Looking back on 2023, after the deep adjustment of the real estate market in the first two years, the sentiment of home buyers and the confidence of the enterprise market have not reversed this year. 7.The 24** Politburo meeting set the tone for the property market, first mentioning that "the relationship between supply and demand in China's real estate market has undergone major changes", further clarifying the construction of the "three major projects", and constantly exploring new development models for the industry. Many ministries and commissions have actively implemented specific measures, and restrictive policies in various places have been gradually optimized, and the real estate industry has truly ushered in the bottom of the policy. Looking forward to 2024, resolving real estate risks is still the main line of policy, and there is room for policies at both ends of supply and demand. On the supply side, the financial support policies for enterprises are expected to continue to be refined, the rules for land auctions in various places may continue to be relaxed, and the funds and supporting measures for "guaranteed delivery of buildings" are expected to be further followedThe construction of the "three major projects" may be the main direction of the policy in 2024, and the relevant policies are expected to accelerate the implementation.
partMarket changes
In 2023, China's real estate market will continue to adjust, and the whole is in the bottoming stage, which is mainly reflected in the following aspects:In terms of fluctuations, new houses fluctuate and adjust, and second-hand houses continue to operate. According to the China Real Estate Index System100 Cities ** IndexFrom January to November 2023, the total number of new residential buildings in 100 cities will be 016%, 5 months of the year**month-on-month**. From January to November, the second-hand residential properties in 100 cities **cumulative**300%, as of November, it has been 19 consecutive months of month-on-month**, and the number of cities has exceeded 90 for 6 consecutive months. In terms of transactions, the scale of new home sales continued to decline. Nationally, from January to November 2023, the sales area of commercial housing nationwide decreased by 8 percent year-on-year0%, and the sales of commercial housing decreased by 5 percent year-on-year2%。Key cities, according toMiddle finger dataFrom January to November, the sales area of newly built commercial residential buildings in key 100 cities fell by about 5% year-on-year, and the market was still facing downward pressure at the end of the year. In terms of the land market, the overall downturn has not changed, and the scale of supply and demand for residential land continued to decline year-on-year. According toMiddle finger dataFrom January to November, the launch and transaction area of residential land in 300 cities across the country decreased year-on-year. 0%, the absolute scale is the lowest level in the same period in the past ten years. In terms of enterprises, the sales performance of real estate enterprises continued to decline, the capital of enterprises was still under pressure, and the industry continued to clear. According toMiddle finger dataFrom January to November 2023, the total sales of TOP100 real estate companies decreased by 14 year-on-year7%, the operating pressure of private enterprises is high, and the risk of real estate enterprises is spreading. - Outlook -The pace of recovery of the real estate market in 2024 still depends on whether residents' home ownership expectations can improve, and the new housing market is still facing adjustment pressure9%, under the optimistic scenario, in 2024, the macro economy will continue to recover, residents' willingness to buy homes will improve, and the transformation of urban villages will be promoted as scheduled, and the sales area of commercial housing across the country may achieve a slight increase. Under the neutral scenario, it is expected that the area of new construction will decline by about 10% year-on-year in 2024, and the amount of real estate development investment will decrease by 6% year-on-year1%, under the optimistic scenario, the transformation of urban villages and the construction of affordable housing will be strengthened, and the amount of development investment will be basically the same as in 2023. 
After more than 20 years of rapid development of the real estate market, China's per capita housing construction area has increased significantly, according to the seventh national census data, in 2020, China's urban per capita housing construction area reached 386 square meters, each household realizes one suite, and the housing needs of residents are basically met. At the same time, China's total population will decrease by 850,000 in 2022, and the urbanization rate will increase by 05 percentage points to 652%, the growth rate continued to narrow, the population's support for housing demand was further weakened, and the total housing demand weakened significantly. From the first end, with the rapid development of the real estate market in the past few years, the supply of land has increased significantly, and the overall supply of the market has gradually reached its peak, especially the high inventory in low-energy cities, and the situation of short supply in the past has been fundamentally reversed.
On July 24, the ** Politburo meeting was clear"Adapt to the new situation of major changes in the relationship between supply and demand in China's real estate market".It means that China's real estate industry has entered a new stage of development, and the scale of new housing sales has gradually declined after peaking, but the structural problems of housing are still more prominent, the housing demand in core cities has not been met, and more low-energy urban housing is in a state of surplus.
- Outlook -"Major changes in the relationship between supply and demand in the real estate market" set the tone for the property market, opening up space for regulatory authorities and local optimization policies. It is expected that in 2024, the restrictive policies introduced in the past during the overheating stage of the market are still expected to continue to be optimized and adjusted, and there is room for policies at both ends of supply and demand. partOptimize restrictive policies
7.24** Politburo meeting set the tone of "major changes in the relationship between supply and demand in the real estate market", since the end of August, the Ministry of Housing and Urban-Rural Development and other ministries and commissions have introduced a number of real estate optimization policies, and then all over the country responded positively, according to the middle index monitoring, as of December 25 this year, more than 200 provinces and cities (counties) have introduced real estate regulation policies more than 660 times, and most of the restrictive policies in most cities have been completely liberalized.
Chart: Frequency of city-specific policies implemented by city since 2022 (as of December 25).
Data**: Comprehensive collation by the Middle Finger Research Institute
At the end of July, Minister Ni Hong of the Ministry of Housing and Urban-Rural Development clearly proposed to further implement the three major optimization directions of personal housing loans, such as "recognising housing without subscribing to loans", and on August 25, the Ministry of Housing and Urban-Rural Development, the Central Bank and the State Administration of Financial Supervision jointly issued a notice to clearly incorporate the policy of "recognising housing without recognising loans" into the "one city, one policy" toolbox. At the end of August and the beginning of September, the first-tier cities fully implemented the relevant policies, and up to now, most cities across the country have implemented the first house "recognition of housing without loan". In addition, more than 30 cities across the country have optimized the standard of "recognising housing and recognising loans" for provident fund loans, of which more than 20 cities have implemented the provident fund "recognising housing without recognising loans".
- Outlook -The full implementation of the first house "recognition of housing but not loan" directly benefits two types of people, one is the local family without a house with a loan record, and the other is the local sale and buy one replacement family. After the policy optimization, the wait-and-see or backlog of housing demand in the early stage has been released, and for buyers who sell one and buy one, it will still take some time for this part of the demand to enter the market when the number of second-hand housing listings is high. 
In January 2023, the People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) will establish a dynamic adjustment mechanism for the first home loan interest rate, which will relax or cancel the lower limit of the first home loan interest rate in stages for cities with new homes, providing room for the reduction of mortgage interest rates in various places. In August, the People's Bank of China (PBOC) and the State Administration of Financial Supervision (SAMR) issued a notice clarifying that the minimum down payment ratio for commercial personal housing loans for the first housing is not less than 20% and 30% for the second housing respectively, and the lower limit of the interest rate for commercial loans for the second housing is adjusted to LPR+20BP (previously LPR+60BP).
According to the monitoring of the China Index, up to now, most urban commercial loans have implemented a down payment ratio of 20% for the first set and 30% for the second set, and adjusted the lower limit of the interest rate for the second home loan to LPR+20BP, and the down payment ratio in some core second-tier cities such as Hangzhou has been reduced to 25% for the first set and 35% for the second set. First-tier cities have also lowered down payment ratios and mortgage interest rates across the board. In December, the average mortgage interest rate of the first set in key cities has dropped to 386%, down more than 150 basis points from the 2021 high, and the average mortgage interest rate for the second set fell to 441%, which greatly reduces the cost of housing for residents.
Chart: Average interest rates for first and second homes in key cities across the country since 2020
In addition, with the continuous implementation of the support policy for the interest rate of the first home loan, the gap between the interest rate of the new loan and the interest rate of the existing loan has widened, and the yield of financial management has declined, and residents have more prepayments. On August 31, the People's Bank of China (PBOC) and the State Administration of Financial Supervision (SAMR) jointly issued a notice to clearly reduce the interest rate on the first home loan. On September 25, a number of banks lowered the interest rate of eligible stock mortgages, and then for home buyers who were not the first home at the time of the loan but have now met the first set of policies in the city, banks also generally require customers to submit applications and provide relevant proofs, and the stock loan interest rate of some home buyers has been substantially reduced. - Outlook -From the perspective of policy trends, reducing the cost of housing purchase and lowering the threshold for housing purchase are still the focus of policy optimization in 2024, and it is also an important measure to implement "promoting stability through progress". Recently, Beijing and Shanghai have made great efforts to reduce the down payment ratio and reduce the mortgage interest rate, the short-term or implementation-oriented, the future local policies are still expected to be optimized, and there is still room for core cities to reduce the down payment ratio and reduce the mortgage interest rate. In addition, on the demand side, in the future, first-tier cities are expected to moderately relax purchase restrictions in accordance with region-specific policies, and core second-tier cities may completely cancel purchase restrictions. 
At the end of September 2023, the Ministry of Natural Resources issued a document to the provincial and municipal departments in charge of natural resources, recommending the abolition of land price restrictions in land auctions. According to the monitoring of the China Index, as of the end of December, 18 of the 22 cities have actually implemented the "cancellation of land price limit", and the upper limit of Ningbo's premium rate has been raised from 15% to 30%, and Beijing, Shanghai and Shenzhen have not yet been adjusted.
Judging from the performance of land auctions, in November, most cities carried out land auctions after the cancellation of the upper limit of land prices, and the overall transaction premium rate increased to 72%, the land auction of high-quality land plots in some core cities heated up, and individual plots were auctioned at high premiums, but the rest of the plots were generally sold at the reserve price or even unsold, and the differentiation phenomenon was further intensified.
Table: Cancellation of land price cap and sales price limit in 22 cities
Data**: Comprehensive collation of the China Finger Research Institute- Outlook -In 2024, in cities where the upper limit of land prices will be abolished, it is expected that some core land plots will be auctioned at high premiums under the focus of real estate investment, but the differentiation of land auctions will continue, and there will still be transactions at reserve prices or even unsold in non-core areasBeijing, Shanghai and Shenzhen are expected to optimize the rules of land auctions according to market changes, such as canceling or raising the upper limit of premium rates in some areas. In addition, in 2024, more cities may optimize the maximum sales price limit, so that the market will return to the market, which is conducive to the recovery of market expectations. partPrevent and resolve real estate risksIn 2023, ** and regulatory authorities have repeatedly emphasized the prevention and resolution of real estate risks, which are mainly reflected in the guaranteed delivery of projects and the resolution of debts of real estate enterprises. In the first half of the year, the regulatory authorities accelerated a series of measures to "ensure the delivery of buildings, protect people's livelihood and ensure stability", the central bank and the China Banking and Insurance Regulatory Commission emphasized that "it is necessary to effectively prevent and resolve the risks of high-quality head real estate enterprises", and the Ministry of Housing and Urban-Rural Development also emphasized that "for the insuring real estate enterprises, on the one hand, they will help enterprises save themselves, and on the other hand, they will be disposed of in accordance with laws and regulations to prevent and resolve risks". At the end of 2023, the ** Financial Work Conference and the ** Economic Work Conference both emphasized "meeting the reasonable financing needs of real estate enterprises with different ownership systems without discrimination", and actively and prudently resolving real estate risks.
In January, the central bank added 150 billion yuan of special loans for guaranteed delivery of buildings, plus 200 billion yuan invested in the second half of 2022, and a total of 350 billion yuan of special loans for guaranteed delivery of buildings have been launched.
At the beginning of August, the central bank clearly extended the term of the 200 billion yuan loan support plan for guaranteed delivery of buildings to the end of May 2024. In the same month, the Ministry of Housing and Urban-Rural Development said that "at present, the work of ensuring the delivery of buildings in various places is progressing smoothly, and the resumption of work and construction delivery of projects are accelerating." The overall resumption rate of special loan projects for guaranteed delivery of buildings is close to 100%, with a total of more than 1.65 million housing units delivered, and the housing delivery rate of the first batch of special loan projects exceeding 60%." In 2023, the work of "guaranteeing the delivery of buildings" has achieved certain results, and it has also had a certain positive effect on stabilizing market expectations.
- Outlook -Resolving project delivery risks is still one of the policy focuses in 2024, and it is expected that the supporting funds and policies of "guaranteed delivery of buildings" will be further implemented to restore market expectations. Strengthen the supervision of pre-sale funds, reform the pre-sale system or important supporting measures of "guaranteed delivery". In 2023, there will be pilot sales of existing houses in many places, and in 2024, it is expected that more cities or regions will promote pilot sales of existing houses, which is expected to accelerate the reform process of the pre-sale system. 
Since the second half of 2021, with the market downturn and continuous bottom-bottom operation, real estate companies have been intensively out of risk. Since the fourth quarter of 2022, for enterprises that have been distressed, the policy has adhered to the risk resolution model jointly negotiated by high-quality real estate enterprises, financial institutions such as AMC, commercial banks, and local governments, so as to promote the acceleration of asset disposal. In November 2023, the financial regulatory authorities emphasized that they will continue to cooperate with local governments and relevant departments, adhere to the principles of marketization and rule of law, increase financial support for guaranteed delivery of buildings, and promote mergers and acquisitions in the industry. In this context, some real estate enterprises have made great progress in debt restructuring.
Table: Progress of onshore and offshore bond restructuring of some real estate enterprises
Data**: Comprehensive collation by the Middle Finger Research Institute- Outlook -Significant progress has been made in the debt restructuring of some insuring real estate enterprises, which has boosted the confidence of insuring enterprises in debt to a certain extent, and the current regulatory authorities are actively and steadily resolving real estate risks, which will help other insuring real estate enterprises to complete debt restructuring. Other insuring real estate companies should take active actions, strengthen communication with financial institutions and creditors, seize the policy window period to promote debt restructuring as soon as possible, repair their own credit, improve corporate liquidity, and resume normal operations.
The ** financial work conference held at the end of October 2023 pointed out that "the reasonable financing of real estate enterprises with different ownership systems should be met without discrimination", considering that the financing difficulties are mainly private real estate enterprises, which is intended to emphasize that commercial banks and other financial institutions should implement the policies to support the financing of private real estate enterprises in detail. In November, the central bank, the State Administration of Financial Supervision and the China Securities Regulatory Commission jointly held a symposium on financial institutions to implement the spirit and deployment of the first financial work conference, requiring to adhere to the "two unwavering", meet the reasonable financing needs of real estate enterprises of different ownership without discrimination, and do not hesitate to lend, draw loans and cut off loans for normal real estate enterprisesContinue to make good use of the "second arrow" to support private real estate enterprises to issue bonds for financing;Support real estate enterprises to raise reasonable equity through the capital market. Table: Some banks have held symposiums on real estate enterprises since November 2023
Data**: Public information, comprehensive collation by the China Index Research Institute- Outlook -At the end of October, after the first financial work conference, there was market news that the regulator proposed the "three not less" policies for real estate loans, that is, the growth rate of real estate loans of each bank is not lower than the average growth rate of real estate loans in the banking industry, the growth rate of corporate loans to non-state-owned real estate enterprises is not lower than the growth rate of local real estate, and the growth rate of personal mortgages of non-state-owned real estate enterprises is not lower than the growth rate of mortgage of the bank. Recently, a number of state-owned banks and joint-stock banks have held intensive symposiums for real estate enterprises, saying that they will better support the reasonable financing needs of real estate enterprises, and the implementation of the "three not less than" policy rules is expected to heat up. If the "three not less than" policy can be truly implemented, it will greatly improve the current situation of financing difficulties for private real estate enterprises, help prevent the spread of real estate risks, and promote the healthy development of the industry. partA new development model for the industry
In 2023, the importance of the "three major projects" was emphasized in many important meetings, and the Politburo meetings on April 28 and July 24 made arrangements for relevant work, and the National Standing Committee also deliberated and adopted relevant guidance. In December, the ** Economic Work Conference further emphasized the "three major projects" such as accelerating the construction of affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villages", and the Finance Office also said in response to economic hot issues that "the 'three major projects' are not only major livelihood projects to solve the urgent problems of the people, but also conducive to driving real estate-related investment and consumption, and stabilizing the macro economy." At present, the relevant work has been started. In the next step, it is necessary to pay close attention to improving various supporting policies, promote the implementation of a number of projects as soon as possible, form a physical workload, and see tangible economic and social benefits." The "three major projects" have become an important starting point for stabilizing investment and promoting consumption in 2024.
Figure: The 2023 National Standing Committee has successively reviewed and approved the relevant guidance of the "three major projects".
Data**: Comprehensive collation of the China Finger Research Institute- Outlook -It is expected that in 2024, the implementation of the supporting policies of the "three major projects" will be accelerated, and the role of stabilizing investment will be actively played. Transformation of urban villagesLocal implementation rules are expected to be issued one after another, and a number of projects are expected to enter the implementation stage to support the stabilization of the real estate market at both the supply and demand ends. It is worth noting that 2024 is the year of the start of urban village transformation, and the actual pull of urban village transformation on real estate sales and investment may be limited, but the expected impact is crucial.
ExpectedAffordable housingThe implementation strategy is expected to gradually become clear, and the supply of placement-type affordable housing will increase. This year, the "No. 14 document" put forward the development idea of placement type affordable housing, focusing on solving the problem of housing difficulties of wage and salary income groups, with the issuance of "No. 14 document", it is expected that the placement type of affordable housing will also be explored and implemented in some cities. So far, the housing security system composed of public rental housing, rental housing, and allotment affordable housing has been constructed, and then the housing system of market + security, purchase + rent has been accelerated and improved, and new development models have been explored.
"Dual-use".At the same time, the combination of "flat and emergency dual-use" and rural revitalization is also conducive to better driving investment in remote areas and giving full play to the role of stable investment.
It has been two years since the 2021 ** Economic Work Conference first proposed to "explore a new development model", and with the sharp decline in the industry, the necessity and urgency of exploring new models have further increased. In November 2023, Ni Hong, Minister of the Ministry of Housing and Urban-Rural Development, said in an interview with ** that "building a new model of real estate development is a fundamental strategy to solve the problems of real estate development and promote the stable and healthy development of the real estate market." In the past, the development model that pursued speed and quantity in the period of solving the problem of 'whether it is good or not' is no longer suitable for solving the problem of 'whether it is good or not' and the new requirements of the high-quality development stage, and it is urgent to build a new development model", and expounded the ideas and considerations for building a new development model from the concept, institutional mechanism and implementation, and mentioned "establishing" in terms of institutional mechanismPeople, houses, land, money'A new mechanism for the linkage of elements", also mentions".Reform the way of development, financing and sales"Etc.;In terms of implementation, it is further clear that it is necessary to implement the "three major projects" of planning and construction of affordable housing, the transformation of urban villages, and the construction of public infrastructure for both ordinary and emergency purposes. Implement the spirit of the first financial work conference, meet the reasonable financing needs of real estate enterprises with different ownership systems without discrimination, and promote a virtuous cycle of finance and real estate. ”
In December, the first economic work conference once again proposed to "improve the relevant basic systems and accelerate the construction of a new model of real estate development", and put forward specific requirements.
- Outlook -From the perspective of the industry, the reform of the pre-sale system, the improvement of the housing security system, the simultaneous development of rental and purchase, the revitalization of the stock and the reform of the land system, and the improvement of the financial, fiscal and taxation supporting system are important directions for the exploration of the new development model. From the perspective of enterprise development model, under the new situation, along with the industry to explore new development models, real estate enterprises should also take advantage of the trend and actively explore new models suitable for their own development.