Guolian Minsheng Securities·2025-05-21 01:15Investment Rating - Investment recommendation: Outperform the market (maintained) [10] Core Viewpoints - The top-level design is driving a new development model in the real estate sector, with the promotion of existing home sales as a key component. It is expected that various regions will gradually introduce pilot policies and supporting measures for existing home sales. This model can mitigate delivery risks, stabilize housing prices, and help the real estate market recover. Companies with strong operational capabilities, high product quality, and robust financing abilities will be better suited to adapt to this model, leading to a scenario where high-quality companies prevail [5][13]. Summary by Sections 1. System Reform: Transition from Pre-sale to Existing Home Sales - The evolution of China's housing system has gone through three stages: welfare housing, commodity housing pre-sale, and the current pilot phase of existing home sales. The pre-sale system has effectively addressed housing shortages and financing challenges, supporting long-term rapid growth in the real estate sector. However, with rising debt levels and delivery risks, the policy focus has shifted towards "ensuring delivery and preventing risks," leading to the gradual promotion of existing home sales [11][16]. 2. International Comparisons: Low Down Payments and Strong Regulatory Mechanisms - Internationally, the common practice involves low down payments combined with strong regulatory frameworks to protect buyers' interests. Countries like the US, UK, Japan, and Germany have established systems where developers receive payments based on construction progress, ensuring that funds are used appropriately and buyers are protected from risks associated with incomplete projects [25][26][27][30]. 3. Current Domestic Situation: Encouragement of Existing Home Sales - Since 2021, the proportion of existing home sales in China's commodity residential sales has been on the rise, reaching 32.7% in Q1 2025, an increase of 22.5 percentage points from the low in 2020. Several provinces, including Hainan, have seen existing home sales exceed 50% of total sales, indicating a significant shift in market dynamics [12][32][39]. 4. Impact of Existing Home Sales: Promoting Reform and Enhancing Operational Capabilities - The shift to existing home sales is expected to delay the conversion of land to housing, reducing new supply and stabilizing prices. This model will extend the cash flow cycle for developers, requiring them to enhance their operational capabilities. The transition may lead to a decline in land auction enthusiasm and a decrease in land prices, as developers will need to consider thicker safety margins in their bidding strategies [47][48]. 5. Investment Recommendations: Focus on High-Quality Developers - The report recommends investing in high-quality developers with strong operational efficiency and financing capabilities, such as China Overseas Development, Greentown China, and others. These companies are expected to thrive under the new existing home sales model, while weaker firms may face accelerated exit from the market [13][39].