The overall decline in real estate data is due to the recent weakening of commercial housing sales and the substantial tightening of financing for housing companies this year, as well as the cumulative effect of industry deleveraging in the past three years. The downward process of real estate investment may have just begun.is concerned about the possibility of short-term policy bottom in the real estate industry.
Text: Tianfeng Macro Song Xuetao/Contact Zhao Honghe
The current downward pressure on real estate investment has intensified, and this process may have just begun.
First of all, real estate data continued to decline across the board in August. Looking at the two-year compound year-on-year growth rate, 's sales and land acquisition have fallen sharply: commercial housing sales growth rate -2.0% (previous value 0.1%), commercial housing sales growth rate 1.6% (previous value 4.1%), land acquisition area Growth rate -10.8% (previous value 0.5%); starts to maintain negative growth: New housing construction area growth rate -7.7% (previous value -6.5%); real estate development investment growth rate 5.9% (previous value 6.4%), real estate The construction area growth rate was 8.4% (previous value 9.0%); 's only increase was completion: The completed housing area growth rate was 7.6% (previous value 4.0%).
The overall decline in real estate data is due to the recent weakening of commercial housing sales and the sharp contraction of real estate financing this year, as well as the cumulative effect of the industry's deleveraging policy in the past three years. We have explained the downward pressure on real estate in the second half of the year in many previous reports (for details, see "Where is the second quarter data strong? Where is the weak?" on August 17 "July data fell across the board ,Epidemic flood or endogenous pressure? ").
1. The situation since the beginning of this year: the sales boom has fallen, and the financing has shrunk sharply. The high boom in commercial housing sales in the first half of the year was mainly dominated by the release of endogenous demand. The core logic is that large cities and middle- and high-income groups are less affected by the epidemic, their income recovers quickly, and more benefited from the wealth effect of brought about by the loose policy during the epidemic. , the demand for house purchases has increased. Therefore, the commercial housing market in the first half of the year showed a structurally high boom, with sales in first- and second-tier cities recovering early and booming. In contrast, sales in third- and fourth-tier cities recovered slowly and the boom was weak. This is the logic of the release of endogenous demand in the post-economic cycle, rather than the early-cycle logic of the relaxation or stimulation of financial conditions.
Since the second half of the year, with the peaking of the economic recovery and the release of endogenous demand, the financial and qualification conditions for house purchase have been further tightened, and the commercial housing sales boom has dropped rapidly.
At the same time, the real estate financing environment has tightened significantly. At the end of last year, when the Central Bank and the China Banking and Insurance Regulatory Commission issued the "Notice on Establishing a Centralization Management System for Real Estate Loans in Banking Financial Institutions", we conducted calculations in the report "How Large is the Macroscopic Impact of Housing Loan Concentration Management". The central bank is answering reporters The question also stated that “most of the banking financial institutions meet the management requirements”, and banks that meet the loan ratio are required to maintain a basically stable loan ratio, and institutions with a loan ratio of less than 2% or more than the standard have been set up for 2 years and 4 years. It is estimated that the contraction of real estate financing will be relatively mild.
However, the actual implementation of the policy was significantly higher than expected. As of the middle of this year, the year-on-year growth rate of real estate loan balance fell from 11.7% at the end of last year to 9.5%.This was 2.8% lower than the growth rate of RMB loan balances. Among them, the growth rate of personal housing loans fell from 14.6% at the end of last year to 13.0%, which was 0.7% higher than the growth rate of RMB loan balances. Correspondingly, the balance of real estate loans decreased by 1.3% to 27.4% compared with the end of last year, and the balance of personal mortgages decreased by 0.2% to 19.7% compared with the end of last year, which is already lower than the upper limit of the proportion of second-tier banks; and the China Banking Regulatory Commission recently stated that at the end of July The year-on-year growth rate of real estate loans further dropped to 8.7%, and the pressure drop rate further accelerated compared with the first half of the year.
Throughout the first half of the year, the balance of real estate loans increased by 1.2 trillion, of which the balance of personal mortgages increased by 2.14 trillion, which shows that the balance of loans to real estate enterprises in the first half of the year decreased by 940 billion.
2. The situation in the past three years: real estate enterprises’ land reserves continued to deplete, and the start of construction fell to negative growth. In recent years, the main policies related to real estate supervision, such as three red lines, housing loan concentration management, shadow banking financing, etc., are all focused on weakening the financial attributes of the real estate industry, requiring real estate companies to reduce balance sheets and reduce leverage. The direct result is that real estate enterprises continue to lose their land reserves. After three consecutive years of destocking, the land bank dechemical cycle (land bank area/annual sales area) of the top 100 real estate companies has dropped from 4.6 times at the end of 2017 to 3.4 times at the end of 2020, the historical average of . At about 4 times.
This year's centralized land supply has further intensified the depletion of land reserves. In the first half of the year, local governments restricted land supply to a low level. Under the background of high commercial housing sales and high enthusiasm for land acquisition by real estate companies, the supply of land exceeded demand.As a result, the land premium rate of has risen, housing prices have risen, the land acquisition by real estate companies has dropped sharply, and local income has not decreased. Since the second half of the year, with the decline in commercial housing sales and the continued tightening of real estate financing, the enthusiasm of real estate companies for land acquisition has declined rapidly. Therefore, even if the land premium rate is restricted, the land transaction volume has continued to decline. The area of land purchased by real estate companies was -25.6% year-on-year in 19 years and -2.4% year-on-year in 20 years. From January to August this year, the area continued to decline to -10.2% year-on-year. According to this trend, expects that the land bank removal cycle will decrease at the end of the year. To 2.7 times.
Affected by this, real estate companies generally lack land reserves, new construction areas continue to grow negatively, and downward pressure on real estate investment continues to increase. The resilience of real estate investment growth in the first half of this year was mainly due to the three red lines of promoting the acceleration of construction by real estate companies . The goal is to complete and deliver as soon as possible, confirm revenue, carry forward profits, and expand equity. After the acceleration of construction, the growth rate of completed housing area has increased significantly since May (back end), and the newly-started area continued to grow negatively (front end). The growth rate of construction area of existing projects is also rapidly weakening (mid-end), and the growth rate of real estate investment is facing There is greater downward pressure, and this process may have just begun.
3. Focus on the possibility of short-term real estate policies
The long-term direction of real estate policies need not be said. It is related to the switching of my country’s economic growth momentum, the optimization and adjustment of industrial structure, the release of residents’ consumption potential, and the narrowing of the gap between the rich and the poor. To achieve common prosperity, prevent and resolve systemic financial risks, and many other important issues, it is almost impossible for macroeconomic policies to stimulate real estate as a means of short-term stable growth.
The key is how to properly balance short-term pressures in the process of dynamically achieving long-term goals?
The main approach may lie in two aspects: First, continue to increase support for high-tech industries. Take high-tech manufacturing as an example. After rapid growth in recent years, its share of investment in manufacturing has risen from 11% in 2015 to more than 20% at present; the average annual growth rate of industry investment is around 15%, which has already Can contribute about 3% of manufacturing growth. The second is to increase fiscal enthusiasm under the premise of controlling hidden debts. Appropriately increase the size of the fiscal deficit within the budget. Fiscal expenditures are tilted towards maintaining basic people's livelihood, narrowing the gap between the rich and the poor, and boosting consumption. Investment expenditures are tilted towards new infrastructure and technological innovation on the basis of appropriate support for traditional infrastructure.
In addition, in the short-term dimension of , is there any marginal flexibility for high pressure on real estate policies?
An important background is that with the sharp fall in economic data from July to August, it is preliminary estimated that the current quarter and two-year compound year-on-year of 's real GDP in the third quarter will fall below 5% , which has broken through the central bank The lower limit of my country's potential economic growth during the "14th Five-Year Plan" period estimated in the working paper in March this year. Although there are many exogenous factors such as repeated epidemics, natural disasters, and shortages of raw materials, the endogenous downward pressure of the economy has gradually emerged (see "Double Heads of Economic Recovery" on March 6 for details); there is another The realistic requirement is to prevent secondary risks from being triggered in the process of handling risks.
As the expectation of long-term house price rises has faded and the financial properties of real estate have gradually declined, the correlation between real estate sales and residential endogenous demand has increased, and the impact of policies has gradually weakened. The main focus of 's policy impact on the real estate industry is financing and land acquisition.
We remind attention to the possibility of short-term policy bottom in the real estate industry.
Observable road signs include: On-balance sheet financing high pressure marginal relaxation for housing companies, off-balance sheet financing-type trusts have slowed down, to avoid risk events of some real estate companies causing financial institutions to suspend loans to the entire industry and even upstream and downstream; local governments increase land supply, control land premium rates, and pay attention to the Whether the land transaction has improved after the three batches of centralized land supply.
Risk Warning
Real estate policy determination exceeds expectations; real estate industry risk exposure exceeds expectations; real estate downward pressure exceeds expectations
team introduction
Song Xuetao | team leader
North Carolina State University, USA, PhD in Economics, Golden Bull Award 2018-2020 Most Valuable Analyst, 2019 Golden Unicorn New Analyst, 2020 New Fortune and Crystal Ball Best Analyst, Golden Unicorn Best Analysis He has published working papers of the central bank, CF40 financial books and many academic papers.
Xiang Jingshu
Master of London Business School , mainly responsible for overseas macro and large-scale asset research. Served in the core quantitative hedge fund AHL under Insman Investment.
Zhao Honghe
Central University of Finance and Economics Master of Finance, mainly responsible for domestic macroeconomic and policy research. Previously worked in the development strategy department of China Export & Credit Insurance Corporation .
Lin Yan
Wuhan University Master of Financial Engineering,Mainly responsible for the research of major asset allocation. Served in Hongshang Assets.
Guo Weiwei
Master of Finance from Wuhan University, mainly responsible for industry comparison and industry trend research.
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