The property market is a field related to the national economy and people's livelihood, which is not only an important indicator of economic development, but also an important factor of social stability. However, in recent years, as house prices continue to rise, many people have turned to buying property as a means of investment and value preservation. This behavior has contributed to the prosperity of the property market to a certain extent, but it has also brought many risks and challenges. Especially in the context of increased regulation and control, tightening of the financial environment and slowing economic growth, the problems of property bubbles and crises are increasingly apparent.
There are three "bad news" in the property market, which makes people more worried about the future of the property market. The most serious of these is that some people have begun to "abandon their houses and cut off their supplies". This is undoubtedly a huge shock for home buyers. So, what exactly do these "bad news" mean?
The transaction volume of the property market has declined significantly. According to the latest data, in the first half of 2023, the sales area of commercial housing was 595.15 million square meters, down 5.3% year-on-year, of which residential sales area fell by 2.8%. At the same time, the sales of commercial housing were 6,309.2 billion yuan, an increase of 1.1%, of which residential sales increased by 3.7%. These data show that although house prices are still growing, the demand of home buyers is shrinking, and the market transaction volume has declined significantly. This trend is particularly evident in first-tier cities and hotspot cities, where high housing prices, purchase restrictions, loan restrictions, lottery and other policies make it difficult for buyers to enter the market, resulting in a contraction in market demand.
The second-hand housing market is also not optimistic. Despite the insufficient supply of new homes and high prices, many buyers turn to the second-hand housing market for opportunities, but the situation in the second-hand housing market is not optimistic. The latest data shows that in July 2023, house price growth was 9.3%, down from 10.5% in June. This shows that the upward momentum of house prices is weakening, especially in some cities, and the price of second-hand homes has even fallen. This shows that under the influence of the policy, the second-hand housing market has also experienced an oversupply situation, sellers have lost their bargaining power, and buyers are holding on to the sidelines.
The land market is sluggish. Land is the basic resource of real estate development, and land supply and transaction can reflect the development willingness and confidence of real estate enterprises. However, the latest data shows that in the first half of 2023, land transfer revenue was 2,270.6 billion yuan, down 11.9% year-on-year. Land supply area was 164 million square meters, down 17.9% year-on-year. These data show that in the current market environment, the demand and expectation of real estate enterprises for land have been greatly reduced, and they are unwilling to risk taking land at high prices. At the same time, under the influence of measures such as increasing land regulation and control, raising the threshold for land transfer, and restricting land loans, housing enterprises are very passive in acquiring land, and even some land cannot be sold. This phenomenon is particularly evident in first-tier cities. Taking Shanghai as an example, in the first half of 2023, a total of 11 residential land was sold in the city, with a transaction area of 388,000 square meters, a year-on-year decrease of 69.6%.
Due to the downturn in the real estate market and the shortage of land, many real estate enterprises are facing the problems of tight capital chain and debt pressure, and as of the end of July 2023, the total principal amount of bonds due to real estate development enterprises reached 1.2 trillion yuan. Nearly a quarter of these bonds are short- and medium-term bonds, and nearly two-thirds of these bonds are non-standardized bonds, namely private placement bonds, trust bonds, asset management schemes, etc. The high financing cost of these bonds and the lack of effective supervision and disclosure mechanisms have brought great difficulties and risks to the repayment of housing enterprises.
At the same time, the financial regulatory authorities have strengthened the prudent management of real estate finance, and under the influence of measures such as the implementation of the three red lines, the financing channels of housing enterprises have also been restricted and squeezed, resulting in many housing enterprises falling into a debt crisis. In the first half of 2023, a number of well-known real estate companies defaulted or defaulted on repayment, such as Evergrande Group, Zhongliang Holdings, Sunac China Greentown China, etc., of which Evergrande Group is one of the largest real estate developers in China and one of the world's largest debt holders, with a total debt of 1.97 trillion yuan. Due to its poor performance, tight cash flow, credit rating downgrade and other factors, Evergrande Group has repeatedly defaulted or defaulted on repayment in 2023, causing panic and doubts in the market, and even rumors that Evergrande Group has faced the risk of bankruptcy restructuring.
The problem does not stop here, due to the dismal transaction volume of the property market, the decline in house prices, the debt crisis of housing enterprises and other factors, more serious situation is that some people have begun to abandon the house and cut off supply, the so-called abandonment of the house and supply refers to some buyers who have purchased high-priced houses or multiple houses in the inability to bear high loans, or see the fall in house prices after choosing to give up repayment and give up their property rights, thereby reducing their losses, which not only has a serious impact on their credit, but also caused great damage to banks, housing enterprises and society, for example, in Beijing, a house buyer in 2019 at 7 per square meterThe price of 80,000 yuan bought a house, but in 2023, the price of the house dropped to 65,000 yuan per square meter, he felt that he lost too much money, so he chose to abandon the house and cut off supply, this case shows that in the current property market environment, abandonment of house supply has become a phenomenon, and it may be more and more, this behavior undoubtedly caused great damage to banks and housing companies.