Policy Punch: Real Estate Sector's Turning Point?

01 Policy Combination Strikes

A bolt from the blue. At the end of September, a series of favorable policies for the real estate market were introduced.

On September 24, 2024, the State Council's Press Office held a press conference. At the meeting, several major policies were introduced to accelerate the stabilization and recovery of the real estate market:

1. In terms of reducing the interest rates on existing mortgages, an average decrease of about 50 basis points is expected;

2. In terms of inventory reduction, the proportion of central bank funding support in the 300 billion yuan of guaranteed housing re-lending will be increased from 60% to 100%;

3. On the demand side, the down payment ratio for second homes has been reduced to a historical low of 15%;

4. In terms of monetary policy, the central bank has lowered reserve requirements and interest rates, releasing liquidity, and it is expected that the LPR and mortgage interest rates will further decrease;

5. In terms of financing, the policy extension for business property loans and Financial 16 policies has been extended to the end of 2026;

Key point: The policy attitude is positive, the reduction of existing mortgages will alleviate the pressure of second-hand housing sales, which is conducive to the return of housing prices to stability, and at the same time, unifying the minimum down payment ratio to 15% will help promote the full release of improved demand.

On September 26, 2024, the Central Political Bureau held a meeting, and there was a significant change in the tone towards the real estate industry:1. Clarify the goal of "promoting the real estate market to stop falling and stabilize";

2. Propose "strict control of new construction, optimization of existing stock, and improvement of quality for commercial housing";

3. Explicitly propose "adjusting housing purchase restrictions", with a significant strengthening of expectations for relaxing restrictions and the number of units in first-tier cities such as Beijing and Shanghai.

Key point: The determination to rescue the real estate market reflected in the meeting's statements far exceeds past expectations, and for the first time, it has clearly defined the policy objectives. The subsequent policy methods and intensity are worth looking forward to, and the industry has already reached an expected turning point.

Under the combination of policies, the real estate sector has shown a noticeable improvement, with transaction volumes rapidly increasing.

In terms of the housing market, the start of "Silver October" has also exceeded expectations.

Firstly, from the perspective of new house visits and subscriptions, the market heat in most cities, especially first-tier cities, has increased significantly compared to before the holiday. Among first-tier cities, the average subscription volume of monitored projects in Guangzhou and Shenzhen during the holiday reached twice the level of the entire month of September, and Beijing and Shanghai exceeded the subscription volume of the entire month of September. Among second-tier cities, hot cities such as Chengdu and Hangzhou maintain a high level of heat.