Source: NetEase Finance Think Tank
The 2024 NetEase Economists Annual Meeting, co-sponsored by the China Enterprise Reform and Development Research Association, NetEase Finance, and NetEase Finance Think Tank, was held in Beijing in November.
In the view of the famous economist Ma Guangyuan, the status of real estate as a pillar industry will not change, and people's demand for better living conditions will not change. Real estate is currently entering a "new cycle", and macro policies need to be patient to solve the current problems and explore new models.
Ma Guangyuan also pointed out that in the process of establishing a new real estate model, we must be soberly aware that the problem of real estate in the past many years is not marketization, but insufficient marketization, such as insufficient land supply leads to land prices that are too high, and land prices are too high and housing prices are bound to be high. Nowadays, many people talk about the model of Chinese real estate and say that they want to learn from Singapore, but it is not practical. In so many countries in the world, the housing system is completely different, and each country has its own national conditions and methods, and it is impossible for China to learn from Singapore.
The following is a transcript of the speech:
Real estate is a big industry, clothing, food, housing, and transportation are one of the most basic needs of a person, so I think there is nothing wrong with developing the real estate industry.
I would like to talk about what economics is, what is economic policy, and how should we prevent risks?
Economics really can't be called science so far, because economics can't do a lot of things, and everyone has a lot of opinions, it's a mess, economists I think it may be the least consensus among all disciplines, 10 economists you ask, there are almost more than 10 views, especially on real estate issues.
I think the first consensus is that the economy itself needs to be recycled. It is particularly important to circulate, that is, the chain of economic circulation cannot be interrupted casually, once interrupted, there will be problems, this is called the economic cycle, every time there is a major global financial crisis, why should the central bank decisively input liquidity?
Second, there should be long-term expectations for economic development. Economists who study long-term expectations have won the Nobel Prize in economics, long-term expectations are very important, for the industry, for the economic development of a country, there can be no long-term investment without long-term expectations, and there can be no long-term development without long-term investment, which is basic common sense.
Third, be patient. We must be patient in everything we do, and in the long-term development of China's economy, everyone can see that there are no major problems when there is patience.
In the process of solving real estate, where is our patience? I want to ask, real estate marketization for more than 20 years, of course, accumulated a lot of problems, these problems need time, how can we develop into such a huge industry in more than 20 years, and solve its problems in two or three years? I think patience has a problem, I will talk about my own views around these three problems.
First, back to a basic common sense, real estate is an industry, the same as manufacturing, I don't think there is any high morality and low morality in the industry, don't evaluate an industry at the moral level, is the manufacturing industry very morally noble? Is it low to do real estate? No.
Returning to the industry itself, let's look at what the relationship between real estate and China's economy is. It is indeed a barometer, and it is inseparable from it, and whether we have a good relationship or a bad relationship, at least today, it is important.
My first conclusion is that it is very important to stabilize the real estate, and the real estate can be said to reflect the emotions of all aspects, reflecting a certain long-term expectation, such as consumption, consumption should rise, if you go to see, what do we rely on to stimulate consumption? I think bulk consumption is very important, we have to absorb the experience and lessons of every past time in stimulating consumption, what we are doing right and what are we doing wrong.
What will happen to the real estate market this year? There must be long-term expectations for economic development and industrial development, but where is the biggest problem in real estate now? That is, without long-term expectations, where is the long-term development of this industry? This needs to be made clear.
Second, what is the new cycle? According to the real estate cycle, the normal cycle of real estate is 18-20 years, we market-oriented reform in 1998 to 2018, in fact, the big cycle is basically here, if you say this in 2020, right? It is still true that the relationship between supply and demand in the real estate market has undergone major changes, which means: (1) there was a structural shortage of houses in the past, (2) no one invested in real estate, (3) from quantity to quality, (4) house prices bid farewell to unilateral rises, (5) it is not necessary to buy a house, we have talked about renting and selling for many years, and now the market pushes to do so, for example, many young people do not have a house, in the past forced to buy, several generations of money to buy a piece, now there is no need, I rent a house for a lifetime may be the most cost-effective, this is a result of marketization。
If we talk about the new cycle of real estate, it also means the high-quality development of real estate itself, how is this high-quality development promoted? It is completely driven by the market, and I will talk about a few misunderstandings.
First, the real estate ceiling has indeed arrived, and the relationship between supply and demand in the real estate market has undergone major changes, which is manifested in what place? This is the ceiling of the industry itself, what is the ceiling? I put forward a concept in 2018, called "two 18", what does it mean? That is, I think the ceiling of China's real estate market is to sell 1.8 billion square meters of houses every year, with sales of 18 trillion yuan. They think that China's urbanization is not completed, and the growth may be slower in the future, but it will continue to grow, and I think there is a ceiling, and this ceiling will come in 2021, and when you look at 2021, the sales area will be close to 1.8 billion square meters, and the sales will be 18 trillion yuan, and it will be even lower in 2022.
This is also consistent with my calculation, I said a few years ago, everyone talked about me and I said why do you think there is 1.8 billion? I made a calculation, I think that by 2024, our annual demand will fall below 1 billion, and the ceiling of the market has actually been reached, which also means that the era of real estate wealth creation is over.
Let's look at the structure, where is the structure manifested? Our per capita construction area, in 2020, we are a little more than 36 square meters, plus a little more than 41 square meters in rural areas, if we remove the public share, less than 30 square meters, what does it mean?
Second, where is the structure manifested? A large number of houses are old houses, before 2000, why do I talk about before 2000? Because the first batch of market-oriented houses in 1998 appeared after 2000 at the earliest, two-thirds of the houses are basically old and dilapidated before 2000, and some of these old and dilapidated houses have to be demolished, and some can be upgraded, but a considerable part of them are due to internal concealment projects. Hydropower projects and so on can't be demolished, you don't think that installing an elevator seems to have become new, and there are other hidden dangers that can't be solved, which means that if two-thirds of the houses are removed, there will be a shortage of houses.
I have also done one thing in the past few years, to calculate how many houses there are in China, using two methods, the first is according to the annual completed area and the number of sets, 119 million units from 2000 to 2021, how many were before 2000, it was 257 million units, and how many small property rights houses are there, almost 70 million to 75 million units, and 451 million units, which means that if you calculate according to the average household size of 3 people, the urbanization level of houses must be enough, but everyone remember that I talked about two-thirds, how many? 257 million sets are old houses, this algorithm and I went to each province, according to the data of each province to calculate although there is a gap, but the conclusion is almost the same, so we want to talk about China's good houses are too few, the intelligent level of houses in the world is very low, the level of furniture intelligence is also very low, even if it is doors and windows, now we talk about "double carbon", China's many building energy consumption through what is gone? through doors and windows.
I will put forward a suggestion, the doors and windows can be replaced to do a big thing, the ordinary doors and windows into energy-saving doors and windows, all of a sudden everyone to see how much energy savings? This can be done, the new cycle of real estate does not mean that real estate has nothing to do, I get three conclusions: 1, real estate as a pillar industry status will not change, the United States is still a pillar industry, an important indicator of the United States macroeconomic is the number of houses built and sold every year, real estate in the United States a single industry is still ranked in the top three; Ordinary people's investment in real estate may not change in the short term, after all, they are still invested in it; 3. The demand for better living conditions will not change.
Finally, I will talk about the new model, in the process of establishing a new model, we must be soberly aware that the problem of real estate in the past many years is not marketization, but the lack of marketization, such as land, land is insufficient supply to lead to land prices are too high, land prices are too high, housing prices are bound to be high, this is a basic law, this is no way, so the construction of this system to play the board must not be market-oriented.
For the future development of the real estate industry, the new model of real estate first means the withdrawal of macroeconomic control policies, real estate regulation and control must be fully withdrawn, do not hesitate, now many places to engage in purchase restrictions are unnecessary, should quickly turn to the construction of the system.
The last piece of advice, be patient, solve real estate problems without rushing.
How do we solve the problem of real estate, we have more than 40 years of market economy, in fact, I think we still need to make up lessons in dealing with corporate risks and industry risks, and we have not learned how to deal with risks.
What is the first step in making up the lesson? Be patient, the most important thing in macroeconomic policy is patience, patience is great wisdom, we need patience to develop the economy, we need patience to defuse risks, we just need to be patient. I want to tell you that I have calculated the US economy, starting from 1821, in 200 years, the average annual growth rate was 3.3%, and the average annual growth rate of the United States in 200 years was only 3.3%, and today it has become the world's largest power. Therefore, we don't need to be so fast, I think as long as China keeps the risk, adheres to the general direction of marketization, and gives everyone long-term expectations at the policy level, China's economy is not bad, I don't think there is much need to worry, take real estate as a sample to summarize the gains and losses of macro policies, which is more important at the moment.