Open-source Securities: Accelerate the promotion of distributive affordable housing, with several second-tier cities implementing it.

Open-source Securities released a research report stating that since 2024, under the call of the central government to increase the construction and supply of affordable housing, local governments have successively announced the construction goals of shoufangling housing, and some cities have completed the subscription of specific projects. The construction of shoufangling housing can meet the rigid housing needs of working-class groups, improve the supply system of market + guarantee housing, and promote the stable and healthy development of the real estate market. On the one hand, state-owned enterprises acquiring completed commercial housing for shoufangling housing can drive the market to reduce inventory, on the other hand, shoufangling housing may dilute the purchasing power of rigid demand commercial housing, leading real estate companies that focus on improvement-style, high-quality, and good reputation to continue to benefit. Investments are favored with high investment intensity, superior regional layout, and marketized mechanisms for strong creditworthy real estate companies. The main points of Open-source Securities are as follows: The construction of shoufangling housing is in full swing, and construction goals are successively announced In order to increase the construction and supply of affordable housing to meet the rigid housing needs of working-class groups, various regions are actively building shoufangling housing for sale. According to data from the Ministry of Housing and Urban-Rural Development, as of the end of June, a total of 1.128 million sets of affordable housing have been built or under construction nationwide, completing 66.2% of the annual plan with total investment of 118.3 billion yuan. Since the announcement of the establishment of a 300 billion yuan shoufangling housing reloan facility by the central bank in May, as of the end of 2024Q2, the cumulative utilization of shoufangling housing reloan funds was only 12.1 billion yuan, which is below expectations. According to data from Caihui, based on the plans announced by major cities for 2024, 35 large and medium-sized cities have a total of 158,200 sets of shoufangling housing for sale, with most comparable cities having shoufangling housing accounting for around 10% of commercial housing, with little impact on commercial housing. Multiple cities have started subscription for shoufangling housing, with prices generally discounted by about 40% compared to surrounding commercial housing. Zhengzhou: In July, the first batch of 1,999 sets of shoufangling housing for sale was officially launched for public subscription. In August, a total of 1,099 sets of housing were assigned to 1,242 households, with all three projects located in the urban area of Zhengzhou. The main unit types are 90-120 square meters, priced at around 7,000 yuan per square meter, which is 50-70% of the price of surrounding commercial housing. Guangzhou: 13 projects are being accelerated, with over 14,000 sets of housing under construction. The admission criteria are stricter than in other cities, and the unit types are specified to be below 90 square meters. Dalian: The first batch of shoufangling housing for sale opened for purchase applications in August, with a total of 3 projects and 334 sets of housing. The overall number of units available for purchase is relatively small, with a discount rate of about 50%. Qingdao: The first batch of two projects received over 8,000 people applying for registration, with a total of 3,613 sets of housing. The unit types are 75-95 square meters, with a selling price of 50%-60% of the price of surrounding commercial housing. Experience from Singapore and Hong Kong for reference Singapore and Hong Kong both have experience in the construction of shoufangling housing for sale: in Singapore, over 80% of households live in government-provided HDB flats, where the ownership belongs to the government, buyers have income restrictions, and prices are determined based on income, with a significant discount compared to market prices, and they can be resold after about five years. In Hong Kong, the proportion of Home Ownership Scheme (HOS) flats is about 15% of the existing housing stock. In order to reduce the waiting time for public housing, the government started building HOS flats again in 2017. There are clear income and asset restrictions for families applying for these flats, and the selling price is about 30% lower than market prices. Beneficiaries High-quality state-owned enterprises such as Poly Developments and Holdings Group (600048.SH), China Merchants Shekou Industrial Zone Holdings (001979.SZ), CHINA OVERSEAS (00688), Xiamen C&D Inc. (600153.SH), YUEXIU PROPERTY (00123). Financially stable private and mixed-ownership enterprises such as China Vanke Co., Ltd. (000002.SZ), GREENTOWN CHINA (03900), Hangzhou Binjiang Real Estate Group (002244.SZ), Seazen Holdings (601155.SH). Risk warning: Macroeconomic downturn, insufficient funding in place, intensified industry competition.