Under The "Epidemic Situation Look At The Enterprise" Series Seven: Can Reduce The Housing Enterprises Under The Epidemic Situation, And Can Not Take The Old Road To Stimulate The Property Market.

The Spring Festival was originally one of the selling season of the property market, but this year, due to the outbreak of the new crown pneumonia epidemic, sales of the property market have been hit, which is a threat to the real estate enterprises with relatively high leverage. The future of China's property market has attracted much attention because it is not only related to the fate of many enterprises, but also to the trend of China's economy.

Hengda Group announced that in February 18th, the 25% off sale of its company property in the whole country has aroused heated debate in the market. At the end of June 2019, Evergrande had a total debt of 1 trillion and 750 billion, of which 1 trillion and 250 billion expired at the end of June this year.

Before the outbreak of the epidemic, real estate companies were under the pressure of financing constraints and the lack of enthusiasm in the market. Chinese real estate enterprises have been accustomed to high debt and high speed expansion for many years, and the property market is no longer able to support this mode when it enters a mature period. At the end of last year, the Beijing Banking Regulatory Commission issued a circular calling for the prevention of excessive leverage in housing enterprises, and strict control of new financing for real estate companies with a high net debt ratio, a radical strategy and a large number of leveraged buy-out businesses.

According to the recent survey conducted by the National Federation of real estate industry associations, 46 Housing enterprises expired debts in the first half of 2020, which amounted to nearly 530 billion yuan. Take a housing company as an example. In the past, it could get loans of 40-60 billion yuan from the financial institutions every month. Now it can get the loan amount cut, and the monthly financial gap will reach 100-110 billion yuan. Its monetary fund will only be enough to maintain the operation for three months. Therefore, the agency suggests that enterprises with relatively low risk should adjust their credit policies appropriately and increase credit channels and quotas, such as phasing reasonable increase in development loan amount, appropriate release of corporate bond issuance conditions, and appropriate outsourcing of RMB cross-border mutual funds pool business. Moderate or low risk enterprises should moderately increase credit loans. The enterprises that are due to repayment due to the outbreak of the epidemic cause conditional extension of the period and give a certain extension or renewal.

So far, in order to cope with the impact of the epidemic, more than 20 provinces and municipalities across the country have issued a "directional relaxation" policy for the real estate industry, which involves land leasing, pre-sale conditions, completion and completion, provident fund and real estate financing. For example, Nanjing allows real estate enterprises to delay payment of land transfer payments, while Suzhou city sells advance and sell time nodes appropriately. At present, these policies mainly focus on temporary relief for real estate companies, avoiding capital chain breaking, and have not yet taken the initiative to stimulate the property market.

There is also a kind of public opinion impulse in the market. After the impact of the epidemic, the government should relax the market regulation policy to stimulate economic growth. However, at the moment when China is embarking on a road of high quality development, it should not stimulate the property market once again to help stabilize the economy. Otherwise, the whole society may erroneously believe that it is going backwards, thereby changing the current trend of resource allocation optimization.

In February 19th, the people's Bank of China issued the report on the implementation of China's monetary policy in the fourth quarter of 2019. In particular, it mentioned that it is necessary to continue to insist that the house is used to live and not to be used for frying. In accordance with the basic principles of "city strategy", we must accelerate the establishment of a long-term management mechanism for real estate finance and do not regard real estate as a means to stimulate the economy in the short term. At the same time, in February, LPR appeared asymmetrically downgraded, with a decrease of 10 basis points in one year, and a reduction of 5 basis points in the five year period, which is lower than the reverse market and MLF decline in the open market. This shows to some extent the policy direction that will not stimulate the property market.

Not taking real estate as a short-term stimulus to the economy does not mean turning a blind eye to the risks faced by real estate companies. How the future market will change can not be judged under the epidemic. At least, so far, the problem of capital chain that the real estate enterprises are facing generally is not caused by the outbreak of the epidemic, but the risk that has always been and constantly increasing. The epidemic has a substantial impact on the first quarter of the economy. It can consider implementing measures to alleviate the pressure for real estate enterprises, such as not blindly lending, breaking loans and pressing loans, supporting partial rational financing. The key is that the real estate enterprises should change the extensive mode of highly leveraged development to adapt to the new normal of the Chinese property market.

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