Economic Observer Reporter Tian Guobao At noon on July 27, at a real estate project marketing center in Chaoyang District, Beijing, salesperson Xu Ying was receiving a group of customers. Before the customer left, Xu Ying asked the other party tentatively, if he was optimistic, he could pay a small deposit to lock in the property, but the customer said that he had just passed by and had not decided to buy it. There are many people looking at houses in
, but not many people have actually sold. This is what Xu Ying feels in recent times. Her project has more than 500 houses. Since the opening of the fourth quarter of 2021, it has sold about 110 units in total. "More than 30 units were sold in June, and about 10 units have been sold from July to now."
Xu Ying introduced that since the opening of the market last year, due to the large number of peripheral projects, it has been facing the problem of sales. The transactions in June have indeed begun to improve, but there is still a big gap compared with previous years. "Of course, sales in July cannot be compared with June, but it is much better than before."
According to data released by the Beijing Municipal Housing and Urban-Rural Development Commission, from July 1 to 26, the transaction area of new homes in Beijing was 607,000 square meters, a year-on-year decrease of 50.8%, a decrease of more than May and 6; month-on-month, the transaction area of new homes in Beijing increased in May and June, and turned to a decrease of 34.3% in July.
is not just Beijing. Wind data shows that from July 1 to 26, the transaction area of new homes in 30 large and medium-sized cities fell by 27% month-on-month, and the year-on-year decline reached 36.9%. Although the year-on-year decline improved from 44.6% in May, it was quite a gap compared with 7.2% in June.
A marketing manager of the TOP30 real estate companies told the Economic Observer that the July real estate market pullback was due to the large base in June and the impact of delayed delivery. "And different cities performed differently. Cities such as Shanghai, Shenzhen, and Xiamen are still continuing to repair, but some cities have a relatively large pullback."
callback and repair
According to Xu Ying, in mid-June, the market began to gradually improve. On the one hand, because the first half of the year ended, the project increased its promotion efforts; on the other hand, it was also because the previous lockdown had accumulated some demand. Since early July, although there have been many people looking at houses, Xu Ying has received at least five or six groups of customers every day on weekdays and has been busy all day on weekends, but the transaction is obviously not as good as in June. "There is a demand, especially in a big city like Beijing, but customers are more cautious."
According to the data released by the Beijing Municipal Housing and Urban-Rural Development Commission, although the transaction area of new houses fell significantly in July, the transaction area of second-hand houses achieved a month-on-month increase of 13.6%, and the year-on-year decrease of 38.4% to 31.4% in July. The transaction volume of second-hand houses once again surpassed the new houses.
Judging from the number of transactions in 30 large and medium-sized cities, the real estate market in first-tier cities is significantly stronger than that in second- and third-tier cities. From July 1 to 26, the transaction area of new houses in first-tier cities decreased by 10.6% month-on-month, the second-tier cities decreased by 33.9%, and the third-tier cities decreased by 23.7%.
From the perspective of year-on-year, from July 1 to 26, the transaction area of new homes in first-tier cities decreased by 4% year-on-year, basically the same as in June; the decrease of second-tier cities decreased by 42% year-on-year, and the decrease of June was 1% year-on-year; the decline in third-tier cities was 47.4%, an increase of 21 percentage points from June.
However, the differentiation between cities has further deepened. In terms of new housing, in the first 26 days of July, the transaction area in cities such as Shanghai, Shenzhen, Chengdu, Fuzhou, and Xiamen all increased by more than 20% month-on-month, especially Xiamen, an increase of 45% from June.
The recovery of the real estate market in Shanghai and Shenzhen is also very obvious. In July, the online signing and pre-sale area of new houses in Shanghai both increased by 32% month-on-month. Although the increase was weaker than in June, it turned positive for the first time year-on-year, with the pre-sale area increasing by 9.4% year-on-year and the online signing area increasing by 18.5% year-on-year.
htmlIn July, the transaction area of new homes in Shenzhen increased by 23% month-on-month, less than in June, but increased by 30.4% over the same period in 2021. The transaction area of second-hand houses in Shenzhen rose by 6.5% month-on-month, better than in June, but fell by 4.2% compared with the same period last year. Among the 130 large and medium-sized cities of html, only the new home transaction area in Shanghai and Shenzhen turned positive year-on-year in July. New houses in cities such as Beijing, Guangzhou, Hangzhou, Suzhou , Wuhan, Wuxi , and Qingdao all showed different declines on a month-on-month basis, especially Guangzhou fell by 50% compared with June.The sales person in charge of another real estate company told the Economic Observer that the recent real estate market has been greatly affected by the loan cuts incident. "The root cause of the loan cuts is that it cannot be delivered on time. Although not many people have truly lost loans, this transmission effect is relatively strong, making it more difficult to sell pre-sales houses."
In this case, although new house transactions in some cities have dropped significantly, second-hand house transactions are active, and the transaction area of second-hand houses in Chengdu and Suzhou exceeded the same period last year; second-hand house transactions in many cities such as Beijing, Nanjing, Dongguan , Qingdao, Foshan were all better than in June.
Influencing factors
The sales person in charge of the above-mentioned real estate company said that under the influence of the supply cutoff incident, not only the sales of the project of the injured real estate company were affected, but the projects of state-owned enterprises and central enterprises would also be affected to varying degrees. "Even projects that seem to have no risk of unfinished risks, home buyers are cautious."
He believes that the supply cut-off incident has a greater impact on the expectation and confidence of buying a house. In order to maintain the only cash channel for sales collection, some real estate companies have been willing to avoid defaults at all costs. "Now it seems that even if it does not default, it will be difficult to keep sales." If the incident further evolves, it is not ruled out that more real estate companies have debt defaults or extensions.
The marketing director of the TOP30 real estate companies told the Economic Observer that the pullback in the real estate market in July is not an isolated case. "You can look at the data of previous years. Sales in July are not as good as June, because June is the end of the first half of the year, and the sales of enterprises are increasing, which is the same as sales in December each year."
However, the factors of the correction of the property market in July this year are more complicated. In addition to the traditional promotions driving sales in June, it is also mixed with various factors such as real estate companies' risks, project delayed delivery risks, and reduced demand. These factors not only affect the real estate market in July, but also affect the trend of the real estate market in the second half of the year.
A TOP20 real estate company executive told the Economic Observer that since 2022, in order to reduce expenditure and avoid ineffective investment to the greatest extent, the construction intensity of the company where they are located has been reduced by two-thirds. Those who are willing to continue investing must be projects or fields that can quickly generate cash. If a project has poor early sales, sales rate is not high, or the city or location of the project is in poor, the willingness to continue investing funds is not high.
The executive told the Economic Observer that the reduction in construction intensity by two-thirds is not just the choice of his real estate company. He predicted that the decline in construction intensity in the entire real estate industry is about this proportion. The decline in the construction intensity of
means that some projects will not be delivered on time, especially for projects with insufficient balance in pre-sale funds supervision accounts. If the capital chain of the group headquarters itself is relatively tight, the difficulty of delivery on time will increase, which will affect the confidence and expectations of home buyers to a certain extent. The above-mentioned sales person in charge of
also said that the sensitivity of home buyers to potential delayed delivery risks is beyond the expectations of most people. Even for projects with sufficient balance of in pre-sale funds supervision account , the home buyers also issued a loan cut statement because they were worried about unfinished, so as to allow the government to intervene and ensure regular delivery.
He believes that in the context of this highly sensitive home buyer, the sales of pre-sales of pre-sales will gradually collapse, and "it is not certain whether the future housing sales can continue to exist in the future."
First tighten and then loosen
This round of real estate downturn began in July 2021.
At the end of 2020, the Central Bank of China and the Ministry of Housing and Urban-Rural Development held a symposium on key real estate companies and officially issued the "three red lines" policy; then, at the beginning of 2021, the "two concentrations" of banks and the centralized land supply system in 22 cities were implemented one after another; in July 2021, the Ministry of Housing and Urban-Rural Development and other eight other departments jointly issued a document to rectify the order of the real estate market.
Since the breakout of Evergrande , financial institutions have begun to withdraw loans to real estate. Local governments have become stricter in the supervision of pre-sale funds. In addition, the real estate market has declined, and the liquidity risk of real estate companies is gradually expanding. Many private enterprises are in a liquidity crisis, and regulators have gradually realized the seriousness of the situation.
In October 2021, the central bank proposed that some financial institutions had a wrong understanding of the "third line and four levels" and needed to maintain stable and continuous supply of real estate credit.Macroeconomic control policies have begun to shift from tightening to relaxation. Since then, the central bank, , China Banking and Insurance Regulatory Commission, and others have repeatedly emphasized supporting real estate companies to make reasonable financing and real estate credit investment.
Although the real estate financing policy has been relaxed, due to the increasingly tight liquidity of real estate companies, the financing environment for a large number of private enterprises has not improved substantially. Except for the improvement of development loans and mortgage loans, other financing is still difficult, especially the issuance of credit bonds is almost inseparable from private enterprises. Under a series of heavy blows, the real estate market began to fall in the second half of 2021 and has continued to this day. However, thanks to the market in the first half of 2021, the sales amount of commercial housing in 2021 once again set a historical record of 18 trillion yuan.
Since 2022, the regulatory policies have continued to uphold a relaxed attitude, and local governments have continuously relaxed their "four restrictions" policies, and have gradually moved from third- and fourth-tier cities to first- and second-tier cities. At the same time, credit policies have been further relaxed, and the interest rate for first-home homes in most cities has been lower than 5%, and the loan period of mortgage loans has also shrunk from half a year to about one month before. Most industry insiders believe that the policy has bottomed out.
Since March this year, a new round of epidemics has occurred in many cities including Shanghai and Beijing. The epidemic prevention and control has caused physical isolation and impact on residents' income. Although the regulatory policies have been relaxed, the real estate transactions have continued to decline until April, the sales of the top 100 real estate companies fell by about 60% year-on-year.
entered May. As the epidemic situation in some cities improves and the release of previous backlog of demand, the real estate market has begun to enter a period of recovery. According to Wind data, the transaction area of new homes in 30 large and medium-sized cities rose by 9% month-on-month in May, among which the increase in first- and second-tier cities exceeded 10 percentage points.
After bottoming out in May, since June, as the half-year performance appraisal period of real estate companies ended, promotional discounts have been strengthened for their projects, and the lockdown has been lifted in most cities, real estate transactions have begun to increase in volume, and the transaction area of new homes in 30 large and medium-sized cities has increased by 74% month-on-month, and the year-on-year decline has also narrowed to 7.2%.
If the trend in June is followed, the possibility of the real estate market being completely restored in the second half of the year will further increase, but the hidden concerns of the decline in construction intensity broke out at this time. Due to the expectation that it will not be delivered on time, some project buyers in some cities such as Zhengzhou announced in the form of collective statements that they would cut off supply and quickly spread to more than 300 projects. Coupled with the fragility of the real estate market itself, the real estate market rebounded in July, and the year-on-year decline in new home transactions in 30 large and medium-sized cities expanded to 36.9%.
What to do? From
In the first half of the year, the funds in place for development enterprises were reduced by 25% year-on-year, among which deposits, advance payments and personal mortgage loans fell by 38% and 25% respectively; the land purchase area decreased by 48% year-on-year, and the land transaction price decreased by 46% year-on-year; the national housing prices fell by 8 percentage points year-on-year.
From the perspective of real estate companies, the sales amount of real estate companies such as Shimao , Zhongnan , Sunac , Zhongliang, Greenland, Country Garden, Xuhui , Jinke , Excellent , Rongxin , and Midea all fell by more than 50%; the sales amount of real estate companies such as New City , Zhongjun, Country Garden and Longhu also fell by about 40%, and the decline among private enterprises was the smallest, at 22%.
Compared with
, the sales amount of in central enterprises, state-owned enterprises and mixed-ownership enterprises decreased by relatively small, all within 50%, among which China Merchants Shekou , China Resources Land , Poly, Huafa , Ocean , and Yuexiu all decreased by less than 30%, and the degree of performance repair is far higher than that of private enterprises.
Under the current circumstances, how real estate can get out of the crisis is a common concern for all walks of life.
Salesperson Xu Ying expressed optimism for the future real estate market. She said that even if the real estate market is really not good, Beijing, as a first-tier city, will still maintain relatively strong demand. "Since 2019, demand has basically been mainly improved, and the improvement in stock can also feed many developers."
According to Xinhua News Agency , on July 28, the Political Bureau of the CPC Central Committee held a meeting and once again emphasized that "we must stabilize the real estate market, adhere to the positioning that houses are for living, not for speculation, and implement policies based on the city to make full use of the policy toolbox, support rigid and improved housing needs, strengthen the responsibilities of local governments, ensure the delivery of buildings and stabilize people's livelihood."
This is also the first time that the Politburo meeting proposed to "guarantee the delivery of buildings". Before this, market rumors had approved a fund of 300 billion yuan, of which CCB invested 50 billion yuan and the central bank invested 30 billion yuan to ensure delivery. An insider of CCB confirmed the news to the Economic Observer, but the news was not confirmed by an authoritative agency.
In the view of the above TOP30 real estate companies marketing personnel, guaranteed delivery is aimed at the existing projects sold and cannot bring changes to the liquidity of real estate companies. However, it is still impossible to judge whether it will improve the expectations of the real estate market. He believes that if you want to fully restore market confidence, the guaranteed delivery policy must not only cover existing projects, but also target some newly launched projects. "For example, state-owned enterprises, central enterprises or financial institutions can invest in projects in a commercial manner, or take over projects with cash cuts, most private enterprises need to have similar credit enhancement measures."
At the end of 2021, Xuhui Chairman Lin Zhong suggested in an interview with the Economic Observer that the state would lead the establishment of a standard fund to purchase bonds of real estate companies. After real estate companies improve liquidity through sales, they can withdraw at the appropriate time. At that time, he believed that this was the main way to rescue real estate companies.
At present, this wish is obviously unfulfilled. A person from a large financial institution told the Economic Observer that in the context of priority maintenance of delivery, more care is given to home buyers rather than real estate companies, "it is certainly beneficial to real estate companies, but the degree of favorability is relatively limited."
He further stated that even if it is guaranteed for delivery, for financial institutions, it is not for all projects to be delivered. "It must be discussed at one issue, and the degree of refinement will be very high. Of course, there will be appropriate commercial demands, but only if the specific situation is implemented, you can know."
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