The economy is taking a sharp turn!

In the past few days, we have seen the most contradictions. This is true both in the international situation and in the domestic economy. Today, we will only talk about the latest developments in the past few days.

1

Bearish and bullish.

In the past few days, the four real estate giants have injured three of them, Longfor, Gemdale stocks and bonds plummeted, and after Sino-Ocean defaulted in substance, Vanke bonds also had panic selling, forcing Vanke to prove itself, and successively moved out of a number of measures such as the endorsement of state-owned shareholders and the salary-linked stock price to fight back short.

However, around the same time, real estate development stocks began to soar.

On November 2, the A-share real estate development sector further rose, Zhongdi Investment rose by the limit, and Cinda Real Estate, Zhujiang Shares, Zhongzhou Holdings, Wolong Real Estate, Yunnan City Investment, etc. followed suit.

It is said that the party committee of the People's Bank of China and the party group of the State Administration of Foreign Exchange held an enlarged meeting on November 2.

Behind this, there is a growing gap in the scissors of cognition.

The first news, behind the sell-off of real estate bonds, is the continuous expansion of foreign capital's confidence in the domestic property market.

To put it bluntly, the judgment path of international capital on China's property market has been extremely confused, and even the basic fulcrum of judgment has been found.

The property market crisis in the past two years, as well as the lack of trust in the continuous spread of the crisis, have gone from private enterprises →mixed-ownership enterprises→ state-owned → central enterprises, and finally to Vanke, which has a stronger symbolic meaning.

The tight chain of capital on the domestic property market has gradually risen from the lowest level of private enterprises step by step, and finally reached the top of the tower.

The second news, the collective rise of real estate development stocks, the actual meaning behind it is the confidence increase under the influence of the Central Financial Work Conference.

The central bank meeting on November 2 is a timely feedback and further implementation measures for the decisions made at the Central Financial Work Conference.

The Central Financial Work Conference is generally held once every five years, so every major policy decision basically provides detailed guidance and clear direction for the work in the next five years.

The specifications of this meeting, all of which are higher than the specifications of the previous five meetings, are the most important financial meetings in decades.

At this meeting, the next development of real estate and the domestic property market was made the most clear statement, combined with various policies in the past month, everything is very clear and certain.

Obviously, there is a huge contradiction between this first news and the second news.

2

Next, let's talk about the big bailout this year.

We have sorted out a summary of the policies for the whole year, even if we do not talk about the specific policies of the whole year and each city, we list the national rescue policies in October, and there are so many of them.

There are nine in total, and each one is significant. For the whole of this year, as of October 31, there were 132 items.

You must have also noticed that this year's various policies are intensive and frequent, and in the introduction of these policies, there is a unified underlying logic, that is, to break all the old rules and order and re-establish a new order.

From the affordable housing in the property market, commercial housing returns to commodity attributes;

The clarity of finance is the blood of the national economy, and it must be under the unified leadership of the central government;

and then to the specific personnel arrangements of the central bank and the Ministry of Finance to avoid policy conflicts and conflicts;

further splitting and restructuring of ministries and commissions of the State Council;

…………

It can be said that 2023 will be a very critical year for the next ten or twenty years.

During the economic downturn, we broke the constraints of various interests and made frequent, significant, and many decisive reforms.

For example, to re-establish the logical relationship of real estate, and the direction of development in the future, we can expand on some here.

At this central financial meeting, for the first time, a new term appeared: three major projects.

What are the three major projects?

"Dual-use" public infrastructure,

Transformation of urban villages,

Construction of affordable housing.

These three major projects were put forward several times within three months through the Standing Committee of the State Council and the Central Economic Work Conference.

At the Central Financial Work Conference, the final summary was made, which is equivalent to saying that in the next five years of financial work, these three major projects are the core direction of real estate and urbanization.

In the previous article, we have elaborated on the "public infrastructure and urban village transformation" for both ordinary and emergency uses, and said that these two policies and the liberalization of population flow and looking at them together are the core supporting policies for the next stage of urbanization 2.0 - population flow from small cities to large cities.

Further, it is also directly related to the next economic leader transformation into domestic consumption.

Today we will talk about affordable housing.

The so-called Circular No. 14 clarifies two major objectives:

The first is to increase the intensity of affordable housing, which is not new, and has been the core direction of real estate transformation in recent years. Interestingly, the phrase "home ownership" is a residential housing scheme that was vigorously developed in Singapore in 1959 and is now directly copied by the decision-makers.

Everyone's attention is focused on the second point, which is to return commercial housing to commodity attributes, which is an unprecedented definition of commercial housing.

This is the latest term for commercial housing after the definite phrase of housing is not speculation disappears. The so-called commodity attribute is a return to marketization.

The so-called marketization is to let the market determine supply and demand, and let supply and demand determine price. Ideally, the invisible hand withdraws and the market decides.

That is to say, the four restrictions on price and sale, purchase and loan restrictions for commercial housing have been completely relaxed, and the ups and downs all depend on market reactions.

Of these two points, it is clear that the first is the foundation, that is, the house can be lived.

Only when this is achieved can the housing panic and anxiety at the grassroots level be completely resolved. Commercial housing can also completely return to the commodity attributes. No matter what goes up or down, it won't hurt your muscles and bones.

Therefore, the direct impact on the property market is also very clear:

1. This policy is the follow-up policy for the transformation of urban villages in megacities at the National Standing Committee in July, and the two need to be looked at together. Now it is understandable that the decisive role of the market in the allocation of resources was said at that time, because the regulation of commercial housing was lifted, and capital was naturally willing to come in.

2. The financial logic of the property market has changed to affordable housing is the people's livelihood, and commercial housing is the government's profit and income.

3. The value of just-needed housing will shrink rapidly, especially for small apartments, and small houses below three rooms may be affected, which is an irreversible trend.

4. It is extremely conducive to the first- and second-tier core cities, in the later stage of urbanization, the plate is extremely fixed, and the wealth of the rich will be mainly precipitated in high-quality cities and high-quality real estate in high-quality plates.

5. Commercial housing will enter a comprehensive high-quality era, and the rich will see more, have more requirements, and have a fine experience, all of which will force product reform. The preservation and appreciation of high-quality products will become the law.

6. The wealth differentiation will become more serious, and the poor will become less and less wealthy, which will also become a law.

7. This may become the basis of the real estate tax, the affordable housing is not taxed, and the commercial housing is taxed according to the ladder, and the higher the total price, the heavier the tax. After all, the basis for opposition to property taxes has been removed.

If you want to have a deeper understanding of the reasons and logic behind it, I have prepared several materials that can help you understand, all of which are the latest and most dry information, so don't miss it!

1. What is the position of the current house price?

2. Macroeconomic and financial outlook at home and abroad in 2024

3. China's Economic and Financial Outlook Report (Q4 2023)

4. In 2022, the government debt of 311 prefectures, cities and states in the country will be overlooked