On September 5th, the real estate sector in Hong Kong A stock market was active again.

In terms of A shares, as of press time, Shenzhen Worldunion Group Incorporated and BEH-Property hit the limit up, Beijing Capital Development rose more than 7%, China Fortune Land Development, CASIN Real Estate Development Group, Hefei Urban Construction Development, 5i5j Holding Group, and Financial Street Holdings followed the market.

In terms of Hong Kong stocks, as of press time, Greentown China rose more than 5%, China Vanke, Shimao Group, China Jinmao and others rose one after another.

Will the interest rate for existing housing loans be lowered?

On the last trading day of August, the news that the interest rate for existing housing loans will be lowered ignited the market, causing real estate stocks to rise sharply. And yesterday, Bloomberg cited informed sources as saying that China is considering lowering the interest rate for existing housing loans in two steps to reduce the burden of household debt and boost consumption.

According to informed sources, financial regulatory institutions have proposed to lower the interest rate for existing housing loans by a total of about 80 basis points nationwide, in two steps. The first reduction may take place in the next few weeks, and the second reduction will take effect early next year. The plan may apply to first and second homes.

Recently, there has been a renewed call in the market for the reduction of the interest rate on existing housing loans. Analysts pointed out that this move will help alleviate the burden of existing housing loan borrowers, enhance their consumption capacity, and thereby promote economic growth, but it will also pose challenges to the profitability of banks.

Tianfeng Securities stated that at the current point in time, appropriately reducing the interest rates on existing housing loans may partially unleash the consumption potential of residents, while also curbing the expansion of 'early repayment' scale. However, it will inevitably affect the banks' existing business and may further exacerbate the shortage of assets and profits.

It is worth noting that various regions are actively promoting the implementation of the 'old for new' housing policy, while also strengthening various supporting policies.

On September 4th, Jiangxi Province's Ganzhou City issued a notice on 'measures to promote the stable and healthy development of the real estate market', which involves 16 measures including provident fund loans and housing subsidies.

On the same day, Hainan Province's Haikou City Housing and Urban-Rural Development Bureau held a symposium with representatives of local real estate enterprises. Two new policies were announced: first, optimizing the housing purchase policy for local residents; second, encouraging 'old for new' housing transactions to meet the demand for improved housing.

On September 1st, Chongqing Municipality issued a notice on 'adjusting and optimizing the real estate transaction policy', proposing multiple measures such as lifting restrictions on the sale of newly purchased homes, optimizing the criteria for determining the number of housing units, supporting 'old for new' housing transactions, and increasing efforts to develop the housing rental market.

On August 29th, Hengyang City in Hunan Province issued a notice on 'several measures for further promoting the stable and healthy development of the real estate market (trial implementation)', proposing to support insurance companies in researching and developing new types of real estate transaction insurance and price stabilization insurance, and encouraging developers to purchase insurance, with homebuyers enjoying insurance benefits.

Looking forward to the 'golden September and silver October'

Overall, the real estate industry is still under downward pressure at present.

According to the data from China Index Research Institute, the total sales of the top 100 real estate companies in January to August 2024 was 2.7 trillion yuan, a year-on-year decrease of 38.5%, a decrease of 1.6 percentage points from the previous month. The sales of the top 100 real estate companies in August decreased by 22.1% compared to the same month last year, a decrease of 2.43% from the previous month.

Entering September, the real estate market will usher in the traditional sales peak season of "Golden September and Silver October", and various places are expected to launch real estate promotion activities.

Jianghai Securities believes that while the prices of new homes in hundreds of cities have experienced a slight increase compared to the previous month, the prices of second-hand homes continue to decline, indicating that the polarization of the current real estate market still exists. With the arrival of the traditional peak season of "Golden September and Silver October", real estate companies may increase their promotion efforts to boost market activity, and the further implementation of supportive policies will contribute to the improvement of market vitality.

Looking ahead, with more supportive policies being introduced one after another, consumers' confidence in purchasing houses will further stabilize and gradually recover, and the performance of the real estate sector is expected to improve further.

Dongguan Securities pointed out that overall, the industry is undergoing a large-scale reshuffling and clearance, gradually moving out of the bottom of this cycle, and entering a new development cycle and a new development model, which is worth looking forward to. This will contribute to the overall valuation improvement of the industry. Meanwhile, the remaining outstanding real estate companies can seize opportunities to increase market share and improve performance, and enjoy the opportunity of valuation re-evaluation.

Zheshang Securities stated that the driving force of the "517 New Policy" for real estate sales in 2024 is gradually weakening, but the downward trend in sales and land investment from January to August has not been broken. The downward risk of the real estate market still exists, and there is a high probability of the policy intensifying by the end of the year to stabilize the market. In addition, the low point of the real estate industry index in September is a good opportunity to layout the real estate sector, and both policy intensification and fundamental seasonal repair have the potential to drive the valuation recovery of the real estate sector.