While the first-tier cities and hot second-tier cities have stepped up regulation of the property market, some third- and fourth-tier cities are ushering in "reverse" regulation, and "restriction orders" are being implemented everywhere.
According to incomplete statistics by The Paper (www.thepaper.cn), at least 7 cities have already restricted the price reduction behavior of real estate companies through interviews with real estate companies or the introduction of policies.
However, behind the price cuts, the debt pressure is high, and the slow return of funds is a reality that some real estate companies have to face. A housing price defense battle is being staged.
At least seven cities issued a "restriction order"
According to incomplete statistics from The Paper, as of now, 7 cities including Zhuzhou, Jiangyin, Heze, Yueyang, Kunming, Shenyang, and Tangshan have announced “decline limits” for house prices.
The reason why it is called the "restriction order" is because some real estate companies or intermediaries have been interviewed or stopped by the government when they reduce their sales prices and sell them at prices significantly lower than the normal market prices or act as agents for new commercial housing.
Taking Zhuzhou, Hunan as an example, on September 9, some citizens and netizens reported that companies such as Jinbi Real Estate, Rongsheng Real Estate, Borui Real Estate, Xinsheng Wanbo, Shell Brokers, etc. have taken a significant reduction in their sales prices and were significantly lower than the normal market prices. Acting as an agent for the sale of newly-built commercial houses, seriously disrupting the order of the real estate market.
In response, the Zhuzhou Municipal Housing and Urban-rural Construction Bureau subsequently interviewed the person in charge of the above-mentioned enterprise project and included the enterprise's bad credit record.
Earlier, on August 31, the "Notice on Several Matters Concerning Further Promoting the Healthy and Stable Development of the Real Estate Market" issued by the Housing and Urban-Rural Development Bureau of Jiangyin City, Jiangsu Province clearly stated that after the sales price of commercial housing was filed, the actual transaction of commercial housing The price shall not be higher than the filing price. At the same time, dumping and price wars at low prices (such as lower than cost prices, price reductions in disguise, etc.) are strictly prohibited, and vicious competition, lowering of standards and quality, late delivery and other illegal activities are strictly prohibited.
Judging from the cities that have announced the "restriction order", the main suppression is malicious price cuts. Among them, the sales prices of some real estate companies are far lower than the market prices, which are considered to have seriously disrupted the market.
How about real estate companies cutting prices?
What are the reasons behind the price cuts by real estate companies?
The sales scale has "turned from rising to falling", and this is one of the reasons for the increased pressure on housing companies to withdraw funds.
According to data monitoring released by the National Bureau of Statistics, Tongce Research Institute showed that in July, the sales area of commercial residential buildings nationwide was 115 million square meters, a year-on-year decrease of 9.45% and a month-on-month decrease of 40.6%.
This is also the first time in the past year that "changes from rising to falling", indicating that my country's real estate sales have entered a downward channel.
From the perspective of the structure of development funds, the proportion of sales receipts in financing reached 57.15%, 3.9 percentage points higher than in 2020, and the proportion of domestic loans in financing was 12.95%, which was 0.87 percentage points lower than in 2020. Corporate financing mainly relies on sales returns, and is showing an upward trend. In the future, real estate financing will mainly rely on "self-made blood."
For the first time, the increase in sales scale "turned from rising to falling" shows that the core source of funds for real estate companies has begun to fall, and the pressure on real estate companies to withdraw funds has increased.
Sun Hongbin, chairman of the board of directors of Sunac China, mentioned at the mid-term performance meeting of this year that the market pressure in the second half of the year was relatively high, mainly from two aspects. One is that some companies start to cut prices when the pressure is relatively high, and the other is that the country's policies are relatively firm. , So that everyone has an expectation that housing prices will not rise, and now the economic pressure is relatively large, and everyone's purchasing power has been affected.
Sun Hongbin believes that the current market is particularly like 2018. “The entire credit market is relatively tight. Sales in the first half of the year were relatively good and loans were relatively difficult. However, in the second half of the year, loans were still the same, and the sales market fell sharply. Sales pressure in the second half of this year It is very large, and the market is expected to be quite tragic in the second half of the year."
The property market shift may also become the consensus of the industry.
Guo Yingcheng, Chairman and Executive Director of Kaisa Group, said at the performance meeting that in recent years, especially this year, the regulation of the real estate market has been more precise, and the implementation of policies has been faster than before.
But at the same time, we are also facing great challenges. After precise control, after the sales end, the return of mortgage funds may be slower than before, which also brings certain pressure to the company.
In addition, debt pressure is also a "sharp sword" hanging over some real estate companies.
According to relevant data released by the Tongce Research Institute, the debt maturity of real estate enterprises this year reached 1.2 trillion yuan, an average of more than 100 billion yuan per month.
The average debt ratio of the real estate industry in the second quarter was 77.85%, a decrease of 1.34 percentage points from the first quarter, and a decrease of 1.23 percentage points from 2020 when the three red lines were proposed.
This shows that the effects of regulation and control are beginning to emerge, and real estate companies regard reducing debt and optimizing the three red lines as their primary strategy.
But at the same time, more stringent regulatory measures have also accelerated the exposure of some real estate companies to their debt deficiencies, and the number of cases of real estate company bond defaults is increasing.
According to statistics from the Shell Research Institute, since the beginning of this year, bond defaults in the real estate industry have increased significantly compared with the past two years.
In just 6 months, 12 real estate companies have breached their contracts.
Song Hongwei, research director of Tongce researcher, believes that under the condition of good real estate market sales in the first half of the year, it is easier for real estate companies to withdraw funds to repay debts. However, since July, the entire industry has entered a downward channel and it is difficult to return funds, and the pressure on debt repayment has been highlighted. For the sake of cash flow, price-sales and price-for-volume exchange have become the choice of many real estate companies.
In the face of the current market environment, Shimao Group Chairman Xu Shitan mentioned at the interim performance meeting that policies such as housing no speculation, three red lines, and concentration management will continue. Under such a policy background, companies are no longer suitable Emphasizing the high growth rate, the company's strategy "shifts from offense to defense", and at the same time increases the assessment of cash and return rates.
Xu Shitan said that the company has taken some measures to resist the market downturn. The company analyzed the sales in July and August. The sales of the entire industry declined. In September and October, the company arranged a lot of supply and sprint goals. There is still a gap in the mortgage line, and the company dynamically manages prices to increase preferential measures for home buyers with a high down payment ratio.
Not only that, Xu Shitan also revealed that prices will be dynamically managed in the second half of the year, and at the same time, price concessions will be increased.
Can the price be lowered?
Falling house prices should be a good thing in the eyes of many people. Why is there a "restriction order"?
China News.com appeared at the same time in the "House Price Limit Decrease Order" and "Rise Limit Order". What happened to the property market?
"It is mentioned in the article that housing prices are not "cannot be lowered", but "don't fall blindly".
In the view of Li Yujia, the chief researcher of the Guangdong Housing Policy Research Center, the "three stability" are the targets of the property market regulation, whether for the central government or the local government.
Big ups and downs are undesirable, and they may trigger fluctuations in market expectations and further strengthen such ups and downs.
In other words, if there is a significant decline, it may be due to market expectations, leading to further declines, forming a cycle of decline.
At this time, government intervention must be used to prevent the formation and circulation of this expectation.
Relevant staff of Yueyang Municipal Housing and Construction Bureau also stated in response to the "Notice on Price Limits for Newly-built Commercial Housing in the Real Estate Market" that some leading real estate companies have been under heavy debt pressure recently. In order to withdraw funds, they have maliciously reduced the prices of real estates. Caused market chaos, this is the main reason for the introduction of the policy.
A marketer from a TOP40 real estate company pointed out, “When the market is experiencing a pullback, many developers will carry out a certain degree of price reduction according to their own conditions. Of course, the market is still divided. There are not many inventory problems in the first-tier and second-tier cities, but the third and fourth-tier cities The price of real estate is relatively slow during the callback period of the property market, so it is normal that we will give some discounts to speed up sales. The government's main attack is malicious price cuts. It is afraid that it will not be conducive to market stability and will also trigger social incidents such as rights protection."
“The downward pressure on housing prices in some cities is indeed increasing. According to data released by the Statistics Bureau, in recent months, more and more cities have experienced a month-on-month decline in housing prices. Or regional real estate companies accelerate the pace of shipments, and the phenomenon of price reduction promotions has increased. However, once the price reduction behavior of real estate companies triggers a wave of price reductions, it will trigger a chain reaction, which greatly affects the orderly development of the real estate market, and also affects the land market. , Have a greater impact on the local economy.” said Zhang Bo, director of 58 Anju Guest House Industry Research Institute Branch.
So, is the "restriction order" effective?
In Li Yujia's view, the property market is operating at the highest level in history, and all parties have a high demand for stability.
Regardless of whether it is for rapid rises or rapid declines, whether for the entire city or some areas, appropriate interventions must be made, including not allowing large price cuts for marketing. This is the same logic as not allowing large increases. This intervention must be effective.
Guo Zhen, a researcher in the real estate industry of the GF Securities Development Research Center, told The Paper that the government does not want to see housing prices continue to fall after real estate companies bid against each other. This will also put the market into a more vicious state. Therefore, maintaining the stability of housing prices without sharp rises or falls has been the direction of regulation in recent years.
Liang Nan, an analyst at the Zhuge Real Estate Data Research Center, pointed out that from the current "restriction order" of the cities, they are basically cities with high inventory and greater pressure to sell. There may be some developers in order to speed up sales. The rapid price cuts have led to market chaos to a certain extent, which is not conducive to the development of the property market.
The introduction of the "restriction order" policy has effectively curbed housing prices from falling too fast, avoided market chaos such as sharp price cuts in real estate, and further regulated the property market transaction behavior, which is conducive to promoting the healthy and stable development of the real estate market.