Opinion Leader | Wu Ge
Core point:
1. Actions speak louder than words. The recent launch of the new real estate policy and the issuance of ultra long term treasury bonds have all touched the sensitive nerves of the market. What will be the final effect of frequent policies? To what extent can unilateral expectations of real estate be mitigated? To what extent can we change the persistent low price situation? Even though the short-term strength of the policy is limited, does it mean that the underlying logic has changed significantly?
2. Different from the past, the environment of this round of real estate is more challenging. The supply side not only has a huge inventory of new houses, but also has high second-hand houses listed. Demand side house buyers focus not only on the policies of the real estate industry, but also on the consideration of employment, income and other macro variables related to the future repayment ability. The original intention of the new real estate policy is to "prevent risks" rather than "stabilize growth".
3. The recent progress of financial bond issuance is slower than that in the past, which is, of course, related to long-term factors such as the increasing difficulty in matching financing costs and returns, which is worried by all circles. However, the launch of the project declaration and the issuance of the quota this year are both relatively late in history, and there is no clear requirement for the issuance and use progress. In addition, the issuance of special treasury bonds is slow, or reflects the urgency of "stable growth".
4. Looking into the future, the new real estate policy can ease the expectation of non-linear adjustment. The cancellation of the lower limit of the housing loan interest rate and the reduction of the down payment ratio can also narrow the decline of commercial housing sales. However, its pulling effect on investment is difficult to see in the short term, and the physical workload such as infrastructure is obviously lagging behind. However, changes such as the improvement of external demand helped the marginal recovery of nominal GDP in the second and third quarters, but the elasticity was moderate.
Body:
The launch of the new real estate policy and the issuance of ultra long term treasury bonds have all touched the sensitive nerves of the market. What will be the final effect of frequent policies? To what extent can unilateral expectations of real estate be mitigated? To what extent can we change the persistent low price situation? Even though the short-term strength of the policy is limited, does it mean that the underlying logic has changed significantly?
1、 How effective is the new real estate policy?
From "significant changes in the relationship between supply and demand", to "the overall situation of economic and social development", to "the people and politics of real estate work", the central government has paid more attention to stabilizing real estate. Different from the previous market-oriented clearing, the recent supply side shows signs of public funds intervention, and the purchase of existing houses by local state-owned enterprises is different from the project "white list" and other policies.
If the 300 billion yuan security housing refinancing line is fully used, or about 60-70 million square meters of existing houses can be digested, accounting for 15-20% of the area of commercial residential buildings for sale. Even after that, the inventory of existing houses is still at a historical high, and there are also high second-hand houses listed. The experience of the United States and Japan shows that public funds involved in risk settlement still need to be strengthened.
Figure 1. Supply side: public funds intervention, risk appetite repair
Source: WIND, calculated by the author
Note: The risk is the credit spread between housing enterprises and foreign debt, and the inventory is the area of commercial residential buildings for sale.
At present, the down payment ratio, purchase restriction and other industrial policies have been significantly relaxed, but the macro variables represented by real interest rates still restrict demand. However, after the opening of the lower limit of the housing loan interest rate, there may be about 40BP of room for adjustment and reduction. Superimposed by the rising price margin, the real interest rate will moderate downward, which will help to narrow the decline in commercial housing sales.
Figure 2. Demand side: the direction of real interest rate changes, but the strength needs to be strengthened
Source: WIND, official websites of governments at all levels, calculated by the author
2、 How effective is the financial issuance?
The progress of financial bond issuance is slower than that in the past, which is certainly related to long-term factors such as increasing difficulty in matching financing costs and returns. However, the launch of the project declaration and the issuance of the quota this year are both relatively late in history, and there is no clear requirement for the issuance and use progress. In addition, the issuance of special treasury bonds is slow, reflecting the urgency of "stable growth" is different from the past.
Figure 3. The slow pace of debt issuance is related to the difficulty in achieving economic goals
Source: WIND, calculated by the author
Note: The issuing progress is the seasonal difference.
By analogy with the year when land transfer fell back and bonds were issued later, the real estate infrastructure investment and physical workload were difficult to improve significantly in the second and third quarters, and may rise to a certain extent around the fourth quarter. The annual GDP deflator is expected to remain at the low range of - 0.5% - 0% year on year, and the upward elasticity of nominal GDP is still moderate.
Figure 4. Real estate, infrastructure investment and physical workload will still lag behind
Source: WIND, calculated by the author
Note: The investment in 21 and 23 years is a compound growth rate.
3、 Basic conclusions
everything Actions speak louder than words. Different from the past, this round of real estate faces a more challenging environment. The supply side not only has a huge inventory of new houses, but also has high second-hand houses listed. Demand side house buyers focus not only on the policies of the real estate industry, but also on the consideration of employment, income and other macro variables related to the future repayment ability. The original intention of the new real estate policy focuses on "risk prevention".
Second The recent progress of financial bond issuance is slower than that in the past, which is certainly related to long-term factors such as the increasing difficulty in matching financing costs and returns, which are feared by all circles. However, the launch of the project declaration and the issuance of the quota this year are both relatively late in history, and there is no clear requirement for the issuance and use progress. In addition, the issuance of special treasury bonds is slow, reflecting the urgency of "stable growth" is different from the past.
Third Looking ahead, the new real estate policy can ease the expectation of non-linear adjustment. The cancellation of the lower limit of the housing loan interest rate and the reduction of the down payment ratio can also narrow the decline of commercial housing sales. However, its driving effect on investment is difficult to see in the short term, and the physical workload such as infrastructure also lags significantly. However, changes such as the improvement of external demand contributed to the marginal recovery of nominal GDP in the second and third quarters, but the elasticity was moderate.
Risk warning: Trade friction exceeded expectations.
(About the author of this article: Chief Economist and Assistant President of Changjiang Securities)
