Since the central bank announced the implementation of a significant new real estate policy a week ago, what changes have occurred in the real estate markets across the country? The aim of the policy is to stimulate the demand of buyers through credit policy, including lowering the minimum down payment ratio for first and second home purchases, as well as abolishing the lower limit of mortgage loan interest rates, in hopes of invigorating the market.

According to monitoring data, the minimum down payment ratios for the first and second housing loans have been reduced to historically low levels, now no less than 15% and 25% respectively. At the same time, the interest rates for housing provident fund loans have also decreased by 0.25 percentage points, plummeting to an unprecedented new low. This wave of new policies started with the housing provident fund loans, followed by many provinces across the country, which abolished the lower limit on housing loan interest rates and appropriately reduced down payment ratios.

In first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, as well as second-tier cities like Xi'an and Changsha, the provident fund loan interest rates were the first to be lowered; subsequently, Jilin, Hubei, Guangxi, Yunnan, Shanxi, Ningxia, Gansu, Hebei, Shaanxi, Guangdong (19 cities within the province), Chongqing, and other areas, comprehensively lowered the minimum down payment ratio for commercial individual housing loans and canceled the lower limit on mortgage rates.

After the new policies were announced, the market responded positively, with an increase in visitors to many cities' property developments and raised activity for new homes. Even though current transaction data has not shown significant growth, the effects of the policy are still brewing. Nevertheless, market confidence is gradually strengthening, and clear positive signals are emerging. Industry insiders report that they are "exceptionally busy after the new policies were implemented," pointing out that "market confidence has significantly increased"; real estate agents also indicate that "the number of customers looking for houses recently has substantially increased," and that "second-hand homes eager to be sold at the beginning of the year have already been sold."

Overall, the vitality of the real estate market is accumulating at a micro-level, indicating that under the stimulus of the new policies, market confidence is being rebuilt, suggesting that the real estate market may welcome a new round of developmental opportunities.

Recently, several provinces, including Shanxi, Shaanxi, and Gansu, announced the introduction of relevant measures to further adjust housing loan policies. Gansu, in particular, after abolishing the policy lower limit of commercial individual mortgage rates for first homes in the cities of Lanzhou, Baiyin, and Pingliang, has now also announced the abolition of the lower limit on mortgage rates for second homes. At the same time, Jiayuguan, Jinchang, Tianshui, Wuwei, and other 11 cities and prefectures went further, announcing the abolition of the lower limits on mortgage rates for both first and second homes and implementing even lower commercial loan rates than before.

Specifically in Wuhan, some banks claimed as of May 21 that the commercial loan interest rate for first homes would be adjusted to the Loan Prime Rate (LPR) minus 70 basis points (BP), which is 3.25%; the commercial loan interest rate for second homes was adjusted to LPR minus 60 BP, i.e., 3.35%. Banking institutions have also begun to implement these new policies. Similarly, on May 23, housing loan interest rates in Xi'an were also adjusted, with the commercial loan interest rate for first homes reduced by 40 BP on the basis of the LPR, reaching 3.55%; the commercial loan interest rate for second homes was reduced by 5 BP based on the LPR, i.e., 3.9%.

In this regard, Li Yujia, a researcher at the Guangdong Housing Policy Research Center, stated that the policy response to housing loan interest rates was relatively swift at the local level, as on one hand, the demand-side policies are easy to implement, and on the other hand, banks are also eager to increase loan issuance, as for banks, housing loans are a relatively high-quality type of loan.

In the capital Beijing, people have responded enthusiastically to this series of adjustments. "We've really been insanely busy lately!" said a property consultant at a Beijing real estate project, still busy at work over the weekend. He recalled that since Beijing announced the policy allowing for the purchase of an additional home outside the Fifth Ring Road, the popularity and sales rate of his property have seen a significant increase. The central bank's new policies have also stimulated the market, significantly boosting customer confidence.

Similarly, an agent responsible for distribution confirmed that since the implementation of the new policy, there has been a notable increase in the number of online contract signings, and customer confidence has been stronger than before. "For example, the sales volume of new projects outside the Fifth Ring Road has been very high since the end of April, precisely because of the new real estate policy and price reductions by developers, the enthusiasm continues to climb, even leading to a price reversal compared to nearby secondary properties."

Another real estate agent revealed that although he himself has not reached the point of being "dizzy busy," he did feel an increase in new home clients. "But sometimes after touring the whole city in a day and accompanying clients to view homes, there is no follow-up." However, the effect of the new policy on influencing client visits can be seen in his mobile house-viewing videos. Furthermore, regarding the second-hand housing market, the agent mentioned that after several rounds of policy stimulation, more and more clients are viewing homes, and the transaction volume has increased. "This month our store sold 11 second-hand homes, compared to just 4 sold last month, indeed the transaction volume has increased. The houses that were urgently for sale at the beginning of the year are almost all sold now, but the prices have indeed been reduced by quite a lot."

According to data from Centaline Property, after the "517" new real estate policy on May 17, the first weekend witnessed a significant increase in transactions in Beijing's second-hand housing market. On May 18, the number of transactions exceeded 900, and on May 19 it even broke through 1100, with the total for the entire weekend surpassing 2000 properties. As for the new housing market, data from the China Index Academy show that from May 1 to May 19, a total of 1418 new homes were sold outside the Fifth Ring Road in Beijing. This transaction volume's month-on-month decrease was lower than the average level for the whole city and accounted for 84.8% of the city's total transaction volume, an increase of 6 percentage points from January to April.

Nationally, not only in Beijing but other cities are also seeing signs of activity in the real estate market. Wuhan, the pioneer in reducing mortgage rates, has seen multiple projects heating up, with the market showing hot sales and even "sold-out-on-the-same-day" projects, yet the current mainstream is still to promote sales through price reductions. According to data from the China Index Academy, from May 16 to May 22, the transaction volume of commercial residential buildings in Wuhan was 1784 units, an average of 254 units per day, compared with the daily average of 166 units in April, an increase of 53%.

In the Xi'an area, a real estate agent stated that although the mortgage rate has been reduced, the new housing market's heat is not very obvious yet, but the second-hand housing market has seen subtle changes. The number of customers is increasing, and the decision-making cycle has obviously shortened, even though there is currently no trend of price increases, some homeowners are still reducing prices due to the urgency of selling. The agent advises homebuyers to continue to monitor market trends.

In addition, a real estate agent in Wuhan mentioned that the volume of transactions has increased significantly on weekends, with queues still waiting in the signing room even close to 10 p.m. The situation in Hefei is similar, with transaction volumes starting to climb. After the down payment was reduced, although the monthly payment correspondingly increased, the current interest rate of 3.45% has been lowered compared to the previous rate of 3.75%. In Chongqing, real estate agents also observed an increase in transaction volumes and mentioned that due to the high temperatures in summer, the number of people visiting properties has also been higher recently.

After the implementation of new real estate policies, the turnover of new homes in some cities has increased significantly. Taking Shenzhen as an example, according to statistics from Lianjia, the number of viewings for secondary housing increased by 127% on the first weekend after the new policy (May 18-19), reaching the highest point since 2018; on May 19, the daily transaction volume of second-hand houses also reached the highest point since February 2021. In terms of the new home market, according to monitoring data from CRIC, Shenzhen had four residential projects launched last weekend, offering a total of 1222 residential units, some projects were nearly sold out on the opening day, with total sales of about 1.5 billion; another project sold overnight, with a turnover of 518 million for the two days of the weekend, and more than 3000 groups visited.

The Wuhan market is also typical. CRIC data shows that, driven by popular sectors in Hankou and Guanggu, individual best-selling projects have led to a slight rebound in Wuhan's 20th week of project visits and subscriptions: the city's average project visits increased by 8% last week, up 12% from the weekly average in April; the average number of subscriptions per project grew by 17% compared to last week, which is a 13% increase from the weekly average in April.

As for Guangzhou, according to statistics from the Hehua Research Institute, within a week of the new policy's release (May 13-19), the transaction volume of new homes in Guangzhou increased by 17% compared to the previous week. Although there was a decline in the net sign volume of second-hand houses, the turnover volume of medium and high-priced residences increased, leading to a significant rise in the average transaction price. However, generally speaking, the market enthusiasm in most cities has not yet fully translated into transaction volume, and the effects of the new favorable policies are still to be further demonstrated.

According to CRIC monitoring data, Nanjing's average project visit volume in the 20th week remained at 67 groups, steady with the weekly average in April and showing a stable growth of 40% compared to the weekly average for the second half of last year. However, the average number of subscriptions per project was only 2.17 sets, not reaching the levels of April and the weekly average for the latter half of last year. Zhengzhou achieved an approximate 9% week-on-week increase in overall market visits in the 20th week, but the volume of subscriptions decreased by 1% compared to the previous week. In Hangzhou, the transaction volume of new homes in the 20th week decreased compared to the average weekly volume in April, with a decline of 14%.

Ding Zuyu pointed out in his analysis of the real estate market that market confidence is gradually recovering. With the promotion of the "517" market rescue policy, buyers' confidence has been somewhat boosted in the short term, and the activity levels of the real estate market in different areas have also seen growth. The new home market is undergoing a low-level repair, and scattered signs of a recovery are emerging in the key cities' second-hand housing market. He predicts that the transaction volume of new homes in May will rise compared to April, and the absolute transaction volume is expected to be on par with that of March.

In addition, the policy direction for first-tier cities has also become a focal point of industry attention. On May 24th, Guangdong province adjusted the housing loan policies for 19 cities including Foshan, Huizhou, Dongguan, and Zhongshan, with the down payment ratio for first homes being adjusted to no less than 15%, and for second homes to no less than 25%, while also removing the interest rate floor. Notably, these 19 cities did not include the first-tier cities of Guangzhou and Shenzhen.

Against this background, Li Yujia put forward his view that whether Guangzhou and Shenzhen, the two first-tier cities, will further reduce the down payment ratio will depend on whether the market demand can improve after the policies are implemented in other cities. At the same time, it is necessary to observe if the housing market in these two cities can gain new momentum if the housing loan policies remain unchanged under the favorable national policies.