Barclays-Asia-Credit-Alpha-China-Property-Could-the-housing-trade-in-scheme-help-digest-excess-inventory--此为英文文档

AsiaCreditAlpha

ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcess

FOCUS

AsiaCreditStrategy

AvantiSave,CFA

+6563083116

avanti.save@BarclaysBank,Singapore

YiminWeng,CFA

+6563082716

yimin.weng@BarclaysBank,Singapore

SarahBeh

+6563085087

sarahemi.beh@BarclaysBank,Singapore

AsiaCreditResearch

JitMingTan,CFA

+6563083210

jitming.tan@BarclaysBank,Singapore

RoannaChau

+85229032625

cheukyan.chau@BarclaysBank,HongKong

WilsonHo,CFA

WBARCLAYS

FICCResearch

CreditResearch

9May2024

inventory?

Weexpectall-inyield-focuseddemandandtechnicalsfrombondredemptions,couponsandLMEstocontinuetoanchorspreadsatcurrentlevels.WepreferBBBsandidiosyncraticopportunitiesinHY(Bs/CCCs).InourFocus,wetakeacloserlookatChinapropertyinventories.

AsiaCreditAlpha

Overview........................................................2

TechnicalsforMayareuneven,butweexpectspreadstoremainaroundcurrentlevels.We

preferaddingtopositionsviaidiosyncraticopportunitiesandselectlaggards.

Focus

ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcess

inventory? 4

Wethinkthegovernmentneedstostep-upsupportmeasuresforthesectortoturntheL-shaped

bottomintoanL-shapedrecovery.

+85229032656

wilson.ho@BarclaysBank,HongKong

ImtiazShefuddin

+6563084906

imtiaz.shefuddin@BarclaysBank,Singapore

Thisdocumentisintendedforinstitutionalinvestorsandisnotsubjecttoallofthe

independenceanddisclosurestandardsapplicabletodebtresearchreportspreparedforretail

investorsunderU.S.FINRARule2242.Barclaystradesthesecuritiescoveredinthisreportforits

ownaccountandonadiscretionarybasisonbehalfofcertainclients.Suchtradinginterests

maybecontrarytotherecommendationsofferedinthisreport.

Pleaseseeanalystcertificationsandimportantdisclosuresbeginningonpage

15

.

Completed:09-May-24,10:10GMTReleased:09-May-24,10:20GMTRestricted-External

9May2024

3

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

performancehasbeenmixed.Theperformancelikelyprovidesindicationofpositioning:moderate/nothighcashbalancesorpositioningthatisnotlight.

FIGURE3.Bondmaturities,redemptionsandcoupons(USDmn)

30,000

25,000

20,000

15,000

10,000

5,000

0

Jan

FebMarApr

Datedmaturities

Jul

Jun

May

CallsfromFinancials

AugSep

LME

OctNovDec

Coupons

Source:Bloomberg,BarclaysResearch

PreferBBBsandidiosyncraticopportunitiesinHY(Bs/CCCs).CreditspreadshavetradedinaverynarrowrangedespitethemacrovolatilityinApril.Webelievethisreflectsdemandfromall-inyield-focuseddemandandaconsistentanchorfrombondredemptions,couponsand

liability-managementexercises.Assuch,anddespitetheslightlyuneventechnicalsinMay,wecontinuetobelievespreadswillremaintightaroundcurrentlevels.

•WeseeChinaAMCsinagoodspotastheoverhangfromthedelayinthereleaseofGreat

Wall'sfinancialresultshasbeenremoved.Weexpecttheirconstructivemomentumto

continueandrecentlyassessedthesectorforpotentialspreadcompression(seeChinaAMCs:ExpectcompressiontoSOEs,3May2024).

•ThehighgradeIndonesiasegmenthaslaggedinApril2024andhadthelowestexcessreturninAsiaHighGrade.Wethinkcurrentvaluationsoffergoodentrypointsandopportunitiesforswitchesthattakeoutcash,whichwefindattractivegivenamutedbondmaturityand

redemptionprofilewithinAsiacreditinMay(seeAsiacreditstrategy:Relvalideasanddislocations,8May2024).

•OurMacaugaminganalystalsohighlightedthepotentialroomforthespreaddifferentialbetweenSTCITYandMPELtoconverge,followingMPEL'srecentoutperformance(seeMelcoResorts:AddnewMelco'32satUW,7May2024).

•IntheIndiacreditcomplex,ouranalysthighlightedtheimprovingcredittrajectoryatBHARTI,notingthatitshealthyFCFcouldresultinsurpluscash,whichcouldbeusedtoreducedebt(BhartiAirtel:Cuttingdebt,7May2024).

RemaincautiousaboutacallingabottomintheChinapropertysector.SentimenttowarddevelopersimprovedafterthePolitburosignaledmoresupportforthesector,includingstepstohandleexcessinventory.However,whileabigcorrectionmayhavepassed,wedonotyetsee

thelightattheendofthetunnel,withsummersalesinJulypossiblyrecordinganother

downturninviewofcautioussentimentthatlingersamonghomebuyers.Thatsaid,housingvouchersandatrade-inprogramme(ie,swappingoldhomesfornewones)maygenerateincrementaldemand(seeChinaProperty:Sightonsite:BeijingandYangtzeRiverDelta:

Searchingforabottom,6May2024).

Focus

ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcess

CORE

AsiaCreditResearch

WilsonHo,CFA

+85229032656

wilson.ho@BarclaysBank,HongKong

WBARCLAYS

FICCResearch

CreditResearch

9May2024

inventory?

Wethinkthegovernmentneedstostep-upsupportmeasures

forthesectortoturntheL-shapedbottomintoanL-shapedrecovery.

AswenotedinourSightonSitereportdetailingourChinatripinApril1,wethinkrecentpolicyproposalsforhousingvouchersandatrade-inprogramme(ie,swappingoldhomesfornew

ones)couldgenerateincrementalhousingdemandgiventheunprecedentedstructuralchangesinthepropertymarket.

Digestinghousinginventorymovesuptheagenda

•ArecentPolitburomeetinghasfuelledrenewedoptimismtowardsthepropertysectorafteritcalledfornewsupply-sidereformstodigesttheexcesslevelsofhousinginventory2.This

newssuggestspolicymakersaresteppinguptheireffortstoreversetheprotractedpropertydowncycle.

•Perouranalysis,43outofChina's80majorcitiescouldfacebansonlandsalesbasedonthespecificcriteriasetoutbytheMinistryofResourcestocontrollandsupply.

•Forthepastthreeyears,thesizeofnewstartshasbeensmallerthantheamountof

residentialGFAsold,whichisencouragingsignthattheoverhangofhousinginventoryisslowlybeingdigested.

•However,thesamecannotbesaidforundevelopedlandreserves,wheretheoverallofsizeoflandparcelssoldbutwhereconstructionhasnotcommencedhaskeptincreasing,perour

calculation.

Assessingpotentialimpactofthehousingtrade-inscheme

•Webelievethepropertytrade-inschemecouldhelpstabiliselocalpropertymarketsifitisexecutedeffectively,withpolicycontinuity,althoughitssuccesscouldbeconstrainedbythefinancialstrengthoftherelevantlocalgovernments.

°Toconsiderthepotentialimpactofthescheme,wehaveanalysedthedetailsannouncedbytheZhengzhouandWuhanlocalgovernments.Fromthis,weestimatethatthetrade-inschemecouldgenerateextrademand,whichisequivalentashighasof6-13%oflocalnewhomesales(byvolume)in2023.

1ChinaProperty:Sightonsite:BeijingandYangtzeRiverDelta:Searchingforabottom,6May2024

2PolitburoProposalsSparkOptimisminChina’sTroubledPropertyMarket,TheDiplomat,6May2024

9May20244

9May2024

5

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

°Thiscompareswiththeimpactoftheshantytownredevelopmentduring2015-2019,whichaccountedfor10-20%ofChina'snationalpropertysalesvolumes,asperourestimates.

°However,localgovernments'fiscalburdenwouldbehugeifcashpaymentisadopted,althoughitcouldbemitigatedbyhousingvouchersorsomenon-cashmethods.

•Whilethebiggestpartofthepropertymarketcorrectionmayhavepassed,wedonotyetseelightattheendofthetunnel,withariskthatthestartofthesummersalesfromJulycouldrecordanotherdownturn.Hence,weremaincautiousaboutacallingabottominthe

propertysector.

•However,thankstoalowbasefromlastyear,weforecastthatthey/ydeclineindevelopers'contractedsaleswillnarrowduringtherestoftheyear–toc.30%in2Q24and15-20%in

2H24,comparedwiththe50%dropin1Q24.

•Anystabilisationinthemarketwilllargelydependonseveralfactors,includingthepaceofinventorydigestion,marketconfidencenormalisation,policymeasuresandfundingsupport,inourview.Giventhestilluncertainoutlook,wethinkthegovernmentneedstostep-upitspolicysupporteffortstoturntheL-shapedbottomintoanL-shapedrecovery.

DeveloperswithlargeexposuresinT1/2citiessettobemoreresilient

•Basedonouranalysis,performingdevelopersaswellasSOEdevelopersgenerallyhavemorelandbankinChina's21megaandlargecities(mostlyT1/2cities),andarelikelytobebetterpositionedforstabilisationofthepropertymarket,whichweexpecttobebeledbyhigher-tiercities.

°Intermsofindividualdevelopers,ShuiOnLandhasthebiggestlandbankexposuretothese21cities(100%).

°ThisisfollowedbyChinaOverseasLand,YuexiuPropertiesandGemdale,withmorethan70%oftheirlandbanks(byGFA)locatedinthese21cities.

°Forthesame,ChinaVanke(49%)hasamarginallyhigherlandbankexposurethanLongfor(46%).

°Amongtheotherperformingnames,Seazen(25%)andAgile(24%)areleastexposedtothesecities.

Assessingthelevelofhousinginventoryfrommultipleperspectives

Politburomeetingcallsformeasurestodigesthousinginventory

Inouropinion,thePolitburo'scallforplanstoreducethesizeofthecountry'shousing

inventory3andtheMinistryofNaturalResources'latestpolicytorestrictcitieswithhigh

housinginventorylevelsfromconductinglandsales4representstepped-upeffortstoreversetheprotractedproperty-sectordowncycle.Nonetheless,executionofsuchpolicieswillremainkeyandweexpectfurthersupportmeasures,includingfinancialaidandtherelaxationof

rules,aheadofthelong-awaitedanddelayedThirdPlenuminJuly.

3PolitburoSaysChinatoStudyPlanstoDigestHomeStockpile,Bloomberg,30April20244ChinaBansCitieswithBigHomeStockpilesFromNewLandSales,Bloomberg,1May2024

9May2024

6

2010.03

2010.08

2011.01

2011.06

2011.11

2012.04

2012.09

2013.02

2013.07

2013.12

2014.05

2014.10

2015.03

2015.08

2016.01

2016.06

2016.11

2017.04

2017.09

2018.02

2018.07

2018.12

2019.05

2019.10

2020.03

2020.08

2021.01

2021.06

2021.11

2022.04

2022.09

2023.02

2023.07

2023.12

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

Quicktake–43outof80majorcitiescouldfacebansonlandsales

Thegovernmenthasnotprovidedalistofcitiesthatcouldbebannedfromconductinglandsalesoranyestimatesoftheirhousinginventorylevels.Despitethis,weattempttocalculateandidentifythepotentialcitieswithhighresidentialinventorylevels(notedbelow),basedontheiraveragesalesvolumesoverthepastthreemonthsandCRICinventorydata.

•BytheendofMarch2024,theaverageresidentialinventoryof80cities(Figure2)stoodat33monthsofsales(versushistoricalaverageof14months).

•Residentialinventorywas25monthsforthefourT1cities(versushistoricalaverageof13months),29monthsforthe15majorT2cities(14months),35monthsforthe25majorT3cities(14months)and41monthsforthe36majorT4cities(17months).

•Ofthe80majorcities,43haveresidentialinventorylevelsofmorethan36months,whichwethinkputsthematriskofabanonlandsales.Moreover,inventoriesin28ofthosecitiesareintherangeof18-36months,whichmeanstheyareatriskoflandsalescontrols,basedonthecriteriaannouncedbytheMinistryofNaturalResourcestorestrictlandsales(fordetails:

ChinaProperty:Sightonsite:BeijingandYangtzeRiverDelta,6May2024).

°Basedonourcalculations,mostofcitieswithhighinventoriesareTier3and4cities,withafewTier2cities,includingDalian,Shenyang,Nanjing,Fuzhou,withmorethan36monthsofinventory.

°Ontheotherhand,inventory-turnovertimeinsomeTier1cities,includingBeijing,

GuangzhouandShenzhen,hassurgedtomorethan18monthsduetoweaknessinlandsales,whichsuggeststhatlandsalesinthesecitiescouldbecontrolledinlinewiththepaceofinventoryclearance.

°Wenotethatourestimatesofinventoryturnoverarehighlysensitivetotheperiodofaveragesalesvolumesused,whichcouldbedistortedbyfactorssuchasseasonality.

FIGURE1.Residentialinventoryin80citiessurgedtorecordhighof33.3monthsasattheendofMarch2024

#ofmonths

33.3months

mnsqm

35.030.025.020.015.010.05.0

0.0

25.7months

23.7months

19.7months

20.6months20.3months

19.4months

11.2months

10.6months

8.1months

8.5months8.6months

600

500

400

300

200

100

0

#ofmonthsofinventory(LHS)ResidentialGFAavailableforsale(RHS)

Source:CRIC,BarclaysResearch

Notableprogressindigestinghousingstocks,butlesseffectonoverallinventory

Weanalysethepaceofhousinginventorydigestionfromtwoperspectives:

1)projectbacklogs(ie,propertyprojectswithconstructionalreadystarted);and

9May2024

7

(337)

2023

693

1,030

2023

1,349

954

395

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

2)undevelopedlandreserves(ie,propertyprojectswithlandsitesacquiredbutconstructionnotyetstarted).

Wefoundthatthedigestionofthebacklogofpropertyinventoryisprogressingslowly.As

shownin

Figure2

,ineachofthethreeyearsfrom2021to2023,theamountofresidentialGFAsoldexceededtheGFAofnewstartsatresidentialprojects,whichreversedthepriortrendof

newstartsbeinglargerthanGFAsold.Thissuggeststhatthebacklogofpropertyprojects,eitherunderconstructionorcompleted,hasbeenshrinking.Webelievethisismainlyattributabletodevelopers'exertingstricterdisciplineonnewstarts,increasingprojectdevelopmentefficiency,andreducinginefficientdevelopmentcapexgiventhemarketdownturnandgovernment's

strongpolicyexecutiontoensurehousingdelivery.

Ontheotherhand,thesamecannotbesaidforthedigestionofundevelopedlandreserves.Asshownin

Figure3

,ineachofthe10yearsfrom2014to2023,theamountoflandsales(inGFA)hasexceededthesizeofprojectnewstartsbyvaryingmagnitudes.Thissuggeststherearestillmanylandsitesthathavebeensold,butremainundeveloped.

•In2020,theyearbeforethepropertycrisisbegan,nearly3bnsqminGFAofresidentialandcommerciallandsitesweresoldbutonly2.2bnofnewstartswererecorded,equivalentto730mnsqmofundevelopedlandreserves.

•Thisgapcontinuedinthefollowingyears,suggestinganunchangedtrendofincreasingundevelopedlandreserves.

•Asdiscussedinpriorreports5,marketsharegainsbySOEdevelopersandgreater

participationinthesectorbyLFGVsandnewparticipantshaveledtosignificantchangestothelandmarketaswellasunprecedentedchangesintherealestatesector

ecosystem.Hence,wethinktheconversionoflandpurchasesintonewstartsaswellaseffectivenewsaleableresourceshavebecomelessefficient.

FIGURE2.GapbetweenresidentialnewstartsandresidentialGFAsold(ie,propertysalesvolume)

FIGURE3.Gapbetweenlandsalesandpropertynewstarts(ie,constructioncommencement)

Residentialnewstart

Residential

GFAsold

Gap

A

B

A-B

2014

624

625

1,249

Nationallandsalevolume

Newstart

Gap

A

B

A-B

2014

1,796

149

1,945

2015

728

339

2015

2,090

1,545

545

1,067

20161,15999116820161,8621,669192

2017

1,102

179

2017

2,085

1,787

298

1,281

20181,5341,26427020182,5592,093466

2019

1,394

280

2019

2,624

2,272

352

1,675

20201,6431,5469820202,9752,244730

2021

1,464

1,627

2021

2,323

1,989

334

(164)

2022

881

1,167

(286)

Note:OnlydataforresidentialGFAisusedforabettercomparison

Source:NBS,BarclaysResearch

2022

1,683

477

1,206

Note:DataforresidentialandcommercialGFAisusedforabettercomparison

Source:CREIS,NBS,BarclaysResearch

5ChinaProperty:Whensupportmeasuresfail,6July2023

9May2024

8

21megaand50Non-50largecities

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Tier1Tier2Tier3OthersNational21cities

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

Landmarketcorrectiondone?

AccordingtotheChinaIndexAcademy,landsalesvolumesrecordedathirdconsecutiveyearofdeclinein2023,withafallof20%y/yto1.3bnsqminGFAsold.Althoughthedeclinewas

smallerthanthatin2022,theamountoflandsoldrepresentedonly45%ofthepriorpeakin

2020.Thecorrectionalsoappearstobelargerthanthatinthepriorcycle;landsalesin2016

wereequivalentto54%ofthesameinthepriorpeakin2013.Whiletheworstoftheproperty

marketcorrectionislikelybehindus,wethinkanystabilisationinthelandmarketwillbe

largelydependentontheprogressofinventorydigestion,aswellasfurtherpolicymeasuresandfundingsupport.

FIGURE4.Chinalandsalesthroughauctionmarkets(GFA,mnsqm)

Tier1Tier2Tier3OthersNational

4cities15cities24cities

49

55

51

36

56

43

reformto

41

reduceland

supply

648

290

2,624

2,975

2,323

1,683

1,349

Downturn

340

269

265

Amassiveincreaseinlandsupplyafter2009

795

3,474

2,559

2,615

125

161

2,718

2,770

1,475

1,484

1,439

1,436

810

484

59

386

1,946

1,978

1,664

1,698

1,905

1,272

1,043

1,252

1,024

2,165

2,236

338

386

805

57

252

204

161

228

160

174

938

1,514

1,819

1,878

1,844

1,727

1,761

324

294

757

325

316

308

290

726

669

716

670

457

445

411

325

377

438

Asupply-side

450

834

426

788

450

443

426

423

431

324

225

167

168

119

190

186

2,090

2,085

1,448

1,411

1,862

1,945

27

42

39

43

38

26

534

596

513

302

351

345

252

226

258

291

296

287

257

182

Note:Residentialandcommerciallandsite

Source:CREIS,BarclaysResearch

FIGURE5.Comparisonoflandsalesdeclines(inGFA)-landsalesin2023only45%ofthatinthepriorpeakin2020

21megaand

50Non-50largecities

2013

Vsprior

peak

2014

-29%

-48%

-30%

-23%

-30%

-30%

-48%

-44%

-30%

2015

-44%

-39%

-44%

-26%

-41%

-51%

-39%

-40%

-44%

2016

-44%

-47%

-45%

-52%

-42%

-47%

-47%

-46%

-45%

2020

Vsprior

peak

2021

-26%-20%-22%-3%-14%-35%-21%-22%-22%

-47%

-42%

-49%

-35%

-43%

-43%

-43%

-49%

2022

-47%

2023

-60%-53%-62%-55%-60%-58%-53%-55%-62%

Source:CREIS,BarclaysResearch

9May2024

9

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

Assessinghousing-voucherandpropertytrade-inscheme

AccordingtotheChinaIndexAcademy,asat6May2024,over50citiesinChinahaveannouncedmeasuresinvolvingthetrade-inofresidentialpropertyunits,inwhichexistinghomeownersareabletoswaptheircurrentpropertyunitsintonewpropertyunits.

Recently,someTier1citeshavealsofollowedsuit,withbothShanghaiandShenzhen

introducingsimilarpropertytrade-inrelatedpolicies.Accordingtomediareports6,the

GuangzhouHousingAssociationisalsointalkwithdevelopersregardingtheproperty"trade-in"scheme.Weexpectmorecitiestointroducesimilarsupportingpoliciesin2024tohelpto

stimulatedemandforhousingupgradesandreplacements.

Withreferencetotheannouncedlocaldetails,therearethreecommontypesofpropertytrade-inschemes,namelyfacilitationbypropertyagents,acquisitionorpurchasebydevelopersor

localSOEs,andsubsidiesfornewhomepurchase.Wesummarisethedetailsaswellastheprosandconsofeachtypein

Figure6

.

Threetypesofpropertytrade-inschemes

Amongthethreemethods,webelieveacquisitionisthemostdirectapproachbecausethe

transactionrisksareliterallyremovediftheoldpropertyunitsthathomeownerswanttosellareincludedinthegovernment-purchaselist.However,thisapproachcouldbecapitalintensiveifpurchasers(eg,localgovernments)payaconsiderableamountofcash,althoughitcouldbe

mitigatebynon-cashoffersuchashousingvouchers.

Ontheotherhand,facilitationistheleastcapitalintensivebecausetheroleoftheproperty

agencies,coordinatedbylocalgovernments,helptoconnecthomebuyerswithhomesellers

anddevelopers.However,thereisnoguaranteethattheoldunitscouldbesoldwithinacertainperiod.Iftheperiodistooshort,itreducestolikelihoodofcompletingthetransaction.By

contrast,iftheperiodistoolong,itincreasesthelock-upperiodforthenewhomesthatarependingforsale,whichcouldbeunfavourablefordevelopers.

Acquisitionofoldhomesshouldbethemostpowerfulmethodbutistheleastadopted

Perouranalysis,somecitiesoffermorethanonewayforhomeownerstoswaptheirexistinghomesintonewhomes,butwefoundthatfacilitationisthemostpopularmethod,withnearlyhalfofsome50citiesweanalysedofferingthatmethod.Bycontrast,despitebeingthemoststraightforwardanddirectapproach,lessthan30%ofsome50citiesoffersuchmethod.

Localgovernmentsdonotappeartobekeenoncommittingtoomuchcapitaltoboostthetheirpropertymarkets.Thefacilitationmethodmayreducetheeffectivenessoftrade-inpoliciestoreduceinventories.

6Whatsignaldoesitsendwithover50citiesinChinapromoting“old-for-new”housing?,ChinaNews,9May2024

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

FIGURE6.Threecommontypesofpropertytrade-inscheme

Property

trade-in

schemes

Howitworks?

Comments

Faciliation

Realestatedevelopersandpropertyagencieswillgiveprioritytosellingtheexisting(old)propertyunits.Iftheoldhousingunitissoldwithinacertainperiod,thenewhousingunitpurchasedwillbeprocessedaccordingly.Iftheoldhousingunitcannotbesold,thedepositsearlierpaidtopurchasethenewhousingunitwillbefullyrefunded.

Thistypeoftrade-inschemewithafaciliationtoselltheold

housingunitscouldreducethetransactioncostsbutthereisnoguaranteewhethertheoldunitscouldbesoldwithinacertainperiod.

Acquisition

DevelopersorlocalSOEspurchaseoracquiretheoldhousing

units,andthesalesproceedsareusedtopurchasedesignatednewhousingunits.Thisapproachismainstreampropertytrade-inschemeforthisyear.

Thisisthemostdirectapproachbecausetherewillbeno

concernsofsourcingthebuyers,aslongastheoldhousingunitsareincludedinthegovernment-purchaselist.Sellersreceive

cashorvoucherswhichtheycouldonlyusetopurchaseselectednewpropertyunits.However,thereisariskthattheacquisitioncostcouldbebelowthesellers'expectation.

Subsidies

Individualsorfamilieswhoselltheiroldhousingunitsandpurchasethenewlybuiltpropertyunitwillbegivencertainhomepurchasesubsidiesortaxconcessions.

Similartothefaciliationmethod,thereisnoguaranteewhethertheoldunitscouldbesold.Thesubsidiesmaybeincentiveforthesellertoselltheoldhomebelowthemarketpricessoastoshortenthetransactionperiod.

Source:CREIS,BarclaysResearch

9May202410

Barclays|AsiaCreditAlpha:ChinaProperty:Couldthehousingtrade-inschemehelpdigestexcessinventory?

FIGURE7.Typesofpropertytrade-inschemesadoptedbyvariouscities-facilitationisthemostcommon

Tier

City

Faciliationbypropertyagents

AcquisitionorpurchasebydevelopersorlocalSOEs

Newhomepurchasesubsidies

Tier1

Shanghai

x

Tier1

Shenzhen

x

Tier2

Hangzhou(LinpingDistrict)

x

Tier2

Nanjing

x

x

Tier2

Ningbo