Huatai Securities turns positive on property sector as cities issue housing sales rules
In short
Huatai Securities said in a research report that it has turned positive on the property sector, after Beijing, Shanghai, Guangzhou and Wuhan issued detailed rules for reform of the housing sales system as of October 8. The brokerage said it would focus on property companies better able to adapt to a new model, and that supply- and demand-side measures may push home prices in more cities to bottom out faster.
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Huatai Securities has turned positive on the property sector, according to a research report from the brokerage carried by Yicai, Jiemian and 36Kr on October 9. The brokerage said it would focus on property companies better able to adapt to a new model: those strong in financing, product strength, engineering capability, or holding and operating properties; leading second-hand housing brokers; leading Hong Kong-funded property companies; and high-quality commercial management and property management companies. [ 1 , 2 , 3 ]
The report said that as of October 8, Beijing, Shanghai, Guangzhou and Wuhan had issued detailed rules for reform of the housing sales system. Compared with the plans of Beijing, Shanghai and Guangzhou, Wuhan's rules provide more room for flexibility, the report said, and the detailed rules of second- and third-tier cities may in future generally be more flexible than those of the three cities. According to the report, this would help cushion the impact of the sales system reform on property companies and the industry. [ 1 , 2 , 3 ]
Overall, the report said, the market's reaction to the sales system reform has been relatively full, and attention will turn back to the recovery of property transaction volumes and prices. It said the twin improvements on the supply side, through the sales system reform, and on the demand side, through mortgage interest subsidies, may push home prices in more cities to bottom out faster. [ 1 , 2 , 3 ]
Why it matters
The report, carried by three business and tech outlets, argues that the market has largely absorbed the housing sales system reform and that attention will return to the recovery of property volumes and prices. It also suggests that rules in second- and third-tier cities may be more flexible than in Beijing, Shanghai and Guangzhou, which the brokerage said would help cushion the impact on property companies.
Key facts
- Huatai Securities said in a research report that it has turned positive on the property sector. [ 1 , 2 , 3 ]
- As of October 8, Beijing, Shanghai, Guangzhou and Wuhan had issued detailed rules for reform of the housing sales system, the report said. [ 1 , 2 , 3 ]
- The report said Wuhan's rules provide more room for flexibility than those of Beijing, Shanghai and Guangzhou. [ 1 , 2 , 3 ]
- The report said the market's reaction to the sales system reform has been relatively full. [ 1 , 2 , 3 ]
- The report said improvements on the supply side (sales system reform) and demand side (mortgage interest subsidies) may push home prices in more cities to bottom out faster. [ 1 , 2 , 3 ]
- Huatai Securities said it would focus on developers strong in financing, product strength, engineering capability or holding and operating properties; leading second-hand housing brokers; leading Hong Kong-funded developers; and high-quality commercial management and property management companies. [ 1 , 2 , 3 ]
Confirmed by several sources
- Nothing is confirmed by two independent outlets yet.
Still unclear
- What the detailed housing sales system reform rules in each city contain. The documents do not describe the content of the rules, only the report's view that Wuhan's are more flexible.
- Which specific companies fall into the groups Huatai Securities said it would focus on. The documents name categories of companies but no individual companies.
- When the research report was issued. The outlets reported it on October 9 but do not give the report's own date.
- Huatai Securities said in a research report that it has turned positive on the property sector. Reported by a single source so far
- The report said Beijing, Shanghai, Guangzhou and Wuhan had issued detailed rules for housing sales system reform as of October 8. Reported by a single source so far
- The report named four groups of companies it would focus on, including leading second-hand housing brokers and leading Hong Kong-funded property companies. Reported by a single source so far