Guotai Junan: The new policy effectively reduces the cost of purchasing housing and transaction costs, guiding demand release and boosting real estate sales.

Guotai Junan's research report believes that the new policy aims to further stimulate demand by effectively reducing the cost of buying a house and transaction costs, which will boost real estate sales. In addition to the current visible tax incentives, the subsequent cancellation of standard for common and non-common residential properties in some cities will further expand the policy's effectiveness. The adjustment of deed tax corresponds to a direct reduction in the cost of buying a house. From the scope of the adjustment, the greatest benefits will go to buyers of improved demand and second-home buyers in first-tier cities. Regarding the adjustment of value-added tax, it is clear that after the cancellation of the standard for common and non-common residential properties in first-tier cities, houses that have been owned for 2 years or more will be exempt from value-added tax. Currently, Beijing and Shanghai have announced cancellations, while Guangzhou and Shenzhen retain the standard. On November 13th, the Ministry of Finance, State Administration of Taxation, and Ministry of Housing and Urban-Rural Development issued the "Announcement on Tax Policies to Promote the Stable and Healthy Development of the Real Estate Market", and the State Administration of Taxation issued the "Announcement on reducing the lower limit of the pre-collection rate of land value added tax", making adjustments to deed tax, value-added tax, and land value added tax collection, which is in line with expectations. Following the October press conference by the Ministry of Finance stating that they are "studying tax policies related to canceling the standard for common residential properties" and the November 8th press conference by the National People's Congress stating that "tax policies supporting the development of the real estate market will be introduced soon", this tax reform was finally implemented, with the main contents including: 1) increasing the preferential deed tax for housing transactions by raising the area standard eligible for the current 1% low tax rate from 90 square meters to 140 square meters, 2) uniformly reducing the lower limit of the pre-collection rate of land value added tax by 0.5 percentage points in all regions, 3) clarifying the value-added tax and land value added tax preferential policies aligned with the cancellation of the standard for common and non-common residential properties. It is worth noting that, rather than the strength of individual policies, the determination of the policies is more important, using the pace of policy release as one of the reference standards. The press conference by the People's Bank of China on September 24th was a turning point in real estate industry policies. From the end of September to the beginning of October, there was a series of policy releases. After this round of policy cycle, a new policy was implemented in mid-November. In terms of pace, compared to the past rhythm of waiting for the gradual weakening of policy effectiveness before introducing new policies, this time the pace of policy enhancement is tight, demonstrating a determined effort to stabilize the market. As the real estate market enters a new stage, we are once again adjusting our allocation strategy at both ends, expecting asset integration and restructuring to become the focus in the near future. It is likely that domestic debt restructuring will be sped up, which falls into the category of risk mitigation. Considering the impact of the current demographic cycle on the industry, resource integration will become mainstream, and the advantages of state-owned enterprises in first-tier cities will begin to show. Risk warning: Market demand accelerates downward.