After the detailed rules for the sale of completed existing homes are implemented, three new signals have emerged in land supply.

The land market in key cities in October has pressed the pause button.

An important reason is that under the impact of the "828" new policy, the land supply cycle has experienced a short-term delay. Since early September, the frequency of land supply in core cities including Beijing, Shanghai and Hangzhou has slowed down significantly.

As eight cities including Beijing and Shanghai have successively released detailed rules for presale-completed housing sales, the pace of land supply in core cities has restarted rapidly. Residential land parcels have been listed for supply in Beijing, Hangzhou, Tianjin and Wuhan one after another. New rules for the land market are hidden in these land supply lists.

01

From the release of the "828" new policy to the early and middle ten days of September, the land supply in core cities was in a short-term gap period.

In terms of data, the scale of land supply in first-tier and second-tier cities in September decreased by 89% and 21% year-on-year respectively. Until the first week of October (Oct 5 to Oct 11), there were still no hot plots listed in core cities, and the floor area of land supply that week dropped by 94% month-on-month.

As the detailed rules of local new policies for presale-completed housing sales have been successively released, the pace of land supply in core cities has recovered to some extent.

In the 42nd week (Oct 12 to Oct 18), four cities including Beijing, Hangzhou, Tianjin and Wuhan started to list residential land, pushing the floor area of supply that week to rebound by 118% month-on-month.

After the release of the detailed rules for the new presale-completed housing sales policy, there are two most intuitive changes in land supply:

First, the plot ratio is generally lower than 2.0, and low density has become the standard configuration. According to incomplete statistics, taking the release of local detailed rules as the time node, a total of about 20 residential plots have been launched in the four cities of Beijing, Hangzhou, Tianjin and Wuhan, with an average plot ratio of only 1.76, which is far lower than the conventional land supply level before.

A typical example is the plot of Xiejiazhuang Village in Changping, Beijing, with a plot ratio of only 1.01, which is the first plot listed after the release of Beijing's detailed rules for presale-completed housing sales. In addition, the Tuofangying plot whose transfer was suspended on September 3 was re-listed, among which the plot 0013-1 has a plot ratio of only 1.36.

Second, the "small yet high-quality" plots with low total price have become the mainstream. Half of the 20 residential plots in the four cities have a starting total price of less than 500 million yuan. Low land price and small scale also mean less cash flow pressure, which essentially adapts to the current prudent investment strategy of real estate enterprises and enables more enterprises to have the ability to enter the market.

This logic can also be verified by the fact that low-density plots in hot cities are highly favored by real estate enterprises. Under the priority of presale-completed housing sales, the construction period of low-density products is generally controllable. Some real estate enterprises can complete the roughcast completion and acceptance of small high-rise and multi-story products within 12-18 months, which has relatively little impact on sales payment recovery.

02

Tianjin is the only city that directly locks in presale-completed housing sales in the land transfer conditions, but not all plots are enforced. Among the 4 listed residential plots, only the low-density plot of Hongxing Road in Hedong District clearly requires presale-completed housing sales, and the remaining 3 plots clearly adopt the "capped presale" mode.

For plots requiring presale-completed housing sales, Tianjin has simultaneously given preferential capital policies: 50% of the land payment shall be paid as the down payment within 30 days, and the balance can be paid off within 2 years; while plots under the capped presale mode require the full payment to be paid off within 1 year. By extending the payment cycle by one more year to match the development and payment recovery cycle of presale-completed housing, the cash flow pressure of real estate enterprises is hedged.

Hangzhou leaves the choice to developers, making it clear that bidders can choose presale or presale-completed housing sales on their own.

Beijing does not enforce presale-completed housing sales for specific plots, and its core action is to optimize land auction rules and lower the threshold for land acquisition.

A typical example is the re-listed Tuofangying plot, which is split into two plots. The total price has been reduced from the original 7.5 billion yuan level to about 4 billion yuan level, lowering the land acquisition threshold for a single residential plot. The originally free supporting construction part has been changed to government paid repurchase, which reduces the implicit cost of real estate enterprises. However, the total price of the two split plots reaches 8.3 billion yuan, which is still a considerable test for the capital pressure of real estate enterprises in the era of presale-completed housing sales.

Beijing's approach is to adopt the method of sharing bidding deposits. Bidders participating in the bidding of the two plots do not need to pay the bidding deposit repeatedly. They only need to pay the bidding deposit of the plot with higher starting price, participate in the bidding of this plot first, and if they fail to win the bid, they can continue to participate in the bidding of the other plot. Under the sharing rule, about 760 million yuan of working capital will be released, directly easing the cash flow pressure of real estate enterprises.

03

There are also some cities where the transfer of presale-completed housing plots precedes the release of local detailed rules, a typical representative is Xiamen.

On October 21, Xiamen centrally transferred 5 residential-related plots with a total transaction value of 10.87 billion yuan. All the 5 residential-related plots were listed on September 30, which was at the time node when Beijing and Shanghai successively released local detailed rules for the national new policy of presale-completed housing sales in late September.

Although Xiamen has not yet issued a local implementation plan for presale-completed housing sales so far, it has made preliminary explorations in implementing the new policy.

Among them, the TP03 plot in Tong'an Meifeng Area is planned to adopt a high-low matching layout of "multi-story buildings in the front row and high-rise buildings in the back row", and the corresponding sales policies are also different — the high-rise part allows capped presale, while the multi-story buildings require presale-completed housing sales.

There are two rule modes in the same plot, differentiating the implementation of presale-completed housing policies according to building forms, and starting the implementation from low-density multi-story products. Xiamen's exploration may represent another implementation path: instead of issuing official documents directly, it explores the presale-completed housing rules suitable for the local market in specific plots.

On the whole, the first batch of land supply after the release of the detailed rules for the new presale-completed housing sales policy should not only strictly promote the institutional direction of presale-completed housing sales, but also provide sufficient buffer for the market.

Low-density "small yet high-quality" plots will become the mainstream of subsequent land supply, and the differentiated implementation of "dual rules in the same plot" according to building forms may be a transitional path worthy of reference for more cities.

In the future, presale-completed housing sales will further amplify the Matthew effect in the land market. Core scarce plots will still be sought after even with the presale-completed housing requirements, and the transaction of ordinary plots at the reserve price will become the norm.

This article is from the WeChat Official Account "Ding Zuyin Reviews the Real Estate Market", author: Editorial Department, published with authorization from 36Kr.