If you want to count the main obstacles on the road to real estate recovery, the weakness of effective demand has been one of the key stuck points. However, recently, state-owned enterprises in many cities have begun to "hands-on" to improve the market, launching various "trade-in" activities in an attempt to activate the replacement demand of the property market.
The specific practices of this "trade-in" are different in each city, but the general commonality is to start from the existing stock of housing of the citizens, and use different methods to help buyers deal with the old houses, so as to activate the replacement needs of the citizens and turn to buy new houses. This model sounds fresh at first glance and has a good starting point, but how effective is the implementation?Is it sustainable and universal?It's hard to generalize, but also to score cities, points. Follow up the "trade-in" in many places
State-owned assets took the lead in stirring up the replacement marketIn the past two months, more and more urban investment and local state-owned enterprises in cities have begun to follow up the "old for new" model, and have begun to take the lead in integrating real estate enterprises and intermediary resources, trying to stir up the replacement market and create effective housing demand. Focusing on the specific implementation details, there are currently two mainstream approaches. One is the unified agency sales model of intermediaries, in which the tripartite cooperation between urban investment, real estate agents and owners is reached. The owner first locks in the new house he intends to buy and pays the intention fee, and at the same time hands over the old house to the agent for sale. If the old house is sold within a certain period of time, then the sale price will be directly converted into the purchase price, for example, the period given by Wuhan is 90 days. If the old house is not sold within this period, then the intention money can basically be refunded unconditionally. Cities that have implemented this model include Wuhan, Nanjing, Ningbo, Zibo, Yangzhou and so on. In some cities, some market-oriented real estate companies have spontaneously adopted this model and entered the old community to take stock. They invited third-party appraisal agencies and intermediaries to work together to evaluate the old house** and implement the consignment sale, and then guide the old house owner to lock in their own new home project. The other model is the state-owned direct income model, in which the urban investment company directly finances the purchase of old houses from the public, and requires buyers to purchase new houses developed by designated state-owned enterprises**. There are two core differences between it and the previous model. First, buyers can directly receive the house payment or "house ticket" for the purchase of a new house, without waiting for the results of the old houseSecond, the old houses acquired by Chengtou will be transformed into affordable housing. A typical area under this model is Taicang, Suzhou. In the specific implementation process, Taicang has several requirements for the proposed acquisition of stock houses, such as the construction area is within 144 square meters, and the house ticket is equivalent to 60% of the new house to be purchased in principle, etcThese trade-ins are gradually spreading and seem to be becoming a trend. But the effect varies greatly between different models. Overall, Suzhou Taicang's model is relatively more sustainable and effective, and it's easy to see why. 
The paradox of the first intermediary consignment model is that it does not directly address the problem of effective demand.
Even if the owner of the old house temporarily puts the ** for sale and locks in the new house at the same time, the demand created is only on the "book", because in the second-hand housing liquidity has been reduced, no intermediary dares to guarantee that the old house will be sold, and there is no guarantee that the demand for buying a new house can be landed.
The second state-owned direct revenue model will be more grounded, and it will be more sustainable for local ** and urban investment, for three reasons.
First, the funds and house tickets for the collection of state-owned assets will go directly to the buyers, and the public does not have to wait for the unknowable results, and can buy new houses with confidence, so that the replacement chain can really roll. This advantage has been reflected in Taicang, in October Taicang released the first batch of replacement, involving a total of 100 sets of three communities developed by Taicang Urban Development Group, which is said to have been digested in a few days, and the market response is good. On November 17, Taicang City Investment Group and City Urban Development Group, two major state-owned companies, jointly launched the second batch of replacement**, covering 8 residential projects. The second is the requirement of directional replacement, which is also a disguised help for state-owned enterprises to destock and create a certain amount of cash flow. Because it is clearly stipulated when buying a house with state-owned assets, the house ticket can only be used for 60% of the new house**, which means that the buyer needs to pay at least 40% of the house payment. This provision can help to remove the best inventory in the hands of state-owned enterprises;Second, you can rely on the 40% of the house payment paid by the buyer to quickly withdraw part of the funds;The third is to pay an additional 4% of the house payment, which is more controllable for buyers. Therefore, this is a multi-win model, which not only creates effective replacement demand, but also reduces the resistance of home buyers, and at the same time, local state-owned enterprises will not suffer excessive financial pressure. 
Third, it accelerates the completion of the task of raising rental housing, and can effectively control the cost of raising.
Different from the intermediary sales model, the use of the stock housing purchased by state-owned assets is very clear, that is, it is used for the transformation of affordable housing. In recent years, there are many ways to raise affordable housing in various places, including new construction, old renovation, and direct acquisition of new housing, which are very costly. For example, last year, a municipal SASAC issued a document planning to purchase 3,000 commercial houses in the city for affordable housing reserves. According to the actual storage results, most of the local storage is in recent years, the new market-oriented apartments or commercial projects, although the acquisition is generally lower than the market price, but the cost of new houses and new houses, after all, is not low. However, starting from the stock communities built in the early stage, both the acquisition cost and the renovation cost are much more controllable. Many local buyers are also highly receptive to this model, because on the one hand, the quality of the new houses that can be replaced is good and the delivery is guaranteedOn the other hand, all kinds of complicated procedures for the sale and purchase of houses can be completed in one place, saving trouble and worry. It is reported that the second batch of replacement ** launched by Taicang City has further optimized the detailed rules, such as the parking spaces of old houses can also be used to replace the parking spaces of new houses. If all localities learn from this model in the future and continuously optimize the detailed rules for replacement facilities, I believe that it can more fully mobilize the enthusiasm of home buyers for replacement. 
There are many difficulties in the implementation of "trade-in".
The detailed rules need to be further optimizedStrive to expand the scope of actionAs mentioned above, although the "trade-in" model of direct collection of state-owned assets has received a good response in some cities, the scope of its role is relatively limited according to the current participants. And there are still many difficulties in the next large-scale implementation. First and foremost is the issue of funding. The large-scale acquisition of stock housing will precipitate a large amount of capital in a short period of time, which can be done in developed cities, but the pressure on third- and fourth-tier cities is very great. But it is precisely this kind of city that is the most difficult to activate the demand for housing, which is more paradoxical. The second is the limitation of the scope of action. There is a threshold for the implementation of trade-in in various places, and there are requirements for the area and property rights of the house, and not everyone can participate. Moreover, the replacement ** released by the housing collection enterprises is not much on the whole, and the range of choices is not large. In areas like Taicang, which have been implemented relatively smoothly, only about 1,000 sets of ** have been released, and market-oriented real estate companies have not participated in it on a large scale. Moreover, Taicang's trade-in "room ticket" is only limited to Taicang, which is attractive to improving the customer base, but it may not be so great. Therefore, the rule threshold and the lack of abundant replacement options are destined to have a very limited demand for activation. Unless the local government can take the lead in guiding some high-quality real estate enterprises and projects to participate in the future, and the scope of replacement is further expanded, it is possible to improve the matching efficiency between supply and demand. Finally, there is a very real problem that the stock of housing recovered by urban investment may not all be converted to rental housing, especially in third- and fourth-tier cities, where the amount of rental housing is not much. This also confirms from another perspective that it is difficult for undeveloped cities to activate the replacement market by acquiring the model of stock housing to transform into affordable housing, because there is not much demand that can be leveraged by themselves. 
I'm starting to plan for my 2024 So overall, the idea of the "trade-in" model is very good, and it has already achieved small-scale results. However, if it wants to be popularized, it is necessary for all localities to further optimize the detailed rules and include more diverse participants in order to expand the scope of its role. For example, optimize the replacement transition policy for home buyers, and give more reasonable resettlement and subsidy programs before the delivery of new houses to dispel the hidden worries and doubts of home buyers. Another example is to guide high-quality market-oriented real estate enterprises and high-quality projects to join the "trade-in" program, give buyers a wider range of choices, mobilize the enthusiasm of residents to participate, and let demand flow more broadly, rather than transferring in a small range of projects. If this "trade-in" model can really be implemented on a large scale, we can even imagine that the model of urban renewal will change in the future. Because whether it is an urban investment or a real estate enterprise, it is the first choice to start with the old community. Perhaps with the development of time, some urban investment can slowly take over some old communities in this way, and then the difficulty of doing the demolition and relocation negotiation work of the old reform will be completely different, which is equivalent to imperceptibly putting the work of "familiar land" in front.