Since the Politburo meeting on July 24 stated that "there have been significant changes in the supply-demand relationship of the real estate market," various municipal governments have introduced new real estate policies.

On September 1, Shanghai and Beijing successively announced the implementation of the new policy tha tallows mortgages on second homes to be treated in the same way as a first mortgage, as long as the buyer has paid off the first loan. From August 30 to September 1, more than ten cities including Wuhan, Changsha, Chongqing, Chengdu, Suzhou, Zhongshan, Nanning, Dongguan, and Xiamen announced the similar  policy. This is in line with the Politburo meeting's requirement of "timely adjustment and optimization of real estate policies."

On August 31, the People's Bank of China and the China Administration of Financial Regulation jointly issued a document on a number of supportive policies, including lowering the down payment percentage, lowering the lower limit of the interest rate for second-home mortgages, and finally lowering the interest rate for first-home mortgages, which the public has been eagerly awaiting. 

The implementation of the "policy combination" in the real estate market has become the focus of market attention. Will the housing market be able to recover? How will cities perform? What will be the long-term trend?

Mixed Responses to the easing of the rules in various cities

The policy content of first-tier cities is consistent with that of other cities across the country, but its effect will be better because the initial proportion of first-home recognition in first-tier cities is much higher, and the effect under the same policy will be more obvious.

There is a large differentiation in the performance of cities, with the weekend growth rate in first-tier cities being higher than that in second-tier and third-fourth-tier cities. Among them, the average daily visits to urban areas in first-tier cities during weekends are 40% to 60% higher than those from June to August, and the visits to suburban areas have rebounded to the level of weekends in June. The average daily visits to urban areas in second-tier and third-fourth-tier cities during weekends are basically the same as those in August. The average daily visits to suburban areas in third-fourth-tier cities during weekends have decreased by 14% compared to weekends in August.

First-tier cities: The new policies have shown significant results, with increased housing views and transactions in Beijing and Shanghai.

1. Beijing: Increased popularity in both new and existing homes

In Beijing, the transaction volume of affordable housing has significantly increased, with some projects selling nearly 40 units in a single day, which is twice the previous weekly average. However, the transaction volume of improvement projects has not increased, mainly due to the impact of the replacement cycle of "selling one and buying one" customers.

It is reported that on September 3rd, Rongchuang Real Estate Group's Rongchuang Yihao Courtyard opened for sale and achieved a transaction volume of 5.62 billion yuan on the first day. A total of 350 units were released in the first phase, and 169 units were sold on that day. The positive effect of the "buying a house without a loan" policy is evident, and the market sentiment of homebuyers has been significantly boosted.

According to data from Zhongyuan Real Estate, on the first day after the implementation of the "buying a house without a loan" policy, which was September 2nd, the number of second-hand housing transactions in Beijing was about 1,200 units, significantly exceeding the same period last week, which was less than 600 units. The transaction volume of newly-built residential properties in Beijing also surged, with more than 1,800 units sold in a single day on September 2nd. In August, a total of only 3,100 units were signed, but the market transaction volume on the first day of the new policy exceeded the transaction volume of the previous half month.

2. Shanghai: Increased demand for new houses, increased listing of second-hand houses, and relatively flat transaction volume

After the new policy was announced, the demand for new houses in Shanghai increased, with a 30%-60% increase in visits and transactions for projects in the suburbs; visits to previously sluggish projects in the outer suburbs also increased by 20%-60%, and transactions doubled. After the new policy was implemented, 9 units were sold overnight in the Lingang new project, which had a high inventory.

During the first weekend of the "buying a house without a loan" policy, according to market monitoring, the first-day subscription rate of new houses in Pudong exceeded 80%. Some real estate projects indicated that the number of eligible buyers increased compared to before, as some housing demand was released. On September 3rd, the subscription for the Zhuangshi Municipal Park 1872 in Zhoupu was completed. It released 224 units and the final subscription number was 450+, with a subscription rate of 203%, and the expected score is around 50 points. The Ideal Land in Jiading New Town has been subscribed for 4 days, with a subscription number of 1440+ and a subscription rate of 234%, and the expected score is about 67 points.

On September 3rd, the eighth batch of 4 projects in Shanghai started subscription: China Construction Yuhua Garden, the first-day subscription number was 130+, with a subscription rate of 88%, and it is expected to have a high score with few opportunities to pick up high-rise units; Guomao Hongqiao Jing Shang, on the first day of subscription, the subscription number was 210+, with a subscription rate of 54%; Minhang Huacao's Nanshan Qianwan Shilan, the subscription number was 70+, with a subscription rate of 49%.

Existing housing: Several real estate agency stores have generally reported that after the new policy was announced, there has been a significant increase in customer inquiries and listing volume of second-hand houses, with an increase of more than 1,000 units in a single night.

However, the actual transaction volume of second-hand housing is relatively weak. According to data from the Shanghai Real Estate Trading Center official website, on September 3, the number of second-hand housing transactions was 527, the same as in August. In August, there were 15,537 second-hand housing transactions, an average of about 518 per day.

Under the "buying a house without a loan" policy, the nominal down payment is 35%, but the current policy for second-hand housing in Shanghai still follows the principle of "three prices are lower". As a result, the actual down payment for many second-hand houses is 40%-50%. In addition, the increase in the number of listings provides more choices for buyers, but it also significantly lengthens the transaction cycle.

3. Shenzhen: Western new houses perform well, and the real estate market recovery is relatively slow

New housing market: According to public information, on September 2, the Hongrongyuan Jiayu Fashion Garden in Bao'an, Shenzhen, opened for sale, selling 596 units and collecting about 2.766 billion yuan in sales. The turnover rate was about 73%. Some western properties in Shenzhen are selling well, including the sale of talent houses, indicating that the demand and purchasing power for housing in Shenzhen are still there. However, due to the adjustment period of the real estate market in the past three years, many buyers have adopted a wait-and-see attitude, leading to a longer turnover cycle.

Existing housing: After the implementation of the "buying a house with a loan" policy, the number of second-hand housing listings continues to increase. Data from Zhuge Housing shows that on the first day of the policy implementation, the platform saw a surge of 2,082 new second-hand housing listings, an increase of about 9.06% compared to the previous month.

The essence of the differentiation between Beijing, Shanghai, and Shenzhen's real estate markets is the reflection of residents' debt repayment ability. The leverage ratio of residents in Beijing is 69.3%, Shanghai is 79.7%, and Shenzhen is as high as 94.7%, significantly higher than Beijing and Shanghai. Combined with the data on the ratio of house prices to income, based on average salaries, the difficulty for residents in Shenzhen to buy a house is the highest in the country, while Beijing ranks third and Shanghai ranks fourth.

In addition, the threshold for talent housing in Shenzhen has been lowered again (full-time associate degree, a family of 3 can buy a three-bedroom apartment), and talent housing has become homogeneous with commercial housing, priced at only 60% of the original price, which will divert a large number of potential buyers.

Against this backdrop, the recovery of the Shenzhen market may not be as fast as Beijing and Shanghai, and the market's repair process may be relatively slow. According to data from Zhuge Housing, on the first day of the policy implementation, there were 108 second-hand housing listings with price increases in Shenzhen, indicating an increase in owners' confidence; there were 259 listings with price reductions, which is still the mainstream.

4. Guangzhou: Market differentiation, heat concentrated in the main city and peripheral hot projects

On the second day of the implementation of the "recognize houses but not purchases" policy, on August 31, the number of new home signings in Guangzhou was about 266 units, while in the previous month of July and the first half of August, the daily new home signings in Guangzhou were generally around 100 units, indicating that the policy has had a noticeable impact on the market.

Over the weekend, overall visits were slightly boosted by the influence of the typhoon, with the heat mainly concentrated in the main city and peripheral hot projects. The number of visits over the weekend increased by 40-60%, while the peripheral projects remained relatively stable.

2. Partial second-tier cities: Combination of policies and marketing measures to boost visits and transactions

Tianjin has implemented a combination of measures including relaxing purchase restrictions, reducing down payments, and lowering interest rates. It is understood that visits to Poly projects have increased by 30-50%.

Changsha has closely followed the policy trend, optimized rhetoric, adjusted invitation strategies, and offered discounts for the traditional peak season of September and October. As a result, visits to some projects have increased by 6%, and transactions have increased by 25%.

3. Most second and third-fourth tier cities: Limited impact of policies on customer visits and transactions

The new policies in Wuhan and Chongqing have been implemented, but the effects have been mediocre. A small number of customers have visited due to the policies, but they are still mainly in a wait-and-see attitude. The sales manager of Poly Tianxi Yihao in Chongqing said, "We haven't felt any changes yet, only two groups of customers said they would come out to take a look and observe."

The policies in Huizhou, Changchun, and Nanchang have been implemented or substantially relaxed for a long time, but there has been no significant increase in visits or transactions.

Real estate stock surges

With the easing of the rules, on Monday, real estate service, real estate development, building materials, and building decoration sectors all saw a rise.

Sales Offices "Open 24/7"

On the evening when the policy was announced, major sales offices in Beijing and Shanghai were crowded with people, and the enthusiasm for viewing houses was high. Many developers took advantage of the situation and announced that they would be "open 24/7"; real estate agents only left a few staff members on duty in the store, and brokers almost all went out to show clients around. The number of listings for second-hand houses also significantly increased.

After the "Buy a Home Without a Loan" policy was released in Guangzhou, Shenzhen, Shanghai, and Beijing, rumors such as developers "canceling discounts," "taking back promotions," and "raising prices overnight" appeared online. However, these rumors were quickly denied by the relevant real estate companie

Overall Stable Housing Prices

From the perspective of the new housing market, developers are generally under pressure to sell their projects. Currently, the policy is not enough to completely reverse the market supply and demand relationship. The hype of developers canceling discounts or even raising prices is just a marketing gimmick. Compared to raising prices, some projects that have experienced sluggish sales in the early stages even offer larger discounts on a small number of housing units, hoping to seize the window of positive policy and accelerate the pace of sales and capital turnover.

From the perspective of the second-hand housing market, a few landlords have made slight price adjustments after the policy was announced, but there is still a lack of foundation for price increases overall. The number of listings for second-hand houses has surged, and the situation of supply exceeding demand may lead to a decline in housing prices because there are more options available for buyers to find lower prices or better conditions.

Long-term Efforts Needed for Continuous Improvement

"Golden September and Silver October" is crucial for the overall annual real estate sales. With more policies being implemented in core cities and active marketing efforts by real estate companies, the short-term outlook for the core city market is promising. It is expected that the current market recovery will be more concentrated in first and second-tier cities, with Beijing and Shanghai markets expected to stabilize and improve under policy incentives. The market recovery and sustainability may be better than in Guangzhou, Shenzhen, and second-tier cities.

Similar to the warming trend in some cities from March to early April this year, it is mainly due to the release of pent-up demand after the relaxation of the epidemic. After this wave of demand is released, the real estate market returned to normal in the latter half of April. The market recovery brought by the policy of "recognizing houses but not recognizing loans" is partly due to the pent-up demand in the previous period. The long-term sustained recovery of the real estate market still requires continuous efforts from both the supply and demand sides.

In addition, stable income and population structure are still factors affecting the stability of the real estate market.

In the future, multiple measures are still needed to encourage developers to price and promote sales reasonably and reduce prices, increase the efforts of public service supplementation, and focus more on the residents' income and employment to stabilize their expectations. Comprehensive efforts should be made to stabilize the real estate market.

(This article was first published on the TMTPost App. Reporting byWang Jian.)

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