The Zhitong Finance App learned that Cinda Securities released a research report saying that the pullback in key cities is close to historical extremes, and property market allocations may face a window period. According to data from the Bureau of Statistics, the Beijing/Shanghai second-hand housing price index declined 1.1%/0.8% month-on-month in October. On 2008/11, 2010/5, 2014/9, and 2017/6, second-hand housing prices in Beijing also experienced a month-on-month decline of more than 1%. Apart from a two-month lag in 2014/6, the month-on-month growth rate of housing prices in Beijing all rebounded after bottoming out. Housing prices in Shanghai have also bottomed out with a month-on-month decline of more than 0.5%. The bottom of the cycle is compounded by the relaxation of loan restrictions in first-tier cities. It is expected that the recovery process of the national property market will accelerate in the future. Housing development companies suggest focusing on Huafa Co., Ltd. (600325.SH), etc., while second-hand real estate agents suggest focusing on the target area, I love my family (000560.SZ), etc.

▍ The main views of Cinda Securities are as follows:

Northern capital loans and general housing standards have been relaxed, and preferential policies have exceeded expectations.

Following the relaxation of purchase restrictions in Guangzhou on 9/20, and after Shenzhen lowered the down payment ratio for two apartments on 11/22 and relaxed the general housing standard, on 12/14, five departments including the Beijing Municipal Housing and Construction Commission issued new policies to optimize the certification standards for ordinary housing, lower the minimum down payment ratio/commercial loan interest rate policy for newly issued loans, and extend the maximum loan period. On the same day, the Shanghai Housing Administration and other departments issued new policies to adjust common housing standards and optimize differentiated housing credit policies.

In terms of general housing certification, Beijing has now abolished the total price requirement, and the average price line has increased dramatically by more than 1.8 times. According to reports from the Beijing Municipal Housing and Construction Commission, the share of general housing in the city may rise to around 70%. However, the Shanghai Universal Housing Standard has removed ring road classification and total price requirements. Currently, general housing requirements are more relaxed than Beijing, and it is expected that a large percentage of houses can also be considered general housing. General housing transactions enjoy benefits such as personal tax, value-added tax, and surcharges, and more families are expected to enjoy preferential tax policies when transferring housing.

In terms of loan restrictions, the minimum down payment ratio for the first unit/second home in Beijing and Shanghai fell below 30%/50% (as low as 40% for the peripheral two units). The lower interest rate for the first set was reduced by about 45 bps, and the lower interest rate for the second home in Shanghai was reduced by 75 bps (peripheral 85 bps). General housing standards and loan restriction policies have been drastically relaxed, helping to effectively reduce the cost of buying a home.

The pullback in key cities is close to historical extremes, and the housing market allocation may welcome a window period.

According to data from the Bureau of Statistics, the Beijing/Shanghai second-hand housing price index declined 1.1%/0.8% month-on-month in October. On 2008/11, 2010/5, 2014/9, and 2017/6, second-hand housing prices in Beijing also experienced a month-on-month decline of more than 1%. Apart from a two-month lag in 2014/6, the month-on-month growth rate of housing prices in Beijing all rebounded after bottoming out. Housing prices in Shanghai have also bottomed out with a month-on-month decline of more than 0.5%. The bottom of the cycle is compounded by the relaxation of loan restrictions in first-tier cities. It is expected that the recovery process of the national property market will accelerate in the future.

Beijing and Shanghai entered the stock era earlier, and second-hand housing agents may benefit.

Vice Minister of Housing and Construction Tung Jianguo said at the 2023-2024 China Economic Annual Conference that in January-November, the total number of second-hand housing units in the country achieved positive year-on-year growth, and the total demand for housing remained stable, but the share of second-hand housing in the transaction structure increased, and the stock market weight increased. Around 2015, Beijing and Shanghai entered the stock era, accounting for more than half of the second-hand housing transaction area. In this round, general housing standards have been greatly relaxed. More properties may enjoy tax concessions, thereby further opening up the housing exchange chain and revitalizing the circulation market. Second-hand housing brokers are also expected to benefit in the process.

Risk Factors:

The tightening or relaxation of real estate regulation policies fell short of expectations, and the decline in sales in the real estate industry exceeded expectations.