"In the past two days, salespeople have received a large number of inquiries from customers." Before the National Day holiday, a major new policy for the real estate market was implemented, prompting homebuyers in Shenzhen to take action.
At the press conference held by the State Council Information Office on September 24, People's Bank of China Governor Pan Gongsheng announced several new policies for the real estate sector. The most market-stimulating news was the reduction in the interest rates on existing mortgages and the lowering of the minimum down payment ratio.
A Beijing homeowner with a second-mortgage interest rate as high as 5% expressed excitement to reporters after hearing about the new policy, saying, "This is exactly the policy I've been looking forward to. If I can pay less on my mortgage, I will definitely go out and spend."
Industry insiders believe that reducing the interest rates on existing mortgages will effectively alleviate the burden of loan repayments for residents. Families will have more disposable income for daily consumption, which will promote the prosperity of related industries and drive economic development. Lowering the down payment ratio for second homes will also help reduce the threshold for buying a home, facilitate the release of demand for better housing conditions, and promote market stability.
Under the significant positive impact, the capital market responded quickly, with real estate stocks and bonds turning red for two consecutive trading days. As of the close on September 25, the real estate sector (Shenwan) rose by 1.73%, leading the gains, with five stocks including Financial Street, Shi Rong Zhaoye, and Wantong Development hitting the daily limit; the Hong Kong real estate sector also led the industry with a 0.74% increase. In terms of real estate bonds, "H9 Long Control 01" rose by more than 144%, and "H1 Sunac 01" rose by 75%.
However, the impact of the favorable policy on the real estate market is still being transmitted. Several interviewed insiders from real estate companies revealed to reporters that there has been an increase in inquiries from customers, but the overall market response is not yet obvious, and they are still waiting for the implementation details of the policy.
Promoting the transaction of second-hand houses
In September 2023, the regulatory authorities promoted a round of interest rate reduction for existing loans, but the scope and intensity of the reduction were limited. On the one hand, it only targeted first-home loans, and on the other hand, the reduced interest rates did not align with the new loan interest rates. Since 2024, the interest rate difference between new mortgages and existing mortgages has further widened, and many homebuyers still choose to use idle funds to repay their mortgages.
Industry analysis points out that before the reduction in September, there was a high demand for the reduction of existing mortgage interest rates. Some homeowners, in order to reduce the monthly supply pressure caused by high-interest mortgages, have been selling second-hand houses, leading to a continuous "volume for price" situation in second-hand housing transactions.
Huafu Securities real estate industry analyst Chen Li believes that the reduction in existing mortgage interest rates this time is expected to accelerate the improvement of the pressure on second-hand housing, significantly improve the supply and demand relationship in the second-hand housing market, and accelerate the stabilization of housing prices from old communities.In fact, shortly after the release of the new policy, a real estate agency store in the Longgang Universiade Center area of Shenzhen Lianjia facilitated a transaction.
"Both parties talked for five hours and finally closed the deal at around nine in the evening," said Manager Cao, a real estate agent for the property, to the reporter. The property is over 80 square meters and is considered a property for immediate needs. Before the policy, a transaction facilitated by the neighboring store took 13 hours to close, so a 5-hour deal is already considered fast.
This is the best school district housing in Longgang Universiade Center. Manager Cao introduced that the buyer's child will only start school the year after next, so they have not been in a hurry to buy a house. The seller, on the other hand, is eager to change houses. In his view, this policy may be the catalyst that pushes both parties to make a decision, allowing the buyer to make up their mind and the seller to make some concessions to change houses before the rapid rise in housing prices.
Manager Cao said that the buyer was only willing to pay 5.3 million yuan, but the owner asked for 5.4 million yuan. The two parties had talked several times before but failed to reach a deal. After the policy came out yesterday, both parties made some concessions and closed the deal at a price of 5.36 million yuan.
There are also some positive signs in the second-hand housing market in Shanghai. The store manager of a large chain agency located in Hongkou District, Shanghai, revealed to the reporter that after the new policy was released, customers have become more active than before and are more willing to come out to see houses. Moreover, under the new policy, it is generally believed that the current market adjustment has basically reached the bottom and will not continue to decline. "Next, we still need to look at the weekend viewing volume and the transaction data in the near week."
Chen Li also believes that another important impact of this reduction in the interest rate of existing housing loans is to effectively reduce the monthly supply cost for residents. With the narrowing gap between housing loan interest rates and the rent-to-price ratio, it becomes a signal for the real estate market to bottom out and stabilize.
On the demand side, in addition to reducing the interest rate of existing housing loans, this new policy also reduces the down payment ratio for the second house from 25% to 15%, and for the first time, unifies the down payment ratio for the first and second houses, with the down payment ratio also reaching the lowest in history.
In Zhang Bo's view, the lower down payment ratio means that homebuyers need to bear a higher leverage ratio. If housing prices fall sharply again, it will directly affect homebuyers' repayment of principal and interest, and may also further increase financial risks.
Zhang Bo believes that this also means that when implementing this policy, the regulatory authorities have a clearer judgment on the current real estate market, especially for the long-term expectation of housing prices. This policy can effectively accelerate market recovery.
After this policy benefit before the National Day, Manager Cao has arranged his work plan, hoping to grasp the housing demand released after each policy. "We hope to invite as many people in the database who want to buy a house to see the house as possible. In addition, we are also communicating with the owners who are selling houses, hoping that they can set aside at least two days during the National Day holiday for buyers to see the house."Pending the Implementation of Policy Details
The release of such significant benefits has, on one hand, alleviated the monthly mortgage pressure for existing homeowners, and on the other hand, it has also lowered the threshold for purchasing a home, potentially enhancing the effect on the group of people who have already bought homes or those with improved housing needs re-entering the market.
Zhang Bo believes that it is not ruled out that some homebuyers will consider improving their living conditions again or purchasing new properties for their parents or children, or diversifying their real estate purchases for travel, retirement, and other purposes.
A Fujian-based real estate company's marketing planning director revealed that on the afternoon of the new policy, they organized various regions to disseminate the favorable policy, particularly targeting customers who are interested in a second home. They emphasized that while the down payment for the second home has been reduced, they also informed customers that the interest rate on the existing home loan can be lowered, and the loan cost is also decreasing, reducing the resistance to the perception that while the down payment is reduced, the loan amount has increased.
On the day of the new policy, some customers have already taken action. A project in Guangzhou by an East China real estate company received 7 visiting customers, 6 of whom were new visitors.
"Compared to usual, having such performance on a weekday at this node indicates an increase in visitor numbers," said a person in charge of the project, "but we still need to continue observing to see if this is a normal trend or an occasional occurrence."
The Shenzhen market has also responded positively. A person in charge of Longfor Group's Shenzhen-Hong Kong company introduced to the reporter that as the threshold for buying a home continues to decrease, more customers with limited funds who want to buy a second home will be able to do so, and in the past two days, sales staff have received a large number of customer inquiries. "The demand for Shenzhen residents to buy and change homes has not been fully tapped, and the arrival of the new policy will usher in a small spring."
However, the response in Shanghai's new housing market is not as optimistic. Several real estate insiders interviewed all said that the market performance of their projects has not seen significant improvement.
A person in charge of a state-owned enterprise's Shanghai company said, "Customers will pay attention to this type of policy released by the central bank at the first time," perhaps due to the recent weather in Shanghai, there has not been much obvious reaction in the projects, with no change in visits and inquiries, and a period of observation is still needed.
A salesperson in charge of a project located outside the outer ring of Shanghai also told the reporter that the current market outside the outer ring is not good, with only a few customers coming to inquire. However, the specific reduction ratio in Shanghai has not yet been determined, and the impact is not obvious. "But in fact, whether it is low interest rates or low down payments, due to unstable income, customers do not want to leverage so much even if they have the need to buy a house."Second-tier cities are also waiting for policies to take effect. The person in charge of the Wuhan projects of the aforementioned real estate company in East China said that after the new policy came out, their Wuhan projects were busy promoting the policy, and it is estimated that the effects will not be seen so quickly. Everyone will definitely wait until the "National Day" holiday to look at houses.
A state-owned enterprise's market person in charge in Zhengzhou also told reporters, "The new policy itself mainly solves some confidence issues. In fact, those who were going to buy a house before will still buy it. The current mortgage interest rates are already quite cheap."