As China's real estate market ushers in its coldest month, one can't help but wonder, winter has arrived, how far away will spring be? For the real estate industry, this question is not easy to answer.
The July data has already raised alarm, with the sales area and value of commercial housing falling by 46.1% and 44.7% respectively month-on-month, hitting a new low this year. Such data prompted the government to adopt more vigorous rescue policies, including reducing down payments, lowering interest rates, and introducing measures such as recognizing homes without recognizing loans. However, when the August data came out, the results surprised everyone. According to Kerry data, the sales amount of TOP100 housing companies in August fell by 1.3% month-on-month and 33.9% year-on-year. What is even more surprising is that first, second, and third-tier cities have generally declined, ending the myth of "rising forever in the north".
However, the price cuts did not stimulate sales, the favorable policies did not seem to have worked, and the real estate market seemed to be in trouble. However, it should be noted that the major favorable policy was introduced at the end of August, and the impact on the data of the month was limited. We will have to wait for the September data release to see the real effect of these policies.
In addition, the traditional sales season of the real estate industry, "golden nine silver ten", may be the last opportunity for many developers to strive for performance this year. However, the just-needed group seems to be starting to wait and see, and people who were once in a hurry to get on the bus are now holding on to the sidelines, and house prices may even continue to fall.
Currently, the biggest problem in the real estate market is confidence. Since the real estate reform in 1994, real estate has been regarded as synonymous with the wealth of Singaporeans. Despite a brief downturn, it is usually followed by a warm-up. However, the constant rise in house prices has led to the conviction that house prices will never fall and that buying a home is an excellent way to make money.
Under the influence of this consensus, there are many strange phenomena, such as the high cost of tea, which is actually the qualification to spend money to buy a house in the queue; Some people have repeatedly married and divorced in order to circumvent the purchase restriction policy. The government had to introduce various restrictive policies to cool the market and limit speculation, but these policies instead stimulated investor enthusiasm. Developers are also actively promoting the policy, telling people that the tighter the policy, the sooner the chance of getting on the bus disappears.
However, all this came to an abrupt end in 2021, when the government implemented the "three red lines" policy, coupled with the impact of the epidemic, the real estate market began to realize that the good times may be over. But no one expected the journey from heaven to hell to be so fast. The thunderstorm of leading private housing enterprises such as Evergrande and Sunac surprised people, and these large enterprises with a scale of hundreds of billions of yuan were actually facing the risk of bankruptcy. In particular, Evergrande's debt of more than 2 trillion yuan has made people deeply aware of the seriousness of the real estate problem. The ensuing unfinished buildings, loan suspension storms, etc., have made the entire industry even worse.
Once confident house flippers are now deeply trapped, and everyone finally understands that the real estate market also has cycles. Such an environment has made the just-needed group also begin to wait and see, and people who were once in a hurry to get on the bus have now become holding currency and waiting, and house prices may even continue to decline.
The rescue policy has taken great efforts, including canceling the purchase restriction policy and lowering the threshold, mainly targeting the group that just needs it. However, the enthusiasm of speculators has waned significantly, and the market seems to be educating them. In the long run, the development logic of the real estate market is changing, which is a good thing. Although it will be a painful period of economic transformation, when the real estate market returns to the essence of meeting the demand for living, developers can focus on improving the quality of products. Because for future consumers, only really good houses are worth investing in, and various strange products will gradually fade out of the market. This is the direction of the healthy development of the real estate market, attracting consumers through product quality, so that the market can continue to develop healthily.