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Hi everyone, I'm Blue and White.
How many houses are there in this world? This is a hotly debated question, but the answer is yes. At the latest press conference of the "First National Natural Disaster Comprehensive Risk Survey", the official announced a huge figure: in the past three years, the housing and urban-rural construction industry has obtained nearly 600 million urban and rural housing construction data and more than 800,000 municipal facilities data.
However, we need to clarify that the "600 million buildings" mentioned here do not just refer to urban housing. Schools, factories, shopping malls, hospitals, office buildings, self-built houses, commercial houses, all count. So, this figure is not representative of China's residential inventory.
So, how should real inventory be calculated? The League of Nations macro summarized four calibers:
Inventory of completed homes for sale, i.e. existing homes.
Inventory of pre-sold but unsold dwellings under construction, i.e. off-plan homes.
Inventory of dwellings that are not yet available for sale under construction, i.e. those without a pre-sale certificate.
The inventory of the suspended and slow-down construction project, that is, the unfinished building.
These new homes for sale, together with certified second-hand homes, are the real residential inventory. However, due to the data limitations of the second-hand housing market, this number remains a mystery.
We can make a rough estimate in other ways. According to Qipu's statistics, the total housing area in the country is 50 billion square meters, with 1.49 billion houses. However, half of them are co-ownership, old public housing and self-built houses, and less than 30% of commercial housing. This means that the total area of houses that can be sold is about 15 billion square meters.
Whether it is 600 million buildings or a total area of 15 billion square meters, these figures do not distinguish between geography and age, and they will not directly affect the direction of the real estate market in 2023.
So, what is a key factor in the property market this year? The answer is mortgage. On February 24, the head of the China Banking and Insurance Regulatory Commission said, "Banks are required to speed up the processing of backlog applications for prepayment and increase supervision over the illegal use of business loans and consumer loans flowing into the real estate sector." ”
This response is thought-provoking. Since the beginning of 2023, the issues surrounding mortgages, whether lending, repaying or selling houses, have become hot spots.
Recently, there were rumors that a large bank had launched a product called "Heart Loan," which allows unmarried couples to apply for a loan together to buy a house. But there are actually a lot of problems with this product, and most people have difficulty actually operating it.
Previously, various relay loan products have appeared, some can be loaned to 80 years old, and some can even loan to 100 years old. These products innovate because banks want to attract more customers, but now there is a situation where banks are rushing to lend and people with homes are rushing to repay their loans. Why is that?
At the end of 2022, the balance of personal housing loans nationwide reached 38.8 trillion yuan, compared with less than 3 trillion yuan in 2008.
This sheer size, combined with historically low interest rate spreads, makes it very difficult to adjust existing mortgage rates. Any small fluctuation can have a huge impact on the entire system.
Therefore, it is almost impossible to reduce the interest rate of existing mortgages. Even if there are calls for a rate cut, in fact, it will not save the housing market. Since November 2022, interest rates have remained stable, at 3.65% for 1-year LPR and 4.3% for LPR over 5 years. This is mainly because the space for banks' spreads is narrowing, while the CPI index is also rising, which means that the central bank is cautious about cutting interest rates.
Therefore, for those who want to save interest, the best way is to be patient. At this time, what affects the direction of the property market is not the number of houses, but the anxiety and helplessness faced by people who have mortgages. If they stop worrying about rising mortgage rates, the housing market will not be able to prosper.
So, for those who are stuck with high interest rates, should they re-lend or prepay? It depends.
Relending is not a wise move because a business loan requires a full amount of real estate and a business license, and there are additional fees incurred by the agent to re-lend.
Waiting in line for months and paying additional interest is unbearable for most people.
As for prepayment, it also depends on the specific situation. If it is an off-plan property, it is best to wait until the handover before considering returning it in advance
Loans, as prepaying the loan before the off-plan payment may face some inconvenience.
However, if you have already paid off part of your mortgage, or bought it before 2015 at a relatively low interest rate, prepaying may be a wise choice. However, it is important to consider carefully, as prepayment is subject to a handling fee and may cause some inconvenience.
Therefore, for those who have a tight life but still want to save interest, the wisest option is to be patient. As we've seen, even though mortgage rates have fallen to all-time lows, there are still a lot of people lining up to pay their loans. This suggests that lowering interest rates does not solve the problem of existing mortgages, but depends more on people's psychological state.
In conclusion, the future development of the real estate market depends not only on the number of houses, but also on the emotions and decisions of those who own mortgages. In this context, policymakers and financial institutions need to be more cautious in dealing with the issue of existing housing loans to ensure the stability and healthy development of the market.