The New Policy Of Wuxi Property Market "Mends The Loopholes" And The Yangtze River Delta Faces A New Round Of Regulation And Upgrading

In order to curb speculation and make up for the policy gap, Wuxi, Jiangsu issued the notice of the municipal government office on further promoting the stable and healthy development of the real estate market in our city (hereinafter referred to as the notice) on August 30.

The "notice" further upgraded the purchase restriction policy. On the basis of the existing housing purchase restriction policy, it added restrictions on the number of houses purchased by divorced families. It stipulates that if a couple purchases commercial housing within two years after divorce, the number of houses owned by the family before divorce shall be calculated according to the number of housing units owned by the family before divorce in the urban area of the city. In order to meet the reasonable housing demand, we should prevent "false divorce" to obtain the house purchase qualification.

At the same time, the new policy of Wuxi has also tightened the tax content and loan policy of housing transactions, and severely cracked down on the speculation of school district housing concept and bid up the price of second-hand housing.

In fact, in the Yangtze River Delta region after the epidemic, Hangzhou, Shanghai, Nanjing and other key cities took the lead in the real estate market, followed by Ningbo, Nantong, Changzhou, Xuzhou, Wuxi and other places around these cities also successively appeared a hot situation.

Previously, on August 26, the Ministry of housing and urban rural development (hereinafter referred to as "the Ministry of housing and urban rural development") held some urban real estate work meetings in Beijing. The meeting required that the main responsibility of the city should be effectively implemented, the initiative of the work should be improved, and targeted measures should be taken in time to ensure the realization of stable land prices, stable housing prices and stable expectations.

It is worth noting that six cities including Shenyang, Changchun, Chengdu, Yinchuan, Tangshan and Changzhou also attended the meeting. Among them, "interviewed" Changzhou second-hand house prices rose by 0.8% in June this year, ranking 12th in China and third in the province, surpassing Nanjing and Wuxi.

Regulation and control upgrading in the Yangtze River Delta

Wuxi purchase limit upgrade, in the eyes of the industry is expected. Based on the analysis of Wuxi local market people and industry analysis institutions, there are three reasons

First of all, since June, the local auction market in Wuxi has reached new highs. Foreign real estate enterprises have entered Wuxi's local auction market in large scale, and German merchants, Yuzhou and Dafa have entered Wuxi for the first time. One fact is that in the past five years, the heat of land price in Wuxi has gradually risen, and the land price has risen faster and faster. In 2019, the total land supply in Wuxi is 47906.73 mu, and the total transfer fee is 73.269 billion yuan, with a year-on-year increase of 21.14%; in 2020, Wuxi plans to transfer 520 hectares of residential land (including 300 hectares of commercial residential land) and 50 hectares of commercial land. It is estimated that the area of ordinary residential land transferred in 2020 will increase by no less than 50 hectares compared with the previous year.

Land market volume, real estate enterprises. At the beginning of June, 20 developers including Shimao, Youyou, Jianfa, Zhonghai, Yincheng, Sansheng, Jinke and poly signed up to compete for a piece of land in HELANKOU, Wuxi. Finally, after three hours of fierce competition and 154 rounds of bidding, it was won by Sansheng group with a floor price of 19542 yuan per square meter, setting a new land price record in Wuxi.

Why is Wuxi's land market booming in August? In addition to the strategic layout needs of small and medium-sized real estate enterprises in the surrounding cities of the metropolitan area, Wuxi's property market and rising house prices have also helped. Since July, the turnover of new and second-hand houses in Wuxi has both risen, and the prices of many real estate have risen, and some plates even have no houses to sell. In fact, Wuxi house has not been in short supply. In June 2020, the saleable area of commercial residential buildings in Wuxi is 4.8144 million square meters, up 2.6% on a month on month basis. According to the average sales of nearly six months, the clearance period is 11.35 months, which is 0.6 months shorter than that of the previous month.

Secondly, the market pressure is great, and the credit policy is not loose. M2 growth rate returned to the high level of 11%, and the new loans in the first half of 2020 reached a record high. In terms of capital cost, interest rates were cut twice in the first half of 2020: the data show that since 2020, the real interest rate (1-year LPR) has been reduced by 30 basis points, from 4.15% to 3.85%; the real estate market interest rate (5-year LPR) has been reduced by 15 basis points, from 4.8% to 4.65%. However, personal credit has not been released synchronously. This year's down payment ratio and mortgage base have not weakened. Especially with the introduction of the "three red lines" policy, there are tightening signals from credit to capital in the market, Wuxi is no exception. Where does the hot money come from? This is a matter of considerable concern to the regulatory authorities at present.

Finally, illegal inflow of funds into the housing market has been the focus of supervision. Not long ago, China Securities Regulatory Commission exposed 258 illegal capital allocation platform institutions. At present, we should strictly prevent hot money from flowing into the stock market and property market. On July 11, following the issuance of the notice on "looking back" on the rectification of banking and insurance market chaos on June 23, the CBRC issued a warning of "some funds illegally flowing into the real estate market and pushing up the asset bubble".

Wuxi is not an isolated case. Looking at the whole country, Shanghai, Hangzhou, Shenzhen and Chengdu have all seen super-high subscription and housing supply ratio, and large-scale lottery in Jiangbei, Nanjing. The cities around these high-energy cities are also on fire. Wuxi's regulatory upgrading is not the first in the Yangtze River Delta. Industry insiders point out that Wuxi focuses more on policy patching.

A person in the industry pointed out that this round of regulation and control upgrading of the first wave of second and third tier cities in the Yangtze River Delta has both market generality and differentiation. Nantong is mainly due to the promotion of investment heat brought by the upgrading of urban energy level, which also leads to the promotion of sales. From the second half of last year to the first half of this year, the Nantong market has hardly cooled down.

Due to the fierce competition in Suzhou and Nanjing, the land price tends to be higher, and the profits of real estate enterprises are squeezed, and they are looking for other profit highlands. From the perspective of investment rotation, Wuxi, Changzhou and Xuzhou are weak second tier and strong third tier cities in Jiangsu Province. These cities are also becoming hot in this echelon. Since June, the growth of first-hand houses in Changzhou has accelerated, with the prices of several newly opened buildings above 16000 yuan / m2, and several high-priced ones of 20000 yuan / m2 have been put into the market. In this year's local auction, 15 plots with floor prices exceeding 10000 yuan / m2 have been born in Changzhou, and land prices have increased significantly. Like other cities, Changzhou's real estate market also has the phenomenon of rising prices of first-hand and second-hand houses, overheated land auction and loose credit.

Wuxi and Xuzhou are also similar, the rise in land prices, to some extent, also led to the activity of the entire sales market.

Demand side or shrink

At the meeting on August 26, the Ministry of housing and urban rural development proposed that we should attach great importance to the outstanding problems existing in the current real estate market and always tighten the string of regulation and control of the real estate market. We should adhere to the problem orientation, implement precise policies, and solve problems from the source. In cities where the contradiction between housing supply and demand is prominent, it is necessary to increase the supply of housing and land, support the rational demand for self housing, and resolutely curb speculation in real estate.

Under the upgrading of regulation and control, the demand side may shrink. Zhang Li, a native of Changzhou, will get a pre-sale permit for the real estate in the near future, but she has a hunch that a new deal will come out in Changzhou before the project is opened. Zhang Li already has a suite under her name. If Changzhou's new deal involves down payment for the second set of flats, her payment ability will be in trouble, and she may give up the purchase.

Take Ningbo as an example. In June 2020, new residential buildings in Ningbo increased by 1.33% month on month, surpassing Shanghai, Hangzhou, Dongguan and other cities, ranking first in China. In June, the average price of second-hand housing in Ningbo increased by 1.6% month on month, ranking the second in the core cities and the fourth in 62 cities in China. The average price went up all the way, reaching 23671 yuan / square meter at the end of June.

On June 24, 12 real estate enterprises swarmed into Ningbo. After six hours of 495 rounds of fierce fighting, Greentown finally won the plot jd07-05-08 (minglou section) in Yinzhou District with 32520 yuan / m2, setting a new record of Ningbo floor price.

At 10:00 p.m. on July 6, four departments of Ningbo jointly issued the "notice on further maintaining and promoting the steady and healthy development of the real estate market in our city", proposing "ten new policies" to stabilize the real estate market. The new policy expanded the scope of purchase restriction in Ningbo, adjusted the bidding rules of residential land transfer, and strictly controlled the floor price. Subsequently, the turnover of Ningbo property market began to shrink, and the inventory of first-hand and second-hand houses rose, resulting in oversupply.

After the upgrading of Wuxi's purchase restriction, will the transaction volume of the property market face a decline? The aforementioned industry insiders pointed out that the gradual warming of Wuxi property market has released a tightening signal. The next September will be a policy digestion period. The land market and housing market in Wuxi will tend to be stable, and the prices will not fluctuate too much.

In the second half of the year, under the pressure of capital withdrawal, the real estate enterprises will accelerate the shipment. Top real estate enterprises including Shimao and Xuhui, as well as medium-sized real estate enterprises, all made it clear in the performance conference of the China Daily that they should speed up supply in the third quarter. Then, with the previous urban inventory, the second and third tier cities in the Yangtze River Delta, which are upgraded in this round of regulation, will face the problem of de stocking.

For the first half of the year to accelerate the acquisition of real estate enterprises, in addition to reducing leverage, expanding financing to ensure the safety of funds, but also to face the market demand side shrinkage after this round of regulatory upgrading.

On August 31, at the mid-term performance conference of SunPower holdings, CO chairman, CEO and executive director Chen Kai pointed out that in the future, the investment demand of the industry will be squeezed, the profits of real estate enterprises will be squeezed, and the competition pattern of the industry will also change greatly.

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