price limit order” for new and second-hand houses in hot cities. Obviously, a sharp rise in housing prices will amplify financial risks, and housing prices are also unstable when they are too fast. Recently, many cities across the country have issued "restriction orders". On the surface, some real estate companies are rushing away under the high pressure of debt. In fact, it further shows that "stability" is the most certain keyword in the property market.

ZH: "Catastrophic" Property Sales Mean China's Worst Case Scenario Is Now In Play

With that preamble in mind, we bring readers' attention to a little noticed report in Shanghai Securities News, citing China Real Estate Information Corp. research (link), which revealed that more than 90% of China’s top 100 property developers’ sales declined in September by an average of 36% from the same period last year. According to the report:

Sept. sales totaled 759.6b yuan ($118BN), down 36.2% from September 2020 and 17.7% lower from the same period in 2019, deepening a downward spiral that started in July

Among companies, 60% of developers saw sales decrease by more than 30% y/y in Sept.

Beijing, Shenzhen and Guangzhou saw transaction volume of residential properties decline 30% y/y, while Shanghai fell 45%

Real estate is the bubble in China. It is backed with enormous levels of debt that are implicity guaranteed by the state. China's wealth gap is also expressed more intensely as unaffordable real estate. China doesn't want home values to fall, but it also doesn't want home values to rise faster than wages. It is trying to control home prices by whatever means it can. China hasn't found a way to keep capital flowing into real estate without restricting credit though, and now they're restricting access to all manner of investment products that allow capital flight in any form. That looks like the behavior of a state that is contemplating a currency devaluation or policies they know will invite capital flows into foreign currencies and commodities.

Chinese consumers are also retrenching according to the central bank's quarterly sentiment survey.

iFeng: 央行报告：储蓄意愿上升 投资、消费意愿下降！银行家企业家这样看经济

In the third quarter, urban depositors' attitudes towards consumption, savings and investment also changed. On the one hand, 50.8% of residents tend to "save more", an increase of 1.4% from the previous quarter; on the other hand, residents who tend to "consume more" accounted for 24.1%, a decrease of 1.0% from the previous quarter; Residents who “invest more” accounted for 25.1%, a decrease of 0.4 percentage points from the previous quarter.

All this is happening in the context of rapidly deteriorating U.S.-China relations. Remember the good old days when trade, not regional war, were the topic du jour? Up until and incluiding the 2016 Shanghai agreement, China and the U.S. worked together with other central banks to avert a finanial crisis. With tensions frayed and U.S. leadership collapsing, if somethihng breaks this time, it might stay broken.

When QE Ends, China Slows

Baidu: 银行房地产不良贷款现“双升”，警惕违约风险向金融体系蔓延

As the semi-annual reports of listed banks have been disclosed one after another, credit risk in the real estate sector has once again attracted attention. The reporter combed through the semi-annual reports and found that, regardless of whether large state-owned commercial banks, joint-stock commercial banks or city commercial banks, the balance of non-performing loans and non-performing loan ratios of most banks in the real estate sector have seen a "double increase."

Judging from the data disclosed by major state-owned banks, as of the end of June 2021, the balance of non-performing loans in the real estate industry of Industrial and Commercial Bank of China, China Construction Bank, and Bank of Communications were respectively 31.911 billion yuan, 11.564 billion yuan and 6.461 billion yuan, an increase of 15.673 billion yuan from the end of last year. 100 million yuan, 2.553 billion yuan, and 1.75 billion yuan; the non-performing loan ratios of the real estate industry were 4.29%, 1.56%, and 1.69% respectively, up 1.97 percentage points, 0.25 percentage points, and 0.34 percentage points from the end of last year.

The real estate non-performing loans of some joint-stock banks also experienced a "double rise." For example, as of the end of June 2021, the non-performing real estate loan ratios of China Merchants Bank, Minsheng Bank, and Ping An Bank were 1.07%, 1.04%, and 0.57%, respectively, an increase of 0.77 percentage points, 0.35 percentage points, and 0.36 percentage points from the end of last year.

Compared with large state-owned banks and joint-stock banks, credit risks in the real estate industry have a more obvious impact on small and medium banks, especially city commercial banks. As of the end of June 2021, the non-performing loan balances in the real estate industry of Bank of Ningbo and Bank of Shanghai were 537 million yuan and 4.716 billion yuan respectively, an increase of 35 million yuan and 969 million yuan from the end of last year; the real estate industry's non-performing loan ratios were 1.48% and 2.73% respectively , An increase of 0.11 percentage points and 0.34 percentage points from the end of last year.

I recently posted Taper This! 2014 Rhymes: Evergrande Goes Down, Real Estate Price Controls, Cash Moving into Stocks. There are links to old posts from 2014, when the Fed was tapering and China was slowing. Ride the cycles.

Chinese Economy Slowing, RE Investment Down, RRR Cut Incoming

China didn't do a big stimulus program in 2020. As a result, it's economy sank back to the post-2008 slowdown trend. With the slowdown is accelerating, the government is cutting the reserve requirement ratio.

Reuters: China's cabinet says it will use RRR cuts to support real economy

China will use timely cuts in the bank reserve requirement ratio (RRR) to support the real economy, especially small firms, the cabinet said on Wednesday.

The People's Bank of China (PBOC) has been gradually scaling back pandemic-driven stimulus to curb debt risks, keeping borrowing costs low and telling banks to maintain support for small firms.

China will "use monetary policy tools, including RRR cuts, in a timely way to further step up financial support for the real economy, especially small firms", the cabinet said in a statement after a regular meeting.

China will lower financing costs for small companies to help them cope with rising commodity prices, the cabinet said.

The country will keep monetary policy stable while increasing policy effectiveness, but will not resort to "flood-like" stimulus, it added.

iFeng: 要降准了！何时降？如何解读？本周五傍晚或是重要观察窗口

1. In view of the impact of the rise in commodity prices on the production and operation of enterprises, it is necessary to maintain the stability and effectiveness of the monetary policy on the basis of not engaging in flood irrigation.

2. Use monetary policy tools such as RRR cuts in a timely manner to further strengthen financial support for the real economy, especially small, medium and micro enterprises, and promote a steady and slight decrease in comprehensive financing costs.

3. Promote green and low-carbon development, set up monetary policy tools to support carbon emission reduction, support the development of clean energy, energy conservation and environmental protection, and carbon emission reduction technologies in a steady, orderly, precise and direct manner, and leverage more social funds to promote carbon reduction row.

4. On the basis of the pilot program, in July this year, the national carbon emission trading market for the power generation industry will be launched for online trading.

5. Steadily expand the coverage of the industry, and use market mechanisms to control and reduce greenhouse gas emissions.

This is weak sauce. They're not going to do anything to support the economy and their green policies if actually followed. The likelihood of follow through is zero percent though, but they will celebrate how a recession reduces carbon emissions.

As for the RRR, it was already cut three times this year and it achieved nothing:

In January, the deposit reserve ratio of financial institutions was reduced by 0.5 percentage points (excluding finance companies, financial leasing companies and auto finance companies).

In March, we implemented a targeted RRR cut for inclusive finance, and granted a 0.5 or 1.5 percentage point preferential deposit reserve ratio for banks that meet the criteria for the assessment of the proportion of loans in the inclusive finance sector, and received a 0.5 percentage point preferential deposit reserve ratio during the assessment. Of joint-stock commercial banks have cut their RRR by an additional 1 percentage point.

In April, the deposit reserve ratio of rural credit cooperatives, rural commercial banks, rural cooperative banks, rural banks, and urban commercial banks operating only in the provincial administrative area was reduced by 1 percentage point, divided into April 15 and May 15 Implemented twice.

China's running low on dollars:

First, from the perspective of base currency injection, in the past, foreign exchange funds were the main channel for base currency injection. In recent years, the scale of foreign exchange funds has generally remained stable. Therefore, the central bank supplements base currency injection and supplement liquidity mainly through MLF ( Medium-term borrowing convenience) plus open market operations.

As I've noted in the less frequent monthly updates on reserves and money supply, what's notable about the past year is that China's FX reserves didn't see a wave of dollar inflows. Reserves have been stable when, given what we know about exports, U.S. monetary stimulus and the past decade, there should have been a big increase. This leaves open the possibility that flows aren't what they used to be and that a reversal in the global economy and FX markets could put outflow pressure back on.

Meanwhile, real estate is rapidly slowing. Yuan Talks: Chinese property developers’ first-half financing hit lowest since 2018 amid the sector’s deleveraging

China's top 100 property developers raised a total of 609 billion yuan in funding in the first half of this year, sliding 34 per cent from the same period last year and down 29 per cent from the previous six-month period, according to a report from the China Real Estate Information Corporation (CRIC), a real estate consultancy. The figure marks the lowest half-year level since 2018.

Bloomberg: Chinese Developer Woes Are Weighing on Asia’s Junk Bond Market

Financial strains among Chinese property developers are hurting the Asian high-yield debt market, where the companies account for a large chunk of bond sales.

That’s widening a gulf with the region’s investment-grade securities, which have been doing well amid continued stimulus support.

Yields for Asia’s speculative-grade dollar bonds rose 41 basis points in the second quarter, according to a Bloomberg Barclays index, versus a 5 basis-point decline for investment-grade debt. They’ve increased for six straight weeks, the longest stretch since 2018, driven by a roughly 150 basis-point increase for Chinese notes.

A Bell Rings: Shenzhen Villa Price Drops 40pc

iFeng: 深圳一别墅跳水！长持4年降价630万，几乎半价却流拍，火爆楼市降温

Four years ago, more than 15 million bought real estate in first-tier cities. Four years later, they had a "blood loss" of 6.3 million auctions, but the auction failed twice. Recently, Alibaba's auction of a villa in Shenzhen on the Internet has attracted attention.

By itself it is an anecdote, but it is symptomatic of the cooling housing market in Shenzhen. In this specific case, the propterty is remote:

Industry insiders believe that no one is willing to accept the price cut by 6.3 million. It may be because the villa is located in Dapeng, the location is relatively remote, and the property was auctioned due to execution, and there may be potential risks such as the inability to close the house in time due to disputes after the auction.

As for Shenzhen, housing transactions fell nearly 40 percent in May:

It is not only the niche market like auctions, but under this round of strong regulation, as a key indicator of the local property market, the existing home sales volume in Shenzhen in May dropped again and again, down 40% from the previous month, which can be described as completely flat.

According to data from Shenzhen Centaline Research Center, the number of existing home residential transfers in Shenzhen in May was 3,027, down 37.9% from the previous month, and the number of units sold was the lowest since March 2020; the transaction area was 276,000 square meters, down 37.3% from the previous month.

...In terms of new homes, transactions in the new home market continued to decline in May. The new home market totaled 4566 commercial homes online, a decrease of 15.3% from the previous month; residential homes signed 2,677, a 23.6% drop from the previous month.

Credit growth has been slowing:

Housing loans are also tightening. Shenzhen Centaline Research Center pointed out that the major banks in Shenzhen currently accept business applications and processing for housing loans, and the qualifications for housing loans are strictly reviewed. With the exception of the Bank of Beijing maintaining interest rates in April, all major banks have basically unified mortgage interest rates, with the first set of interest rates rising by 45BP and the second set of interest rates rising by 95BP.

That's giving extra weight to regulatory policy:

In May, Shenzhen adjusted the household entry policy, raised the threshold for settlement and reduced qualified buyers; issued a notice on the sales price guidance of new commercial housing and commercial apartments, implemented "guidance prices" for new houses and launched a commercial housing pricing evaluation system to combat borrowing Decoration in disguised form of raising prices.

Controlling demand with one hand and increasing supply with the other, Shenzhen has begun to concentrate land supply and vigorously develop affordable rental housing.