Yuan Yihong: Local governments should also be willing to reduce land prices

Text/Yuan Yihong

The land rate is not indivisible. The land market is an important part of the overall real estate market. The activity of the land market is a reflection of the real estate market.

Statistics released by the research institute on September 23 show that in the recent week, the overall supply and demand of the land market in 40 large and medium-sized cities across the country has increased month-on-month, the transaction volume of residential land has doubled, and the total amount of land transfer has also increased month-on-month.

Is the land market out of the cold?

The Middle Finger Academy cites two examples from Guangzhou and Changchun. On September 18, Guangzhou listed 9 cases of land, with a total starting price of more than 11.4 billion yuan; on September 19, Guangzhou sold 3 more residential land (including 2 live auctions). The land was sold for two consecutive days, which is relatively concentrated.

Changchun city last week with 11.7 billion yuan of land transfer revenue, the highest in the second-tier cities that week. Among them, only on September 16, 14 parcels of land (which must be taken together) were sold at one time, amounting to 9.09 billion yuan. This painting is more like a directional transfer to Wanda Group (Northern Film Capital), and there is no comparison.

However, this short cycle of monitoring land transactions on a weekly basis cannot see the trend of the land market. It has a lot of randomness, contingency, uncertainty. A city's centralized launch of a batch of land at a time, or a large plot of land in a city center, can push up the city's land turnover in a short period of time. The available data cannot prove the recovery of the land market, or even show a warming trend.

Land transactions are not only related to the supply of land by local governments, but also related to the willingness of housing enterprises to obtain land. The decline in land transaction area in August has a lot to do with the lack of land supply. But housing enterprises are not willing to take land, and no matter how much land you launch, it is useless. So both are indispensable.

I personally believe that what can really show the prosperity of the land market is the premium rate and the number of streams. According to the statistics of Zhongyuan Real Estate Research Center, as of the 19th, there have been 52 land plots with a transaction price of more than 1 billion yuan since September, of which 22 plots are bottom price transactions, and only 20 plots have a premium rate of more than 10%. This kind of transaction situation is obviously very light.

In the two cities mentioned earlier, the plot of 9.09 billion yuan in Changchun is almost directional transfer, so there is no doubt about the reserve price transaction; on the 19th, there were 2 3 residential plots sold in Guangzhou, which shows that its transfer price is not recognized by the enterprise.

The short-term fluctuations of the land market cannot confirm or falsify the prosperity of the overall real estate market. At present, judging from the feedback from the sales market, there is no evidence that the real estate market has rebounded. The price reduction promotion is still in the price reduction promotion; the project that sells badly is still not very good. A number of housing enterprise practitioners said that the pressure to complete the performance is very large, and there is no expectation for the golden nine silver ten, but hope that the dematerialization rate in the next two months can be improved.

I have long called on housing companies to bravely reduce prices and promotions, but most housing companies are still hesitating to wait and see. Now it seems that the market situation has been relatively clear, we should abandon unrealistic illusions, the debt ratio is high, the equity should be resolutely sold; the cash flow pressure is large, the discount promotion should be resolutely discounted.

However, the reality is that some projects have not made much profit anymore. At the beginning, when the land was acquired, it was a bidding transfer (the land price achieved the expectations of the government department), and when it was sold, it was a limit price; the profit was already thin, and then it was a loss.

I therefore call here for an appropriate reduction in the price of land transfer. There are two reasons: first, the land is not sold well, it will have an impact on the local financial (government fund) income, and it will also have a certain impact on the investment of the year, and the price reduction and transfer will increase the probability of the transaction; second, the land price is the rigid cost of the house price, the land price is high, the house price will not be low, and reducing the land transfer price will help to curb the rise in house prices.

There are two prerequisites, the first is that local governments should be willing. The land market is sluggish, unwilling and unable to do anything, or have to fall, there will be enterprises willing to quote. The so-called reduction is to reduce the starting price and the reserve price. At the same time, we must also lower expectations.

Second, housing enterprises have the willingness to buy land. The real estate market trend is not optimistic, the prosperity is not high, the willingness of housing enterprises to invest in land will not be high. Conversely, if the boom picks up and sales turn better, even if your starting price is low, if there are more than a dozen housing companies to grab, the premium rate will soon be raised to a height of more than 30%.

Since it is the market that ultimately plays a decisive role in land prices, what is the role of local governments in reducing the starting price and reserve price of land transfer? some. Not to mention that price reduction can promote transactions, the probability of land auction is greatly reduced; and the government shows sincerity, activates the market, and perhaps a one-time land transfer will reduce some income, but the entire market has risen, benefiting all parties including the government (revenue).