Goldman continues its breakdown of Chinese property inventory rescue plans.
Following our latest note What would it take to clear China’s housing inventory? where we expected housing “trade-in” programs to be a key policy initiative to help saleable inventory digestion and stabilize the property price outlook, we observe this program has expanded to more cities (50+ by MTD-May, according to CRIC) and examine the five main mechanisms of local trade-in policies (Exhibit 1).
Amongst the varied types of trade-in models announced so far, the “acquisition model” so far has likely achieved the highest effectiveness in improving project transactions and sell-through. By participating cities: i) Zhengzhou: As the pilot city to announce acquisition model, by end-Apr, 194 units of existing housing units had passed the initial evaluation and trade-in intention was confirmed on c.30 housing units; ii) Nanjing: Project visits significantly improved in central and nearby outskirt districts since Labor Day holiday, according to CRIC. iii) Wuxi: first batch of 25 units completed “trade-in” by end-Apr, recording total transaction value of Rmb100mn+.
