Guotai Junan: Real estate enters a new stage, the advantages of state-owned enterprises in first-tier cities will begin to show.

Guotai Junan released a research report stating that currently, Shanghai is the first to respond to the cancellation of the standard for ordinary residential housing, followed by Beijing. It is expected that other first-tier cities will also follow suit. The tax adjustment policy for first-tier cities after canceling the standard for ordinary residential housing was clearly stated in the tax policy jointly released by the Ministry of Finance and other departments on November 14. As of November 19, Shanghai and Beijing have already canceled the standard, while Guangzhou and Shenzhen have not yet mentioned it, and the implementation of the policy will continue to be monitored. The real estate sector is entering a new stage, adjusting the allocation at both ends. It is expected that asset integration and restructuring will become the focus next. Domestic debt restructuring is likely to accelerate, which also falls under the category of risk mitigation. Considering the impact of the current demographic cycle on the industry, resource integration will be mainstream, and the advantages of state-owned enterprises in first-tier cities will begin to show. The main points of Guotai Junan are as follows: On November 18, the Shanghai Municipal Housing and Urban-Rural Development Commission and four other departments jointly issued the "Notice on the Matters Related to Canceling the Standards for Ordinary Residential Housing," clarifying the cancellation of the standards for ordinary and non-ordinary residential housing. The current standard implemented in Shanghai is the version adjusted on December 15, 2023. This standard includes buildings that are "five stories or higher, as well as low-rise buildings such as old-style apartments, new-style alleys, old-style alleys" and "single housing units with a building area of 144 square meters or less" as ordinary residential housing. Under the new policy, the standard for ordinary residential housing is canceled, and related tax matters are also adjusted. Specifically, 1) individuals transferring housing will be subject to a personal income tax rate of 1% of the transfer income, which means the personal income tax rate for non-ordinary housing will be reduced from 2% to 1%; 2) individuals selling housing that has been owned for 2 years or more will be exempt from value-added tax, which means the 5% differential value-added tax for non-ordinary housing is canceled. In addition, the new policy will take effect on December 1. The reduction in personal income tax and value-added tax resulting from the cancellation of the standard for ordinary residential housing, combined with the previous stamp duty concessions, effectively reduce the transaction costs. For stamp duty, a housing purchase of a total price of 10 million yuan can be discounted by a maximum of 2% in stamp duty, which is 200,000 yuan; for personal income tax and value-added tax, selling a non-ordinary residential housing for 10 million yuan can save 100,000 yuan in personal income tax, and if the value-added price difference is 4 million yuan and held for at least 2 years, it can save 200,000 yuan in value-added tax (400x5%). The above tax policies, by simultaneously reducing costs at both ends of buying and selling houses, are expected to boost transaction activity. It is worth noting that there have been adjustments in both the policy pace and policy thinking. On the one hand, compared to the past practice of introducing new policies after the market cools down, the current policy follows a faster pace, meaning that even though the market has not cooled down yet, the new policy has already been implemented. On the other hand, unlike the previous relaxation of purchase restrictions to promote the release of rigid demand, this policy directly targets improving demand, alleviating potential transaction bottlenecks through the reduction of tax burdens, showing a change in policy thinking. Risk Warning: Market demand accelerates downward.