Real estate stocks are boiling collectively! The real estate situation has undergone a major turning point.

Affected by the latest tone of the Politburo meeting, real estate stocks are boiling collectively.

After the market opened on July 25th, the real estate development sector continued to strengthen, with Rong Sheng Development, Jinke and Zhongnan Construction increasing daily, while Dima, Huayuan Real Estate, Tianfang Development, gemdale, Binjiang Group, Caixin Development, Xincheng Holding, Poly Development, Huafa and SIC were among the top gainers, while only one of the sector’s constituent stocks declined slightly.

In terms of Hong Kong stock real estate, Longhu Group increased by as much as 21.92%, Country Garden Service increased by 21.32%, Hejing Taifu Group increased by 17.58%, New Town Development increased by 16.54%, Longguang Group increased by 15.94%, Country Garden increased by 15.87%, New Town Yue Service increased by 14.65%, Zhongjun Group Holdings increased by 14.10% and Agile Group increased by 13.88.

The real estate-related industrial chain has also been boosted, with stocks such as Goodwife, Piano, Zhibang Home and Wrigley Home in the home sector trading daily; The building materials sector also showed positive performance, with Zhengyuan shares and Bunny trading daily, and Oriental Yuhong approaching the daily limit.

Such rare fervor of real estate stocks stems from the latest tone of the the Political Bureau of the Communist Party of China (CPC) Central Committee meeting on real estate.

On July 24th, the Politburo meeting pointed out that it is necessary to effectively prevent and resolve risks in key areas, adapt to the new situation in which the supply and demand relationship in China’s real estate market has undergone major changes, adjust and optimize real estate policies in a timely manner, and make good use of the policy toolbox because of the city’s policy, so as to better meet the rigid and improved housing needs of residents and promote the stable and healthy development of the real estate market. It is necessary to increase the construction and supply of affordable housing, actively promote the transformation of urban villages and the construction of "flat and emergency dual-use" public infrastructure, and revitalize all kinds of idle real estate.

Compared with previous Politburo meetings, this meeting has adjusted the latest situation judgment of the real estate market: the relationship between supply and demand in the real estate market in China has undergone major changes, and it is first proposed to adjust and optimize the real estate policy in a timely manner, and change "supporting" the newly changed demand into "better meeting".

The major change in the industry situation means that the property market has stepped into a flat or even depressed situation from the high state in the past few years. According to the data of Ping An Securities, the property market transaction has been weakening since the second quarter. In June, the sales of commercial housing fell by 18.2% in a single month. In the medium and long term, with the slowdown of urbanization rate, the per capita living area of cities and towns has been greatly improved, and the potential demand is also under pressure.

Ping An Securities said that the domestic real estate market has once again entered a new stage after experiencing "demand exceeds supply" to "structural demand exceeds supply". The meeting pointed out that the real estate policy should be adjusted and optimized in a timely manner, and the demand-side policy optimization such as restricting loans and purchases in short-term key cities is worth looking forward to because the city makes good use of the policy toolbox to better meet the rigid and improved housing needs of residents.

Huatai Securities also said that the "new" real estate situation is aimed at the "old" situation that the market demand exceeds supply for a long time in the past, which led to the continuous rise of house prices, so it is necessary to "live and not speculate". At present, the real estate market has returned to decline after a short period of repair. In the first half of 2023, the sales area and sales amount of commercial housing were -2.8% and +3.7% respectively, and house prices rose first and then fell. In June, the prices of new and second-hand houses in 70 cities were -0.1% and -0.4% respectively.

"It is precious and timely to readjust the real estate industry at the current time." Huatai Securities said that in the past 22 years, a total of 835 relaxation policies have been introduced in various places. Since the first quarter of 2023, the pace of relevant policies has obviously slowed down. After the meeting of the Political Bureau, the policies of key cities are expected to be gradually optimized, such as the relaxation of policies such as restricting purchases, loans and sales, and recognizing housing and loans in core cities.

Yan Yuejin, research director of Yiju Research Institute, believes that the surge in real estate stocks on the 25th fully demonstrates the market’s absorption of the spirit of the Politburo meeting, and also reflects the positive adjustment expected by the market. Some enterprises with debt problems or operating pressures also showed relatively high stock performance, indicating that the impact of the Politburo meeting was comprehensive and universal, and the expectation of continued loose policies in the real estate sector was significantly enhanced, and macroeconomic and real estate expectations continued to improve in the second half of the year.

It is worth noting that the Politburo meeting also mentioned the transformation of villages in cities, which is considered to be an "important part" of the new real estate model.

The industry believes that the transformation of villages in cities is an inevitable choice to repair domestic demand and consumption potential, which will help to build a new model of renting before buying, gradually let new citizens upgrade their housing consumption, and create conditions for the sustainable development of the commercial housing market. The policy not only drives some construction opportunities, but also gives birth to a large number of business opportunities for operational services, which is beneficial to enterprises with comprehensive asset operation capabilities.

Huatai Securities said that it is necessary to pay attention to the detailed rules of each city in the future. Local state-owned assets with resource advantages will give priority to this policy, and they are optimistic about cities with abundant supply flexibility and high-quality housing enterprises with sufficient value and replenishment ability in mainstream cities.

Editor-in-Chief: Qin Hong

Text Editor: Yang Rong

Author: CBN

Source of the title map: upper view of the title map

Photo editor: Yong Kai