Shenzhen’s second-hand housing reference price policy: the reference price is “effective”

"In my opinion, the Shenzhen property market has been regulated for so many years, and the reference price is the most powerful." Luo Hua (pseudonym), a senior real estate agent, joked.

On February 8, 2021, Shenzhen took the lead in establishing a second-hand housing reference price release mechanism in China and released guide prices for 3,595 communities in the city. In the blink of an eye, a year has passed. This year, Shenzhen’s real estate market has gone through too much: the transaction volume of second-hand houses hit a 15-year low, the myth of housing in school districts is no longer the same, real estate agents are having a hard time, the era of unilateral agency has arrived, and buyers have gone from grabbing houses to not daring to buy them. Sellers have gone from optimism to wavering, and investors have quietly withdrawn from the market...

It can be said that the turning point effect of the Shenzhen property market is evident. Today, this “regulatory tool” is also used by more and more cities. Entering 2022, where will the reference price of second-hand houses go?

“Only rising but not falling” is no longer expected

When the reference price of second-hand houses is released, the most concerning thing is that it will not fall. The prices of luxury homes in less core areas have been cut in half. For example, the reference price of Nanshan Hengyu Bincheng and China Resources City was set at 132,000 yuan per square meter. This price was far from the highly speculated transaction prices at the time.

Subsequently, home buyers in Shenzhen discovered that the APP styles of major real estate agency platforms had suddenly changed. Without the listing price of the owner, only the reference price remained. Immediately afterwards, many banks in Shenzhen successively approved second-hand housing loan quotas based on the official second-hand housing reference price. Since the loan standards of commercial banks are based on reference prices, it can be said that the most critical financial level has stuck in the "throat" of many home buyers. At that time, relevant departments in Shenzhen interpreted this as saying that releasing reference prices for second-hand housing transactions would help increase the disclosure of second-hand housing transaction information, guide rational transactions in the market, guide real estate brokerage agencies to reasonably publish listing prices, and guide commercial banks to rationally issue second-hand housing loans. Prevent and control personal housing credit risks and stabilize market expectations.

In Luo Hua’s view, the power of second-hand housing reference prices is reflected in several aspects: a significant reduction in transaction volume and loosening of prices. More importantly, many home buyers and investors no longer have the expectation of “only going up but not going down”.

How powerful is the reference price for second-hand housing transactions? In February 2021, after Shenzhen launched the reference price for second-hand housing, the transaction volume of second-hand housing in Shenzhen dropped sharply to 4,166 units that month, compared with 7,008 units in the previous month. sets, down 40% month-on-month. In March 2021, this data rebounded to 6,789 units, but it became the "last glory" - since then, second-hand housing has continued to fall, once falling to 1,605 units in October last year. Although the transaction volume rebounded subsequently, in January this year, the transaction volume of second-hand housing in Shenzhen fell back to 1,557 units, a year-on-year drop of 75.04%. From a full-year perspective, 40,699 second-hand housing units were sold in Shenzhen in 2021, a year-on-year decrease of 57.3% from 95,273 units in 2020, and even lower than the 57,203 units in 2012 and 57,251 units in 2014, setting a new low in the past 15 years.

In addition to the significant reduction in transaction volume, second-hand housing prices also seem to be showing signs of loosening, especially housing in school districts that are known as "hard currency". Moreover, more and more property owners are willing to sell their houses at or close to the reference price. Data from Le Youjia Research Center shows that assuming the reference unit price of a house is 100,000 yuan per square meter and the actual transaction price is 120,000 yuan per square meter, the deviation is 20%. Before July 2021, the proportion of transaction orders with a deviation between the transaction price and the reference price was less than 10%, and more than 20% of the transaction orders accounted for more than 60%, indicating that the transaction price at that time was much higher than the reference price. . Since August last year, the proportion of properties within 10% of the deviation has increased significantly. Compared with September, it increased by 14 percentage points in October. It can be seen that more and more properties are sold at prices close to the reference price.

"House prices in school districts are going up and down just as fast. I just recently bought a small-sized house in Baihua School District, and the price has dropped 30% from a year ago." Luo Hua told reporters, "University District expectations are superimposed on reference prices, and there are too many strong regulatory measures this year.” However, in his view, the biggest change brought about by the reference price era is the subtle change in the psychology of buyers and sellers: they no longer blindly believe that housing prices “will only rise.” Don’t fall”. "Actually, the demand for home purchases in Shenzhen is still there, but many people have become more cautious and no longer as blind as before." Luo Hua said.

Where will the reference price of second-hand houses go?

In addition to Shenzhen, which was the first to introduce reference prices, Shanghai, Xi'an, Chengdu, Guangzhou, Sanya, Dongguan and other cities have successively introduced reference prices to control inflated listings, Improve the online signing transaction price of second-hand housing and other measures for the second-hand housing market.

It is worth noting that Shenzhen, Guangzhou and Dongguan in the Guangdong-Hong Kong-Macao Greater Bay Area have successively implemented second-hand housing reference price policies, and coordinated regulation in surrounding cities seems to be the direction. Le Youjia Research Center believes that the wait-and-see sentiment in the Shenzhen property market was extremely strong last year, and Guangzhou and Dongguan also successively introduced second-hand housing reference price policies. Although the reference price mechanism was only implemented for some hot properties, it still brought an impact to the local second-hand property market. It was a very heavy blow. After the introduction of the policy, the number of local second-hand housing inspections and transaction volume once again dropped significantly.

Changes in real estate companies, intensive regulation, and the emergence of policy bottom are also key words for the national property market in 2021. Different from the beginning of last year, since the end of last year, some cities have begun to introduce policies to stabilize the property market, including loose provident fund policies, housing purchase subsidies for talents and other supportive policies. In this new context, where will the reference price of second-hand housing go?

Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, believes that the intensity of implementation of the reference price will be reduced because the market has clearly corrected and the state’s The policy tone of the property market has turned to stability, with stability taking top priority. The essence of the second-hand housing reference price is to reduce leverage, and at the same time, it also cuts off speculation driven by rising second-hand housing prices. Since the reference price is generally lower than the transaction price and listing price, it may also bring expectations to the market for lower house prices, which will also have an adverse impact on market stability. Moreover, the “one-for-one, one-for-one” purchase demand now dominates the entire new home market. If the second-hand home market continues to decline, it will also be very detrimental to new home sales. "I predict that the implementation scope of the second-hand housing reference price will not be significantly expanded in 2022, or will maintain the status quo."

Yan Yuejin, research director of the Institute Think Tank Center, believes that based on the current situation, the reference price policy On the contrary, the progress will be delayed, and policies will often be stepped up when the second-hand housing market heats up. The current second-hand housing market is generally sluggish, but this does not mean that such policies will be withdrawn. If market speculation reappears in the future, relevant policies will continue to be increased, which at least shows that the phenomenon of artificially high second-hand housing prices can also be controlled.

“Now is the reference price adjustment window period. If the price continues to drop, the amount of loans available will be smaller, and the second-hand housing market will be even colder.” Facing this year’s Shenzhen property market, Luo Hua also remains cautious .