China's real estate market is initiating a major rescue operation by bottoming out.

Last Friday, which was May 17th, the housing market policy was launched in a triple strike. Here are the key points summarized:

1. Reduce down payment ratio: The minimum down payment for the first set is 15%, and for the second set, it is 25%;

2. Reduce loan interest rates: The personal housing provident fund loan interest rate is reduced by 0.25 percentage points. For loans below 5 years (inclusive of 5 years), the first set interest rate is 2.35%, and the second set interest rate is 2.775%; For loans above 5 years, the first set interest rate is 2.85%; the second set interest rate is 3.325%;

3. Cancel the lower limit of the national first and second set commercial housing loan interest rates, which will be determined by localities independently.

Following the cancellation of purchase restrictions, the era of low down payments has begun, and the housing loan interest rate has entered a "no bottom" mode.

It can be seen that this time the accelerator is really pressed to the bottom. The central bank is a "triple explosion", reducing interest rates, reducing down payments, and canceling the lower limit of housing loan interest rates. Compared with the previous policy of squeezing toothpaste, this time it is almost directly saying "I want to save the market."

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In addition, the housing delivery work meeting held on the same day also proposed: "For cities with a large inventory of commercial housing, the government can purchase as needed, and purchase some commercial housing at a reasonable price for use as affordable housing." This means that the "national team" is also about to start receiving houses, and the Chinese version of the real estate storage model is about to be born.

A set of combination punches has been played out, and the policy stimulus is nuclear-level, which can be said that China's real estate market will usher in the most relaxed era in history.01 Why is there such a fierce market rescue?

The news last Friday left some people joyful, some questioning, and some confused: the real estate predicament has been fully erupting for nearly three years, so why is there a sudden fierce market rescue? Among all the market rescue policies, the government's finance or the central bank's direct intervention is generally the ultimate move.

Why is that? It's still the same sentence, real estate is too important.

I don't know if anyone has paid attention to this, in the first quarter of this year, the national GDP grew by 5.3% year-on-year, but the real estate industry decreased by 5.4% year-on-year, which is the only one among the 12 main industries.

And this is already the fourth consecutive quarter of negative growth in the real estate industry, with a large amplitude of shock, a wide range, and a long duration, all of which are far beyond the past. Since the housing reform in 1998, it can be said to be the first time.

Looking at the data, it is even more shocking.

From the sales end, at the end of April, the national commercial housing inventory was 745 million square meters, with residential accounting for more than half, that is to say, there are still tens of millions of sets that have not been sold, and the national commercial housing inventory has set a historical high, but the market demand has been continuously shrinking.According to the latest data from the National Bureau of Statistics, from January to April of this year, the sales area of new houses was 292 million square meters, a year-on-year decrease of 20.2%, with the decline rate increasing by 0.8 percentage points compared to January to March. The sales amount of newly built commercial housing was 280 million yuan, a year-on-year decrease of 28.3%.

It should be noted that at its peak, the national commercial housing sales area was close to 180 million square meters, with an average of 150 million square meters per month, and the sales amount reached 18 trillion. Ideally, the sales area for four months should be around 600 million square meters, and the current sales volume is equivalent to half of that time.

Looking at the housing prices, from January to April, the national average sales price of commercial housing was 9,595 yuan/square meter, with a year-on-year decline of up to 9.2%. Once leading cities such as Nanjing, Xiamen, and Wuhan saw a year-on-year decline in second-hand housing prices of more than 10%, and even the previously relatively strong Beijing, Shanghai, Guangzhou, and Shenzhen saw a year-on-year decline of more than 7%.

What's worse, the panic selling in the second-hand housing market has not only taken away a large amount of rigid demand from the new housing market but has also led to a very strong bearish mentality on the demand side. This mentality has spread to the overall market, making the new housing market even more difficult and exacerbating the already tight capital chains and debt crises of real estate companies.

From January to April, the national real estate development investment was 3,092.8 billion yuan, a year-on-year decrease of 9.8%, with the decline rate increasing by 0.3 percentage points compared to January to March. The funds in place for real estate companies were 3,403.6 billion yuan, a year-on-year decrease of 24.9%, with the decline rate narrowing by 1.1 percentage points compared to January to March. The construction area of real estate companies decreased by 10.8% year-on-year; the new construction area of real estate decreased by 24.6% year-on-year, and has been falling for 31 consecutive months.

From the investment end to the development end, and then to the sales end, there is nothing that can be looked at with satisfaction.

If this situation is allowed to develop, it will inevitably evolve into a systemic risk for the entire industry, and in the end, both jade and stone will be burned. In fact, it has already been transmitted from the real estate industry to the financial industry and other related industries.

Although it is normal for any industry to follow the market, and the rise and fall of prices are normal, the bubbles formed during the surge can also be adjusted by natural rupture. However, in terms of scale and driving effect, real estate is not an ordinary industry.

As a pillar industry, the real estate industry is related to a series of upstream and downstream industrial chains, from the construction industry to building materials, home appliances, and other industries, accounting for more than 10% of the overall economy. The huge financial chain it brings up is also related to tens of millions of people. About 70% of the property of Chinese residents' families is a house, and 70% of the debt is also related to the house.Looking at the economy, industry, employment, personal income, and so on in recent years, everyone should have a lot of personal feelings. In addition, we are also facing external dual pressures - the United States continues to violently increase interest rates, the recent trade war has escalated, and additional tariffs have been imposed on some Chinese goods, with the tax rate of some products even soaring from 25% to 100%.

Therefore, whether it is from the perspective of the national economy or the wealth of residents, real estate cannot be easily allowed to fall. It can land slowly, it can rise gently, but it must not be suddenly interrupted, otherwise it will bring greater bubbles and crises.

Therefore, the market rescue at this time is not only to save real estate companies but also to save the overall economy. Because only when real estate is alive and the market is alive can the economy be activated.

Look at the departments participating in this market rescue, including the People's Bank of China, the Ministry of Housing and Urban-Rural Development, the State Financial Supervision and Administration, the Ministry of Finance, leaders of various local governments, and large financial institutions such as state-owned banks.

This is the top-level coordination and overall planning of multiple departments to launch the final battle against the bearish side, and it is also a desperate rescue to save everyone's wealth.

02 Market rescue big moves have landed, is the real estate market reversal imminent?

On May 17, the three major A-share stock indices all rose by more than 1%, and the real estate sector set off a surge of limit-up. Among them, nearly 20 real estate stocks such as Vanke A, Poly Development, Urban Construction Development, Airport Shares, Binjiang Group, Anjubao, and 5i5j were all at the limit-up board.What is a price limit up? It refers to the situation where the increase of a stock on a certain day reaches the maximum limit.

Looking at this data, many people say: Real estate, which was not favored by grandmothers or uncles a few years ago, is it going to stand up again now? Will it stimulate the rise of housing prices?

I can only say, don't expect too much, stabilizing real estate is the first step, the overall housing prices will not fall sharply, but they are also impossible to rise sharply, a soft landing is the most optimistic expectation.

Although the "inventory reduction" move was also used 10 years ago, at that time, the policy tools were full - lowering the reserve requirement ratio and interest rates, the monetization of shantytown renovation, 100 million people entering the city to settle down, etc., coupled with economic growth, accelerated urbanization, and residents increasing leverage, it can be said to be invincible.

But now it is different from the past, the supply and demand relationship of real estate is completely different now, the leverage rate of residents is at a historical high, and the fundamentals such as economy, population, urbanization, and debt are no longer the same as before.

Only in extraordinary times is there a need for extraordinary measures. Canceling the purchase restriction is just the first step, followed by lowering the down payment threshold.

In the past, it took six wallets to make a down payment, and now it allows some people to reach the threshold. Because a 15% down payment basically means that a house that used to be about 3 million yuan can now be boarded with about 400,000 to 500,000 yuan. Buying a house with the money to buy a car, at least in terms of the threshold, has already been realized.

Some people will say, the down payment threshold has been lowered, but the monthly payment threshold has been raised. A house of 10 million yuan, a loan of 8.5 million yuan, who can afford it? OK, then give a sweetener - lower the interest rate.

On a national level, cancel the lower limit of commercial loan interest rate policies for the first and second houses, and in cities with a poor real estate market, commercial loans can even be infinitely close to provident fund loans.In the future, some cities may even see interest rates in the "2s," which would definitely be the lowest real estate interest rates in history. Taking a housing provident fund loan of 1 million yuan, a loan term of 30 years, and an equal principal and interest repayment method as an example, after the reduction of the first set of housing provident fund loan interest rates, the monthly payment can be reduced by 135 yuan, which amounts to a reduction of 485,000 yuan over 30 years.

This wave will at least stimulate those who are already eager to buy a house and just need that final push. However, it is unlikely to stimulate a large-scale entry of homebuyers into the market.

Don't worry, there is one last move - the national team enters the market to store houses.

Since the biggest problem now is that there are too many houses and too few buyers, why not introduce a new catfish to help digest demand and reshape the supply and demand relationship? After all, they also control the land supply, and they can collect taxes by selling land while also renting out the houses to collect rent, which is a win-win strategy.

The national team's purchase of new houses can, on the one hand, immediately reduce inventory and revitalize the cash flow of real estate companies. On the other hand, it can also be transformed into affordable housing, reducing the pressure of affordable housing construction, killing two birds with one stone.

So, since the effect is so good, why not implement it earlier? The problem arises, where does the money come from? According to calculations by Tianfeng Securities, it is estimated that about 7 trillion yuan is needed to bring the real estate inventory back to a reasonable level, which is not a small amount. You should know that last year's national fiscal revenue was only 21.6 trillion yuan.

The issue of funding is just one aspect, and the issue of returns is another. China's rental yield is far lower than the international average, and the rental return rate in big cities is only 1-2%. Therefore, the national team's storage will not cover all cities, nor will it rush in all at once.

Even with a new weapon, the initial dosage still needs to be restrained. After all, any market rescue cannot be cost-free, otherwise, the finance will become a bottomless pit.So, those who were overly pessimistic before can ease some of their expectations. But those who are overly optimistic at the moment, there is no need for that either.

A era has passed, and another era has come. Throughout history, all reforms and changes have started with bloodshed and ended with bloodshed.

But one thing we need to understand is that this time's magnificent combination of punches is not to break bones, but to stabilize the real estate market, achieve a soft landing, and ultimately stabilize the economic foundation.

What ordinary people can do is to see the trend of the times, act in accordance with the trend, and never think that they can stand aside and watch the excitement. They must know that in the face of the torrent of the times, most of the insignificant are not given the choice to bet, but can only gamble that the big ship we are all riding can sail out of the storm area.

However, the current real estate policies at least reflect two signals: the central government's goal of stabilizing the real estate market is very clear, and the country's determination to promote the recovery of the real estate industry and the economy is very firm.

But as the saying goes, "If you don't eradicate the root, the grass will grow again with the spring breeze." Although the first task this time is to avoid a hard landing, in the long run, it is necessary to promote from the perspectives of reducing housing prices, land prices, real estate financing interest rates, rents, and taxes, while improving people's employment and reducing the operating costs of enterprises, in order to repair the industry and market dynamics, repair the internal demand dynamics, and truly save the industrial economy.

Either don't save, or make a big effort to create a miracle. I hope that while the current policy is raising market confidence, the follow-up policies can also keep up in a timely manner, and be sure to quickly and accurately grasp the best window period, and no longer let confidence be eroded!