Housing Asset Tightening Cycle Precursor: Three Or Four Line Cities Take The Lead In "Loosening"

In February 21st, Henan Zhumadian announced that the down payment ratio dropped from 30% to 20%, which fired the first shot in the three or four tier urban property market regulation and relaxation. Within the next week (from -2 on February 22nd 28), Guangxi, Qinzhou, Jiangxi Fuzhou, Henan Hebi, Jiangsu Nantong and other three or four tier cities issued successive market control policies, involving relaxation of pre-sale conditions, mortgage interest rates reduction, housing subsidies, raising the amount of provident fund loans and other aspects, and obvious signs of relaxation.

In this regard, Yan Yuejin, director of research center of E-House Research Center, pointed out that the fine-tuning policies introduced by these three or four line cities have positive effects and objectively alleviate the financial pressure faced by the high turnover mode of Housing enterprises.

A housing enterprise executives analysis that the three or four line of urban market regulation to take the lead in loosening, is a short-term performance of housing prices cash flow pressure performance. On the one hand, the three or four tier cities with higher inventory levels will continue to push forward the monetization resettlement; on the other hand, the phased exit of the three or four tier cities with higher pressure of rising housing prices will adopt more new forms of resettlement housing. This led to the gradual withdrawal from the overdraft of the pre market purchasing power and the replacement of monetization and resettlement policies. The three or four cities in the first half of 2019 were in a downward row.

According to data from the research center, the three or four property market in 2019 dropped by 15% over the same period. In 2019, the top 100 housing companies fell by nearly 10% in the three or four line cities' new land investment construction area.

The three or four line city's market regulation is loosening first, which is a manifestation of the short term cash flow pressure of Housing enterprises. Song Wenhui photo

Asset shortage pushes short financing demand

A small and medium-sized Housing enterprises (the total sales of around 50 billion in 2019), the head of the fund department, pointed out to the twenty-first Century economic report that although the capital of the entire real estate market has not reached a very tight level, housing companies have entered the state of lack of assets, and good financing collateral assets are scarce. In addition, there is no obvious relaxation in terms of administration and policy. When the epidemic will end and the industry's future expectations are uncertain, the pressure of Housing enterprises at the capital level is relatively large.

Although housing companies have entered the asset tightening cycle, the pace of financing has not slowed down. A fact is that since the beginning of the year, large and medium-sized Housing enterprises have been raising funds, such as Hengda issued 4 billion 500 million corporate bonds, poly 900 million yuan medium term notes, and green land 18 billion yuan corporate bonds. The short scale of other housing enterprises is constantly improving. Including Binjiang, HUAFA and other housing enterprises are also issuing short term financing and margin trading in a concentrated way. These housing enterprises all indicate that financing is used to repay the stock debt. At the same time, ABS financing is also favored by some medium-sized Housing enterprises. For example, long Guang real estate 2 billion yuan asset backed securities ABS was approved by the Shanghai Stock Exchange, Jinke real estate 1 billion 60 million yuan ABS recently updated to "have received feedback."

The above said that the short fuse shows that the housing enterprises have already seen a funding gap. In the more than a month of market suspension, the greater the scale of enterprises, the more intense the cash flow is. On the other hand, when enterprises stop working, they also reduce the cost of capital. Many local governments have issued part of the funds payable and the tax payment postponed payment policy, which has slowed down the pressure of accounts payable in the first quarter of the housing enterprises. The biggest burden of housing prices is loan interest and land payment.

This round of financing of housing prices, despite the cash flow pressure brought out by the epidemic can not be underestimated, but behind the city layout and market changes, resulting in housing enterprises in 2020 has obvious asset compression pressure. People with financial institutions told the economic report twenty-first Century that they are concerned about the state of capital flows in the short and medium term. Therefore, they are cautious about credit loans for housing companies, and still want to put more high-quality mortgage assets in their hands.

New deal to stimulate sales to help fund withdrawal

Since 2014, the reform of monetization and resettlement has played a catalytic role in the development of the property market in the three or four tier cities. Once the demand for incremental housing driven by the housing reform is rapidly removed, the real estate market of the fourth and fourth tier cities will face greater downward pressure. For example, the epidemic is the worst for home buyers. In addition, since the second half of 2018, the central authorities have strictly controlled financial risks and pushed financial deleveraging. The three or four line urban housing reform has tightened monetary rehousing. In 2016 -2018, in order to expand the scale of housing industry, land investment focused on three or four line cities, such as Xiangsheng, Jinke and so on.

The relaxation of the policy is mainly from the sales side to stimulate the property market transactions. Take Zhumadian as an example, the city took the lead in reducing the down payment ratio of the first suite from the 30% to 20%, and the maximum loan amount of the provident fund from 450 thousand to 500 thousand. In addition, Zhumadian's financial subsidies to buy a house, the subsidy standard for all kinds of talents to buy the first suite is 200 yuan / square meter, the subsidy standard for graduates from polytechnic schools is 150 yuan / square meter, and the subsidy standard for migrant workers is 100 yuan / square. Square meters. In order to increase the cash flow of developers, financial institutions are also lowering the interest rate of personal housing mortgage loans moderately. For example, in February 24th, Nanning adjusted the provident fund loan policy, allowing the provident fund to purchase two suites under certain conditions.

Zhang Hongwei, chief analyst of the same policy research institute, pointed out that with the gradual opening of the sales offices below the line, the policy of the three or four line cities will be relaxed, and the short-term sales pressure of the housing enterprises in these cities may be hedged in the near future. In fact, with many housing companies returning to the second tier cities in 2019, the three or four tier cities had already had sales pressure.

Ya Ju Le, Zhongliang are typical heavy line three or four line Urban Housing enterprises, their investment changes in 2019 just map the three or four line city sales pressure. Combing the earnings data shows that in the end of 2018, 36 million 230 thousand square meters of land reserve in the end of the year, about 70% of the earth storage in the three or four line cities. In 2018, the proportion of the three or four cities in the new land investment was nearly 84%. In 2019, agile started to contract three or four line investment in cities, focusing on three tier cities surrounding the second tier and core cities. In 2019, the company's investment in the three or four tier cities dropped by 22.7 percentage points. Zhongliang started from the fourth quarter of 2018, and gradually reduced the proportion of investment in the three or four line cities. The second tier cities accounted for an increase of 16.1%-29.1% in the amount of new land investment.

When the market is expected to change, the housing enterprises' investment in the three or four line cities has shifted from the three or four tier cities around the first tier cities to cities with population introduction capability. For example, in the second half of 2019, land investment in Tai'an, Linyi and Weifang in Beijing Tianjin Hebei Urban Agglomeration rose rapidly.

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