Recently, the real estate policy has been issued intensively, and there are relevant statements on both sides of supply and demand, which has attracted great attention from the market.
From a macro perspective, how to view and evaluate its impact on the bond market; From a micro perspective, what about real estate debt?
Real estate policy, here we go
On May 17, 2024, heavy real estate policies were introduced intensively. To sum up, there are two key points: on the one hand, focusing on improving residents' willingness and ability to buy houses, the central bank's policies have been issued for three consecutive times. On the other hand, it focuses on house guarantee and de stocking.
Recently, various urban real estate optimization policies have been issued intensively, which mainly include the following aspects: (1) Relax or cancel purchase restrictions, lower the threshold for house purchase, digest inventory and release demand. (2) Support the "old for new" and "sell the old to buy the new" to promote the virtuous cycle of new and second-hand housing. (3) The purchase and storage of stock housing solves the housing problem of some groups while digesting the inventory and alleviating the liquidity pressure of housing enterprises. (4) We will continue to implement policies and measures related to financial support for real estate.
How does the real estate market perform?
From the sales side, the market prosperity still needs to be continuously observed. The prices of new commercial residential buildings and second-hand residential buildings have declined month on month since the second half of 2023. In 2024, the decline in the first quarter is narrowing, and the month on month decline in April is further expanding. The inventory level is relatively high. In 2023, the area for sale of commercial housing will grow slightly in fluctuations, and the area for sale in the second half of the year will grow slightly, about 18% - 20%. Since February 2024, the year-on-year growth rate has narrowed to 15.6% in April. The overall reduction of commercial housing is weak.
The investment of housing on the investment side is not motivated to start, and the real estate optimization policy may promote the delivery of project construction. Since 2024, the year-on-year decrease of investment in real estate development has slightly expanded. In April, the investment in real estate development, the area of new construction and the area of construction have respectively changed by - 9.8%, - 24.6% and - 10.8% year on year, all at a higher level since 2023. In terms of completion, since 2024, the year-on-year change of completed housing area has changed from positive to negative, or affected by the high base in the same period last year. At present, the real estate optimization policy is further increased, which may promote the construction and delivery process of the project. The overall activity of the land market is not high.
How about the performance of real estate bonds?
Since 2024, the issuance scale of state-owned enterprise real estate bonds in the first quarter has increased significantly compared with the previous quarter, while the issuance of non-state-owned enterprise real estate bonds in the same period is still relatively low, and there is a large gap in net financing. Since the second quarter, the issuance scale of state-owned enterprises' real estate bonds has declined, while the issuance of non-state-owned enterprises' real estate bonds has recovered. However, affected by the significant growth of repayment scale in the same period, the net financing of state-owned enterprises has changed from positive to negative, and the net financing gap of non-state-owned enterprises has expanded.
At the end of 2023, with the continuous increase of the "real estate stabilization" policy, the implementation of the urban real estate financing coordination mechanism has been effective, the mortgage interest rate has been lowered, and the requirements for the management of operational property loans have been issued. Overlapping the relaxation of the purchase restriction policy in key first and second tier cities, we will work together from both sides of supply and demand to promote the steady development of the real estate market. Since the fourth quarter of 2023, there has been an obvious narrowing trend in the credit spreads of different types of real estate enterprises. In 2024, the interest margin between local state-owned enterprises and central state-owned enterprises will continue to fluctuate and decline, and has now been compressed to within 80BP.
In summary, the current real estate policy is still a bottom-up policy to relax constraints, which may slow down and stabilize the downward slope of real estate supply and demand in the short term, but the long-term effect remains to be observed. In terms of real estate bonds, the current market's confidence in private enterprise real estate bonds needs to be further observed, and it is still necessary to pay attention to the credit risk of private enterprises and the resulting valuation fluctuations. In terms of state-owned enterprise real estate bonds, under loose policies, some high-quality real estate enterprise real estate bonds have certain allocation value, and can seek coupon games.
Risk warning: policy uncertainty; Adjustment of domestic policies related to real estate beyond expectations; There may be risks of delayed, untimely or incomplete information
