CITIC Securities: Real Estate Policies Incorporated into the Framework of Boosting Consumption, National Policies Likely to Be Introduced in April-May

CITIC Securities research report points out that the consumption-boosting policies introduced by various regions have all included stabilizing the property market in their policy frameworks.

CITIC Securities believes that the importance of the real estate industry in consumption-boosting policies is reflected not only in the consumption directly or indirectly related to housing but also in the significant impact of the wealth effect of housing prices on residents' income confidence and consumption willingness. It is believed that national policies will be introduced in April-May, and developers with strong product capabilities and companies holding high-quality operational assets have investment value. CITIC Securities also expresses continued optimism about the dividend value of the property and commercial management service sectors.

The key to boosting consumption is to enhance consumption willingness, and the key to enhancing consumption willingness lies in increasing residents' property income. The real estate market is the primary potential source of residents' property income.

According to the "2019 Survey on the Assets and Liabilities of Urban Households in China" by the People's Bank of China, housing assets account for over 70% of the physical assets of urban households in China and nearly 60% of total assets. Data from the National Bureau of Statistics (NBS) shows that the new and second-hand housing price indices in 70 cities have cumulatively fallen by 10% and 17%, respectively, since H2 2021, and have been declining MoM for 22/23 consecutive months since 2023, affecting residents' expectations for wealth preservation and appreciation and further reducing their property income, thereby impacting their consumption willingness and capacity. We believe that the main purpose of stabilizing the real estate market is to boost residents' consumption confidence, making them willing and able to consume.

The consumption-boosting policies introduced by various regions all include measures to stabilize the property market.

The "Guizhou Province Consumption Boosting Implementation Plan (Draft for Comments)" announced by the Guizhou Development and Reform Commission on April 18 mentions optimizing the supply regulation of the real estate market, including starting the renovation of 30,000 urban villages and 8,600 urban dilapidated houses in 2025, and supporting local state-owned enterprises in acquiring completed existing commercial housing for use as affordable housing. The Qingdao Housing and Urban-Rural Development Bureau, Finance Bureau, and other departments have issued documents such as the "Qingdao Implementation Plan for Housing Trade-in to Promote Consumption in the Housing Sector (Trial)" and the "Notice on Further Measures to Promote the Stable and Healthy Development of the Real Estate Market," which include acquiring second-hand housing for use as affordable housing with a one-time acquisition subsidy of 30,000 yuan per unit and an annual 2% acquisition loan interest subsidy, as well as providing 50,000-100,000 yuan housing purchase subsidies for families with multiple children. Liaoning, Jinan, and other regions have also included stabilizing housing consumption as part of their consumption-boosting policies. Overall, various regions continue to make efforts to stabilize the real estate market in terms of provident funds, home purchase costs, and housing purchase subsidies.

Although the March real estate industry data showed signs of warmth, the urgency of policy introduction remains.

According to NBS data, in March 2025, new home prices increased in 24 out of 70 large and medium-sized cities, and second-hand prices (which better eliminate structural factors) increased in 10 cities. However, this still means that the majority of cities are still in a downward trend in housing prices. Although the rate of decline in housing prices has narrowed, it must be noted that housing prices have been declining MoM for 22 consecutive months since June 2023 and have been declining YoY for three consecutive years since April 2022. The momentum formed by the continuous decline in asset prices is difficult to completely reverse with just a few months of strong sales. Since the main focus of the policy is on price rather than volume, we believe that the introduction of subsequent policies remains urgent.

High-frequency data shows a seasonal pullback.

According to leading intermediary platforms, as of April 18, 2025, the 7-day average trading volume of second-hand housing in 75 sample cities was 3,440 units, down 0.4% MoM and 23.3% from the peak of the small spring. According to the Iceberg Index, as of April 13, the marginal listing prices of second-hand housing in the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen fell by 0.13%, 0.17%, 0.33%, and 0.25% WoW, respectively, with prices still slowly declining. The listing volume continues to rise, with the WoW increase in second-hand housing listing volume in 141 sample cities reaching 0.4% as of April 18, up 6.4% from the beginning of the year, reflecting the release of potential housing replacement demand and residents' pessimistic outlook on the medium-term performance of housing prices.

Risk factors:

Rapid decline in real estate transactions, rapid decline in residents' income expectations, and the risk of dragging down home purchase willingness.

Investment strategy:

We believe that as external uncertainties increase, policies to expand domestic demand will gradually intensify, and real estate will be an important part of the consumption-boosting policy framework. Its importance is reflected not only in the consumption directly or indirectly related to housing but also in the significant impact of the wealth effect of housing prices on residents' income confidence and consumption willingness. We believe that national policies will be introduced in April-May, and developers with strong product capabilities and companies holding high-quality operational assets have investment value. We also remain optimistic about the dividend value of the property and commercial management service sectors.