(Producer/Author: GF Securities, Guo Zhen, Le Jiadong, Xing Xin, Xie Miao)
1. The "930" in 2022 has been relaxed again, and the improvement of basic needs is promoted, and the interest rate of the first is improved and the space for basic needs is promoted. The personal income tax preferential treatment of second-hand transactions promotes improvement 0 At the end of September, the central government issued three relaxation policies in succession, announcing that cities with eligibility can cancel the interest rate of the first mortgage, lower the interest rate of the first provident fund loan , and the second-hand transaction personal income tax can be refunded within one year after the sale of their own housing. The improvement of interest rates for the first-time loans has opened up space for urgent needs, while the personal income tax preferential treatment for second-hand transactions has promoted improvement demand. On September 29, the Central Bank of and the China Banking and Insurance Regulatory Commission issued a notice, planning to relax the interest rate restrictions on cities that have been continuously lowered from June to August 22 to June to August 2022. Local governments can independently decide to maintain, lower or cancel the interest rate limit for first-home mortgage loans, and maintain the current regulations for second-home mortgages. The current implementation standard is that the interest rate for the first home loan on May 15 is 5-year LPR-20bp, and the interest rate for the second home loan is LPR+60bp. According to the latest LPR benchmark interest rate (4.3%), the lower limits for the execution are 4.1% and 4.9% respectively. As of September, the implementation interest rate of 100 cities across the country was 4.15% of the first and 4.91% of the second. This policy will greatly relax the interest rate space in cities where housing prices fall.
htmlOn September 30, the central bank announced that from October 1, 2022, the provident fund loan interest rates for the first housing units of less than 5 years (including) and more than 5 years have been lowered to 2.6% and 3.1% respectively (both lowered by 15bp), and the second-set interest rate policy remains unchanged. This cut is the first cut since August 2015. The interest rate for the first provident fund loan is currently the lowest since June 1999, which can further release some urgent demand. On the same day, the Ministry of Finance issued the "Announcement on Supporting Residents' Replacement of Personal Income Tax Policies on the Exchange of Housing", which stipulates that from October 1, 2022 to December 31, 2023, taxpayers who sell their own houses and repurchase their houses in the same city within one year after the sale will be given a tax refund preferential treatment for taxpayers who have paid their own houses at the time of sale. If the amount of the newly purchased house is greater than or equal to the amount of the current housing transfer, all the personal income tax paid will be refunded, and if the amount is less than, the amount will be refunded in proportion to the amount. This preferential policy was implemented 13 years ago. In February 2013, in order to stabilize housing prices and give full play to the adjustment role of tax policies, it was stipulated that the transfer of second-hand housing was strictly subject to personal income tax at 20% of the transfer income. In addition, during the specific implementation process, if the taxpayer fails to provide a complete and accurate certificate of original value of the house and cannot correctly calculate the original value of the house and the tax payable, localities may collect personal income tax based on factors such as the area, geographical location, construction time, house type, average housing price level, etc., based on factors such as the location, geographical location, construction time, house type, and average housing price level. The re-implementation of this preferential policy will help further explore and improve demand and have a great improvement effect on the market where second-hand housing transactions are active.
(II) The "930" national policy is the biggest effort to relax the current cycle
0 The adjustment of the first arbitrage interest rate without a lower limit is very important. In the environment of implementing policies based on the city, the lower limit of interest rates, as a few adjustment tools in the hands of the central government, has strong signal significance for boosting market confidence across the country. Some cities can choose to "cancel" interest rates to decline, and their intensity is even higher than the level of " benchmark interest rate 0.7x" in 2008 and 2014. In terms of the interest rate of housing provident fund
loans, from October 2014 to August 2015, the interest rate of first housing provident fund loans for more than five years was lowered 5 times, with a total of 125bp (25bp each time). The 15bp reduction this time is relatively small compared to the previous cycle, but the interest rate of provident fund loans has been at its historical lowest point. In terms of tax incentives for second-hand houses, in December 2008 and March 2015, preferential policies were introduced for second-hand house transaction tax, stipulating that the transaction will be fully charged for business tax based on the sales amount if the purchase of a house is less than 2 years (original 5 years). This time, tax preferential policy is more targeted than the previous cycle. It promotes the implementation of improvement demand through personal income tax preferential treatment for housing purchases within one year, which will help second-hand transactions attract new housing demand.In addition, the introduction of new policies such as the "security transfer" of second-hand houses in Guangzhou, Nanjing, , Suzhou and other places, and the parallel processing of "serial orders" business of existing housing transactions in Beijing have improved the transaction efficiency of second-hand houses and helped further stimulate the vitality of the second-hand house market. Overall, the relaxation policy of this cycle "930" reflects more the characteristics of "implementing policies based on cities". So far, compared with the previous cycle's "one-size-fits-all" relaxation policy, there are no unified loan restrictions and relaxation policies such as "the minimum down payment in non-purchase-restricted cities" and "14,930 loan recognition but not house recognition" and other strong unified loan restrictions and relaxation policies. Although the adjustment policy of the first house interest rate lower limit is not set for the first time in history, it is only for some cities where housing prices have been continuously reduced. For cities that do not meet the conditions, the lower limit of the first house interest rate is still LPR-20bp, and there is still room for relaxation before the lower limit of the "30% off interest rate" in the previous cycle.
(III) Recent policies are favorable to non-core second-tier
According to policy requirements, this interest rate adjustment is for cities with prices falling for three consecutive months on a year-on-month basis. According to the statistics bureau’s 70 cities, 23 cities meet the requirements, and the sales amount of 70 large and medium-sized cities is 10 trillion yuan, and the market meets the requirements is 2 trillion yuan. The market size outside the 70 large and medium-sized cities is about 7 trillion yuan, most of which are third- and fourth-tier cities. In addition to the 70 large and medium-sized cities, second-hand housing prices in about half of the cities fell year-on-year from June to August, accounting for about 3.5 trillion yuan in the commercial housing market.
In terms of tax preferential policies for second-hand housing transactions, cities that are more affected should be cities with relatively active second-hand housing market and have risen rapidly in recent years (the taxes and fees may be higher when second-hand housing is sold). The proportion of second-hand housing sales area to new home sales area in each city in 21 years represents the activity level of the second-hand housing market. The compound growth rate of second-hand housing prices in 2018-22 should be measured. Two cities with high values may be greatly affected by this tax preferential policy. Guangzhou, Nanjing, Shenyang and other cities may have more positive reactions to this policy. Overall, the two main policies at the end of September may have a great impact on cities such as Wenzhou , Wuhan, Shijiazhuang, Qinhuangdao , Harbin, and Tianjin. These cities can not only enjoy the discount of canceling the lower limit of the first-hand housing rate, but also have relatively active second-hand housing markets. The stabilization of these non-core second-tier cities will have a driving effect on the stabilization of the overall real estate market.
2. The policy intensity has increased significantly
During the historical cycle, credit policy is of great significance to sales stabilization. In October 2008, the lower limit of the first-arbit interest rate was lowered from the benchmark interest rate 0.85x to the benchmark interest rate 0.70x. Two months later, the national sales turned positive (the single-quarter decline in the third quarter of 2008 was 31%), and in September 2014, the lower limit of the first-arbit interest rate was lowered from 0.95x to 0.70x. The transaction area in key cities turned positive in Q4, and the national data decline also narrowed significantly. In order to measure the policy intensity of the cancellation of the lower limit of the first-home mortgage interest rate and the reduction of the housing provident fund interest rate, the possible improvement space in the future and the possible impact on sales, we have sorted out the absolute values and relative benchmark discounts of the changes in the first-home mortgage interest rate and the housing provident fund interest rate.
According to historical data, the highest benchmark for first-home mortgages in my country since 2008 was 7.83%, which occurred in January 2008, with a minimum of 4.30%, and in August 22. In actual operation, the interest rate for first-home mortgages reached 7.62%, which occurred in October 2011, with a minimum of 4.15%, and in September 22. Judging from the discount level of mortgage interest rates relative to the benchmark interest rate, the highest mortgage interest rate for first-home homes is 1.23 times the benchmark interest rate, which occurred in September 2021 and the lowest is 0.70 times, which occurred in October 2020. We score the absolute and relative level of the mortgage rate at the highest historical benchmark rate of 7.83% and 0.7 times the lowest benchmark rate of 4.3%, that is, 3.0% as the lower limit. In terms of score weight, the absolute position and relative level upper limit of the mortgage interest rate are both 5 points, of which the absolute position reaches the upper limit of 7.83% for 5 points, and when it reaches the lower limit of 3.0% for 0 points, and when it is in the middle position, the value will be assigned according to its corresponding percentile; in terms of relative level, the mortgage interest rate is 5 points compared with the benchmark interest rate discount of 123% for 5 points, and when it reaches the lower limit of 70%, it is 0 points. In the middle position, the value will also be assigned according to the corresponding percentile.
According to the results, the highest total score of the first-home mortgage interest rate in recent days was 7.84 points, which appeared in September 2011, among which the absolute position and relative level scores were 2.84 and 5.00 respectively. The current total score of the first-home mortgage is 3.67, a decrease of 53% from September 2011, among which the absolute position and relative level decreased by 58%, 50% to 1.19 and 2.48 respectively. The absolute value of the first-home mortgage interest rate has reached the lowest level in history, but due to the discount of the benchmark interest rate, it is still only 97% off. Based on the absolute scale and relative level, we expect that this round of cyclical mortgage interest rates will still have 35% adjustable space in the future.
uses the same scoring system to measure the level of housing provident fund loan interest rates. Since 2008, the highest interest rate for housing provident fund loans for more than 5 years is 5.22%, reaching a historical low of 3.10% after this reduction, which is the first time since July 2015. From a relative perspective, the discounts of housing provident fund loan interest rates for more than 5 years are 76% and 56% respectively compared with the benchmark interest rate, while those for the current period are 72%, which also has room for further adjustment. We use the highest provident fund interest rate of 5.22% as the upper limit and 0.56 times the benchmark interest rate of 4.30%, that is, 2.42% as the lower limit, and we score from the absolute position and relative level of the housing provident fund interest rate. In terms of score weight, the absolute position and relative level upper limit of the housing provident fund interest rate are both 5 points, and if the absolute position reaches the upper limit of 5.22% is 5 points, and if the lower limit is 2.42% is 0 points, and if the middle position is in the corresponding percentile, the corresponding percentile will be assigned; if the mortgage interest rate is discounted to the upper limit of 76% is 5 points, and if the lower limit is 5%, if the lower limit is 5%, if the mortgage interest rate reaches the upper limit of 56%, the lower limit is 0 points, and if the middle position is in the same value as the corresponding percentile.
From the results, the highest interest rate for housing provident fund loans in history was 8.52 points, which appeared in June 2011 and the lowest was 2.50 points, and in July 2015, the current total interest rate score of provident fund loans is 5.31, a 38% decrease in the higher point, but there is still about 50% adjustable space from the lowest point. Previously, we have scored the introduction and relaxation of the four-limit policies in various places, and calculated the overall policy score based on the weight given by the city market size to judge the future policy trend and its impact on the market. Based on the same logic, we also included the interest rate of the first home mortgage and the interest rate of personal housing provident fund loans in the scoring system. Considering that the mortgage interest rate and provident fund loan interest rate have similar impacts on the market as the loan restriction policy, both affecting residents' purchasing power, among which the impact scale of commercial loans is greater than that of Provident fund loan , we assign 5 points and 2 points respectively. In addition, we have weighted the value of 0.2-5 in 357 cities across the country based on the amount of commercial housing sales in 2019-21. Under this rule, the overall national impact weight is assigned to 236, which corresponds to the weighted mortgage interest rate and provident fund interest rate corresponding to the adjustable space in the future.
Different policy environments and relaxation efforts will affect the confidence of the national real estate market and the increase in housing prices. Through policy sales rate -land acquisition intensity-will willingness to start a business-sales influence the buyer's expectations, purchasing power and market sales performance. From the historical perspective, the tightness of the overall policy environment in the country (policy score) is basically inversely changing with the current market sales level. The higher the policy score, the tighter the policy environment, the lower the sales rate, the worse the real estate companies' willingness to acquire land, and the worse the market sales performance. On the contrary, the policy score declines, the relaxation of the policy environment, the sales rate increases, the willingness to acquire land to start construction, and sales rebound. From the historical perspective, the tightness of the overall policy environment in the country (policy score) is basically inversely changing with the current market sales level. The higher the policy score, the tighter the policy environment, the slower the market sales speed, the lower the policy score, the central and local governments relax the real estate market policies, the purchase willingness of home buyers has increased, and the sales rate has increased. In the third quarter of 2021, the market policy score gradually declined after reaching a high point, and the market's sales capacity slowly rebounded.
Interest rates and taxes are among the few adjustment tools that belong to the central government under the current context of policy implementation based on cities. The use of real estate in the previous period was relatively cautious. This two consecutive issues have strong signal significance for boosting national market confidence.Before the market bottoming out and recovers and market confidence recovers, we expect that the central and local governments at all levels will continue to introduce loose policies in the future, and the policy score will continue to decline, driving a steady increase in market sales. National commercial housing sales are expected to bottom out in the near future, and gradually turn positive around the second quarter of 2023.
3. The overall economic recovery is expected, and the large layout of individual returns is the largest
According to g, the top 100 real estate companies achieved sales of 626.9 billion yuan in September 22, a year-on-year decrease of 26.5%, a decrease of 6.2pct from August. From January to September, the sales amount of the top 100 real estate companies decreased by 45.8% respectively compared with the same period in 21 years, and the decline narrowed by 1.8pc respectively month-on-month. After market sales bottomed out in May, the decline has continued to rebound slightly for four consecutive months, and the prosperity has gradually recovered.
split sales amount growth factor. From the perspective of area, the sales area of the top 100 real estate companies fell by 35.5% in September, a decrease of 1.8pct. According to the cumulative data, the sales area of the top 100 real estate companies fell by 49.3% year-on-year from January to September, and the cumulative decline in the market has continued to narrow since May. In terms of price, the average sales price of the top 100 real estate companies in September 222 was 17,003 yuan per square meter, an increase of 14.1% year-on-year. From January to September, the average sales price of the top 100 real estate companies increased by by 6.9% year-on-year. Behind the decline in volume and price increase, it is more reflected that under the implementation of a low-prosperity environment, the differences in the sales status of high- and low-tier cities continue to expand, and first-tier strong second-tier cities continue to have a high prosperity, which has increased the proportion of this market in sales results, which has led to a structural increase in prices, which is not a comprehensive increase in prosperity.
21, the differentiation of sales performance between enterprises has a strong correlation with the company's situation and the intensity of land investment. Strong credit real estate companies are gradually widening the gap with weak credit and defaulting real estate companies. Since June, sales of strong credit real estate companies have recovered rapidly. In September, sales of strong credit real estate companies fell by 1.9% year-on-year, a decrease of 6.4% from August, while sales of weak credit and default real estate companies fell by 60.4% and 81.7% year-on-year, an increase of 8.1pct and 6.4pct month-on-month.
financing , according to wind and the company's financing announcement, in September 222, real estate companies achieved credit bond financing of 46.2 billion yuan, a year-on-year decrease of 11%. The average monthly credit bond financing scale from January to September 222 was 50.9 billion yuan, a year-on-year decrease of 29%. In September, real estate companies achieved overseas debt financing scale of 4.3 billion yuan, a year-on-year decrease of 86%. Since August 21, the scale of financing for real estate companies has continued to remain low and has not rebounded significantly so far. In particular, overseas financing channels were once closed. In September 222, the issuance maturity ratio of real estate companies' credit bonds and overseas bonds was 0.45, and the overall financing of the industry was under pressure.
Against the backdrop of continued tightening of financing scale, only a few strong credit real estate companies have obtained financing resources. Judging from the proportion of bond issuance by the top 15 credit real estate companies, since the fourth quarter of 2021, the proportion of bond issuance by the top 15 credit real estate companies has remained high in the industry, fluctuating around 40%. The highest proportion in the second quarter of 2022 reached 47%. In total, from January to September 2022, the issuance of bonds by the top 15 credit real estate companies accounted for 42% of the overall industry scale, an increase of 22pct over the past 21 years. The industry is currently in a slow recovery stage, and sales and financing have not yet recovered on a large scale. Only some real estate companies can obtain tight funds and resources, recover before the industry, and have investment capabilities. From January to September 2022, the cumulative land acquisition amount of 54 leading real estate companies was 817.7 billion yuan, a year-on-year decrease of 67.3%. In terms of land acquisition strength, from January to September, the land acquisition strength of 54 sample real estate companies (land acquisition amount/sales amount) was 20%, a decrease of 11pct from 21 years. Real estate companies mostly choose to reduce foreign investment to ensure the security of the capital chain. At the same time, as the layout shifts to high-level cities, land acquisition is mostly two concentrated projects, and the pace of land acquisition is greatly affected by centralized land supply.
Specifically, the land acquisition situation among real estate companies also showed a major differentiation trend. From January to September 2022, the land acquisition efforts of the top 15 credit real estate companies was 30%, while other sample real estate companies only acquired land at 1%. The top 15 credit real estate companies also maintained a certain level of land acquisition this year, while other sample real estate companies have basically stopped acquiring land. The current land auction market is relatively hot, and strong credit real estate companies acquire high-quality land at a lower premium rate. In the future, the gross profit margin of sales and settlement will increase to a certain extent after the value of goods is released.
With the implementation of global policy improvements, the increase in interest rate advantages and second-hand housing transaction activity will bring greater changes to the second-tier and medium-level urban markets, which will be a good thing for the recovery of corporate sales data. For real estate companies' operations, companies with land investment capabilities tend to choose to acquire land, core first- and second-tier cities with the advantage of flow rate turnover (Beijing, Shanghai, Shenzhen, Hangzhou, Hefei, , Xiamen , etc.). The recent industry policies will have a stronger impact on the middle-tier second-tier and strong third-tier markets, which will be conducive to the comprehensive recovery of the market and the stability of the enterprise. Therefore, the improvement of the sales elasticity of the existing resources in real estate companies in medium-tier second-tier cities will be more significant.
From the cumulative land acquisition proportion in 22 years, we divide the land acquisition cities into three categories. One type is the core first- and second-tier cities in the eastern region that adopt centralized land supply, the other type is the remaining 13 key cities that adopt centralized land supply, and the other type is the cities with non-key 22 cities. To a certain extent, the proportion of land acquisition in second-class cities can represent the layout of real estate companies in medium- and second-tier cities. From the perspective of newly acquired resources, as the economic climate declined this year, real estate companies turned to high-level cities. Therefore, the land acquisition proportion of Class I cities basically exceeded half, but they also obtained a certain proportion of resources in medium- and second-tier cities. Because Binjiang and Shoukai focus on regional deep cultivation, most of the newly acquired resources are located in Hangzhou and Beijing. The land acquisition proportion of Zhonghai , Poly, and Jindi
in Class II cities reached 31%, 24%, and 24%, which is more significantly affected by policies.
Newly acquired resources cannot represent the overall reserves of real estate companies. We further refer to the distribution of land reserves of real estate companies at the end of 21 years to analyze their future growth potential. We divide cities into four categories according to future residential housing needs, namely Class A cities (i.e., first- and second-tier cities in the eastern core area), Class B cities (second-tier cities in the eastern non-core area, second-tier cities in the central and western second-tier cities and third- and fourth-tier cities in the eastern core area), Class C cities (third- and fourth-tier cities in the eastern non-core area, third- and fourth-tier cities in the central and western third- and fourth-tier cities, and second-tier cities in the northeast) and Class D cities (third- and fourth-tier cities in the northeast). From the perspective of the land reserve distribution of real estate companies, most strong credit real estate companies attach importance to the layout of medium-sized cities. For example, Poly Development and China Overseas Hongyang Group's land reserves in medium-sized cities both reached 63%, while the land reserves in other real estate companies' medium-sized cities are basically distributed between 50% and 60%. Only Yuexiu and Shoukai Shares are local state-owned enterprises, and their land reserves are mostly concentrated in Guangzhou and Beijing, so more than half of the land reserves are in core cities.
Wait for the effect of policy relaxation to appear, and the operating conditions of strong credit real estate companies laid out in medium-sized cities will be further repaired, thereby increasing the differentiation among real estate companies. During the industry transformation, the pattern between real estate companies has changed. Some real estate companies have given priority to obtain investment and financing resources due to their strong credit, and have taken the opportunity to accumulate relative advantages. In addition, the future layout of urban sales recovery is expected to recover before the industry, further increasing the market share of , with great growth potential.
4. Analysis of leading real estate companies with "strong credit + large layout + low valuation"
From the perspective of ROE, first, the industry's profit improvement, second, real estate companies with investment capabilities, sales improvements have driven the rise of operating leverage , and third, the turnover rate improvement, and the operating ROE level is improved. First, look at the profit margin. Judging from the land auctions in the two episodes, the first batch of the group was the most popular in 21 years (high prosperity combined with delayed land supply), with a total cost gross profit margin (excluding construction) of 15.4%. The second and third batches rebounded to 21.9% and 25.0% with the land market popularity, which was nearly 10 percentage points compared with the first time. In 22 years, the first and second batches continued to rebound to 25.9% and 27.4%. In 22 years, the average number of key cities that have been auctioned in the third batches was 28.2%, and the industry's profit margin continued to improve.
Historical small cycle, real estate policies need to take into account both economic and people's livelihood. When investment is down, relax and protect the economy and house prices rise too quickly, strengthen real estate regulation and stabilize the market. Since policies first act on the area and changes in inventory affect prices, there are generally four stages in the industry's small cycle: , both volume and price decline, both volume and price rise, both volume and price rise, and price fall, and four stages.In the absence of large-scale clearance and full competition in the industry, the market competition of both volume and price increases is fierce, the land profit margin declines, and the market profit margin of both volume and price decreases, so the changes in profit margins also form a certain correlation with the cycle. In this round of cycle, the industry production capacity brought by the supply-side reform has been cleared to optimize the industry's competitive landscape. Although the current market's low prosperity profit margin has improved significantly, we believe that the profit margin level in the upward cycle will also be higher than the equilibrium value before the previous reform. In the future, as the industry reaches the "three stability" and the optimization of the competitive landscape, profit margin fluctuations will be reduced, which is conducive to the stability of long-term ROE.
Second look at leverage ratio . The leverage ratio includes financial leverage, operating leverage, and equity leverage. Operating leverage is leverage corresponding to operating liabilities (total liabilities-interest-bearing liabilities). When the collection rate does not change much, the growth rate of prepayment accounts is mainly due to sales decisions. We have counted the financial situation of 31 (same caliber) A+H real estate companies since 2009. We can see that the growth rate of prepayment accounts is basically consistent with the growth rate of national sales amount of the Bureau of Statistics. Therefore, the improvement in sales will be conducive to the improvement of the growth rate of prepayments. The growth rate of net assets attributable to shareholders mainly depends on the performance of sales project settlement 2-3 years ago. The year-on-year growth rate is highly correlated with ROE (the difference is mainly in the ratio of dividends ). The year-on-year growth rate of net assets attributable to shareholders is less affected by the market. Therefore, the improvement of sales situation will increase the operating leverage multiplier of real estate companies (operating liabilities/net assets attributable to shareholders).
From the sales amount to the land acquisition amount, it represents the strength of land acquisition. Judging from the relationship between the historical land acquisition strength and the current sales rate, it basically shows a positive correlation. In other words, there is actually no countercyclical land acquisition and the economic downward stage. Although the profit margin improves, there is a risk. Once the pace is wrong (the subsequent housing prices continue to fall or the sales rate continues to be low), the price paid is extremely heavy. When the industry is in an upward cycle, the market is strong, real estate companies have higher operating leverage, and while the risks are reduced, they will generally increase the investment intensity of . It is expected that strong credit real estate companies will have better operating performance after their sales stabilize.
It is expected that from 22 to 23, industry policies will continue to increase on the demand and supply sides. The ultimate goal is to allow the industry to play a supporting role in the entire economic activities. The implementation of a series of support policies for the "930" over the past 22 years will help the market recover and stabilize. After the sales improvement, strong credit real estate companies will increase their operating leverage, and their investment market share may increase significantly. Coupled with the improvement of industry profit margins, policies have improved the ROE level of leading real estate companies. Leading companies have a medium-term logic of two or three years in this round. It is recommended to "strong credit + large layout + low valuation".
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
Selected report source: [Future Think Tank]
