From January To August, The Growth Rate Of Commercial Housing Sales Turned Positive, And The Influence Of "Three Red Lines" Loomed

On September 15, the National Bureau of statistics released data showing that from January to August this year, the national real estate sales volume reached 9694.3 billion yuan, a year-on-year increase of 1.6%, and the growth rate turned positive for the first time since this year.

This benefited from the good market trend in recent months. From May to August, the national real estate sales area and sales volume increased year-on-year for four consecutive months. Among them, the sales volume increased by 27% in August and the sales area increased by 13.7%.

Real estate is one of the fastest recovering industries from the epidemic. Investment in real estate has been increasing since June this year. The growth rate of real estate investment rose to 4.6% in the first eight months, while the growth rate of fixed asset investment (excluding farmers) in the same period was - 0.3%.

The loose monetary environment, which stimulates the release of demand suppressed by the epidemic situation, is considered to be the main reason for the market recovery, which also makes many indicators of the real estate industry better. However, in recent years, many cities have introduced property market regulation policies to curb investment demand. The "three red lines" based financing management policies will also have an impact on enterprise decision-making. It seems that the coming "gold nine silver ten" will face a trace of uncertainty.

Real estate is one of the fastest recovering industries in the epidemic. -Photo by Zheng dikun

A number of property market indicators are improving

In the first eight months of this year, the sales area of commercial housing nationwide was 984.86 million square meters, although it decreased by 3.3% year-on-year. However, compared with the 39.9% decline at the beginning of the year, it has been significantly narrowed.

Due to the price increase, the national real estate sales still increased by 1.6% in the first eight months. According to the data previously released by the National Bureau of statistics, since the second quarter of this year, the prices of new and second-hand houses in 70 large and medium-sized cities have shown an overall upward trend. Among them, the market sales in the eastern region recovered quickly, which also improved the overall average transaction price to a certain extent.

Fu Linghui, a spokesman for the National Bureau of statistics, said that the recent recovery in the real estate market was due to the release of some repressive demand in the early stage of the epidemic, as well as the increase in financial support for the real economy, which led to a downward trend in market interest rates, a decrease in medium and long-term interest rates, and an objective reduction in the burden of some buyers, which is also conducive to the recovery of the entire real estate market.

But Fu Linghui also pointed out that "on the whole, no matter in terms of investment or sales, it is still at a relatively low level and has not returned to the normal state."

Nevertheless, in recent months, some regional markets have been overheated. In some second and third tier cities, due to the lack of supply and the inverted prices of first-hand and second-hand houses, there is a phenomenon of rush buying in the market, which promotes the rapid rise of house prices in some cities.

On August 26, the Ministry of housing and urban rural development held a meeting on real estate in some cities in Beijing. The chamber of Commerce was attended by the heads of Shenyang, Changchun, Chengdu, Yinchuan, Tangshan, Changzhou and other municipal governments as well as the housing and urban rural development departments of their provinces (autonomous regions). According to the Statistics Bureau, housing prices in these cities have increased relatively much.

Since the outbreak of the epidemic, the central bank has repeatedly released liquidity to the market, and the cost of capital has dropped. In the first half of this year, the financing environment is relatively loose, coupled with the favorable sales recovery, the capital situation of real estate enterprises has improved. From January to August this year, real estate development enterprises have put in place 11709.2 billion yuan of funds.

But in the land market, real estate companies still maintain a cautious attitude. In the first eight months of this year, the land purchase area of real estate development enterprises was 119.47 million square meters, a year-on-year decrease of 2.4%, an increase of 1.4 percentage points compared with January July; the land transaction price was 708.8 billion yuan, an increase of 11.2%, and the growth rate dropped by 1.0%.

Due to the positive trend of many indicators, the real estate development boom index (referred to as "national housing boom index") in August was 100.33, which was above the appropriate boom level of 100 points for two consecutive months.

Chain reaction of "three red lines"

The stable operation of the real estate market also depends on the timely adjustment of the policy level.

According to the statistics of the shell Research Institute, since July, a total of 44 provinces and cities have launched 61 real estate related policies. Among them, 10 cities including Changzhou, Shenyang, Hangzhou, Dongguan, Wuxi, Shenzhen, Nanjing, Ningbo, Dalian and Chengdu have issued policies on restricting the sale and purchase of real estate market, raising the threshold of loans and real estate resale, preventing market overheating and further restraining investment demand.

Pan Hao, a senior analyst at Shell Research Institute, told 21st century economic reporter that this round of operation will also serve as a warning to other cities in the country, and may slow down the recovery of trading volume and the speed of price rise to a certain extent.

But for real estate enterprises, the real problem is a series of chain reactions brought by prudent financing management.

On August 20, the Ministry of housing and urban rural development and the people's Bank of China held a forum on key real estate enterprises. The responsible persons of 12 real estate enterprises attended the meeting and formed the "capital monitoring and financing management rules for key real estate enterprises", namely, "three red lines": after excluding advance collection, the asset liability ratio is greater than 70%, the net debt ratio is greater than 100%, and the cash short debt ratio is less than 1 times. According to the situation of real estate enterprises "stepping on the line", it is divided into "red, orange, yellow and green", and the differentiated debt scale management is implemented accordingly.

According to the 21st century economic report, this measure has been launched in some real estate enterprises in September, and will be gradually extended to the whole industry in the future.

According to the statistics of Guotai Junan, more than 40% of the listed real estate enterprises are located in the red and orange files, which have greater pressure to deleverage. Therefore, many enterprises should choose the way of short-term cash return.

In early September, Evergrande launched a wide range of price cuts. Although Evergrande has the practice of promoting sales in the "golden nine silver ten", this action still leads to discussions about "deleveraging". A person from a real estate enterprise in Beijing told the 21st century economic report that in order to impact the annual performance, the company usually implements sales promotion in the fourth quarter, but this year may be ahead of schedule because "the financing environment in the second half of the year has been significantly tightened.".

This person believes that compared with previous years, changes in financing policies have made real estate enterprises more motivated to reduce prices and promote sales. However, due to the influence of policies on the demand side, this year's "gold nine silver ten" can be expected, but it will not be too hot.

At the same time, the pace of enterprise expansion is likely to slow down. Many respondents believe that linking the financing scale with debt ratio and cash flow means that the era of rapid expansion with high leverage will come to an end. Therefore, future land acquisition and M & A activities will cool down.

Pan Hao pointed out that the new deal will likely bring a series of chain reactions and affect the future performance of real estate data. On the sales side, the willingness of real estate enterprises to ship is still strong, and the turnover is expected to continue to increase, but the price will remain stable; on the financing side, the tightening of policies will slow down the growth of funds in place of real estate enterprises; on the investment side, the growth rate of investment in real estate development, the growth rate of newly started area and the growth rate of land purchase area may continue to slow down or go down.