There is news of price cuts in the property market

The mystery of Friday’s surge in real estate stocks has been revealed!

Just now, at 1:32 pm on May 15, the central bank issued the "Notice of the Insurance Regulatory Commission of the People's Bank of China on Issues Related to Adjusting Differentiated Housing Credit Policies" (Part 2) through its official website.

The full text of the notice is very short. For convenience, the full text is quoted as follows:

The Shanghai Headquarters of the People's Bank of China, all branches, business management departments, central branches in provincial capitals (capital) cities, and sub-provincial central branches; all banking and insurance regulatory bureaus:

In order to adhere to the positioning that houses are for living in, not for speculation, fully implement the long-term mechanism of real estate, support various localities to improve real estate policies according to local conditions, support rigid and improved housing demand, and promote the stable and healthy development of the real estate market, according to The relevant arrangements of the State Council are hereby notified of matters related to differentiated housing credit policies as follows:

1. For households that purchase ordinary self-owned houses with loans, the lower limit of the first commercial personal housing loan interest rate will be adjusted to no less than the corresponding The loan market quoted interest rate will be reduced by 20 basis points, and the lower limit of the second set of commercial personal housing loan interest rate policies will be implemented in accordance with current regulations.

Second, on the basis of the unified lower limit of loan interest rates across the country, the local offices of the People's Bank of China and the China Banking Regulatory Commission guide the self-regulatory mechanism of provincial market interest rate pricing in accordance with the principle of "implementing policies according to the city", and based on the principle of "implementing policies according to the city". Based on the changes in the urban real estate market situation and the regulatory requirements of the municipal government, the lower limit of commercial personal housing loan interest rates for first and second homes in each city within the jurisdiction shall be determined independently.

People's Bank of China

China Banking and Insurance Regulatory Commission

May 15, 2023

The following is my analysis:

The core point of this notice is: “For households that purchase ordinary self-owned houses with loans, the lower limit of the first commercial personal housing loan interest rate will be adjusted to no less than the corresponding loan market quotation rate minus 20 basis points. The lower limit of the interest rate policy for second commercial personal housing loans is subject to current regulations. "

This means that if you buy an ordinary house, and it is your first house, you can enjoy 20% lower than the LPR base interest rate. Special offer of one basis point.

The picture above shows the latest trend chart and values ??of LPR (loan market quoted interest rate).

The interest rate for loans with a term of 5 years and above is 4.6.

It dropped 20 basis points, which is 4.4.

Before this adjustment, the central bank stipulated that the interest rates for first and second homes should be lower than 4.6 for first homes and lower than 5.2 for second homes.

Now it has become: the first house should not be lower than 4.4, and the second house should not be lower than 5.2.

Many cities have previously lowered the interest rate for first-time home buyers to 4.6, such as some commercial banks in Guangzhou.

The central bank and the China Banking Regulatory Commission allow the lower limit to exceed 20 basis points. If the LPR 5-year interest rate continues to fall in the future, it means that the first-time home interest rate can continue to fall below 4.4.

But you should note that the document says "first ordinary owner-occupied house."

If the residential area you purchase exceeds 144 square meters, or the area ratio of the residential area is lower than 1.0, or the unit price and total price exceed the limits stipulated by the local government, it is not an ordinary residential area and cannot enjoy the above discounts.

If you do not buy your first home, you will not be able to enjoy the above interest rate discounts.

But don’t be discouraged. In order to promote the recovery of the property market, it is believed that a number of local governments will adjust the standards of ordinary residences and make more houses become ordinary residences.

As for whether the house you bought is your first home, there are countermeasures everywhere. Many places have said that you should buy your first home after the loan is settled.

So the power of regulation still lies in the hands of local governments.

Then the question arises: What does the second notice from the central bank and the China Banking Regulatory Commission mean?

My answer is: The discount is huge!

Although the central bank has clearly stated that the interest rate for first-time home buyers can be as low as 4.6, most cities have not reached this level.

For example, data recently released by the central bank show that in March 2023, the interest rate for newly issued personal housing loans was 5.42, 17 basis points lower than at the beginning of the year.

This means that despite the vigorous "mortgage interest rate cuts" in various places in the first quarter, in fact, the extent of mortgage interest rate cuts was relatively limited, only falling by 17 basis points, and the weighted average mortgage interest rate still reached 5.42.

This time the central bank and the China Banking Regulatory Commission issued the latest documents, allowing the interest rate for first-time home buyers to continue to rise by 20 basis points from the 4.6 interest rate, which will inevitably lead to a significant decline in the actual interest rate of mortgage loans nationwide.

Take Suzhou or Huizhou as an example. In the third quarter of last year, the first home loan interest rate was still over 6. For example

If the latest regulations of 4.4 of the central bank are implemented, then for a 2 million loan, based on a 30-year loan period and equal principal and interest, the monthly payment can be changed from the highest 11,991.01 yuan to the current 10,015.22 yuan. The monthly burden decreased by 16.5. As for the total interest expense, it dropped from 2.317 million yuan to 1.605 million yuan.

It should be noted that this time there is no adjustment to the lower limit of second home loan interest rates, nor is there any discount on existing home loan interest rates.

My prediction is that the interest rate on second-home loans will also fall below the lower limit of 5.2, and discounts on existing mortgages may also be realized.

In October 2008, faced with the tremendous pressure from the outbreak of the global financial crisis, the Central Bank and the China Banking Regulatory Commission once discounted existing mortgage loans. At that time, ordinary mortgage interest rates were generally 15% off the benchmark. Later, existing mortgage loans with a 15% discount were allowed to continue to be discounted to 30% off the benchmark. Many people have enjoyed the discount on existing mortgages.

What will the market look like in the future?

My judgment is: the market will gradually pick up, especially in some cities with increasing population, higher levels, developed economies, and more relaxed policies. Such as Nanjing, Suzhou, Dongguan, etc.

Next, one after another policies to loosen restrictions on the property market will continue to be implemented in various places. It will be the norm for a city to introduce 5 to 6 rounds of easing policies in 2023. Because the property market is too cold, policies need to continue to be strengthened.

According to data from the China Index Research Institute: the average sales volume of the top 100 real estate companies from January to April this year was 21.22 billion yuan, a year-on-year decrease of 50.2; the total land acquisition by the top 100 companies from January to April was 362.6 billion yuan, and the scale of land acquisition A year-on-year decrease of 55.9.

If you look at RMB loans, RMB loans increased by 645.4 billion yuan in April, a decrease of 823.1 billion yuan year-on-year. Household loans decreased by 217 billion yuan, a decrease of 745.3 billion yuan year-on-year. Among them, housing loans decreased by 60.5 billion yuan, a year-on-year decrease of 402.2 billion yuan.

The real estate market needs a boost. And the good news is coming gradually and is in full force! Related Q&A: Related Q&A: Entering the stock era, are commercial properties more valuable for investment than residential properties?

The answer is yes. In the stock era, commercial properties have more investment value than residential properties. This needs to be demonstrated from both commercial and residential properties.

The value of commercial real estate

With the improvement of income levels and changes in consumption concepts, consumers are paying more and more attention to the convenience and experience of shopping. Based on this, domestic and foreign retail companies insist on digital transformation of offline stores while laying out new retail. In addition, big data, artificial intelligence and mobile Internet continue to support the commercial market. Technologies such as "AI beauty", smart try-on, and virtual reality have greatly enhanced consumers' shopping experience and stimulated potential consumer demand, which has a positive impact on the future. There will also be an increase in demand for physical commercial projects.

The demand for experience stores is undoubtedly the biggest support for commercial real estate.

Looking at the value of commercial real estate from changes in shop rents

In the first half of 2019, 81.5% of commercial streets in first-tier cities had rising rents compared with the previous month, 3.7% of commercial streets had falling rents, and 14.8% of commercial streets had falling rents. Street rents were the same as the previous period; in second-tier cities, 65.8 were commercial streets with rising rents, 17.1 were falling, and 17.1 were the same as the previous period. Overall, shop rents are rising.

With the active retail business market in recent years, first-tier cities are still the first choice for retailers to expand. New first-tier and second-tier cities with relatively strong commercial activity will continue to be favored by retailers. In the future, new first-tier cities will continue to be favored by retailers. , shop rents in second-tier cities may increase to varying degrees.

Rising rents are the largest source of value-added for shops and commercial real estate. Amid rising rents for shops in major cities across the country, the investment value of commercial real estate still exists.

The trend of residential real estate has changed

Speeches such as "Houses are for living, not for speculation", "Housing supply exceeds demand" and "Future houses are not a cost-effective investment" are negative comments on people's investment choices A kind of guidance. Against this background, investment trends and expectations in residential real estate have changed. The investment value will be greatly reduced.

From the perspective of social development trends and policy changes, in the era of stock, commercial real estate has more investment value than residential real estate. With attitudes, opinions and warmth, welcome to follow Yi Finance!