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If real estate can't be saved, it will lead to several serious consequences, do you understand?
Have you ever dreamed of owning a house of your own? Under this roof, every brick and tile carries the warmth and security of home.
However, when the pulse of the real estate market weakens and the industry that supports the dreams of hundreds of families collapses, what kind of waves will be set off?
Yes, real estate is more than just a piece of land or a house. It has been integrated into all corners of the socio-economy. But what if one day, all this cannot be saved?
If the real estate market cannot be saved, there will be several serious consequences, which we have to think about and pay attention to. First, a regression in the housing market will bring about an economic downturn and rising unemployment. For many years, the real estate sector has been a major driver of the mainland's economy. The real estate-related industries are huge, covering various fields such as building materials, construction equipment, metallurgy, machinery, decoration, electrical furniture, tourism, gardening, transportation and commerce. According to statistics, the real estate industry is directly related to more than 60 industries and has hundreds of millions of employed people. Therefore, if the real estate market collapses, it will not only lead to a stagnation or even a decline in economic growth, but also exacerbate the worsening of unemployment.
Second, financial markets will face heightened risks. We already know that the real estate market is both bound to the development of many related industries and has also brought wealth to most people. Many people used to rely on down payment loans to buy a home, but this has also led to many people being in debt. According to the central bank, 70% of household wealth is now in the form of property. Once the real estate market collapses, people's wealth will shrink significantly, and those who still have loans may even choose to give up repaying their loans, which will lead to an increase in a large number of foreclosure houses and financial non-performing assets, which is not conducive to the healthy development of society.
Third, the consumer market will shrink. Consumption is one of the important factors driving economic growth, but in recent years, we have found that the spending power of mainland residents is not strong. This is not because people are reluctant to spend, but because many people put their money into the real estate market and even overdrawn their income for two or three decades. As a result, we can see that all walks of life are becoming more and more difficult due to the lack of customer consumption, and the bustling commercial streets are gradually losing their vitality. In this case, if the real estate market suffers another setback, the number of unemployed will increase, and people will be more cautious in spending, leading to a further contraction of the consumer market.
Finally, taxes will be significantly reduced. As we all know, the collection and use of taxes are needed and benefited by the people. The mainland's tax revenue mainly comes from the real estate market. In recent years, another name for local tax revenue has been "land finance", which is enough to prove the importance of land revenue to local finance. However, if the real estate market collapses and the city's land cannot be sold, tax revenues will be significantly reduced, resulting in a lack of local funds to run the city and provide public benefits. In severe cases, it may even lead to a delay in the payment of salaries to civil servants and teachers, and the consequences can be imagined.
To sum up, if the real estate market cannot be effectively saved, there will be many serious consequences. However, we have reason to believe that under the active regulation of the government, the real estate market will eventually return to its residential properties and return to a state of stable development without drastic ups and downs. What do you think about this issue?
Introduction: The real estate market has undergone a major transformation in the second half of 2022, from strict regulation to full liberalization, but people's enthusiasm for buying houses has decreased. Failure to save the housing market will have four serious consequences: a downturn in the economy and rising unemployment, increased risks in financial markets, a shrinking consumer market, and a sharp drop in tax revenues. However, under the active regulation of the government, it is hoped that the real estate market can return to a state of stable development.
The economy is in a downturn, and unemployment is intensifying
The real estate industry has long been the leader of the mainland's economic development, and has played a significant role in driving many industries such as building materials, construction equipment, decoration, and electrical furniture. According to statistics, the real estate industry is associated with more than 60 industries and hundreds of millions of employed people. However, if the real estate market collapses, it will lead to economic stagnation or even decline, and a large number of people will lose their jobs.
In addition, financial institutions and companies related to real estate will also be in trouble, causing increased risks in the financial market. The collapse of the housing market will not only have an impact on loans and debt, but will also lead to an increase in credit risk, further dragging down the stability of the financial system.
Increased risk in financial markets
The collapse of the real estate market will bring increased risks to the financial markets. Since many people participate in the real estate market and buy homes with loans, they are saddled with higher debt. If the housing market collapses, people's wealth will be drastically reduced and their ability to repay their loans may be weakened. This will lead to an increase in a large number of foreclosures and financial bad debts, negatively affecting the stability of the financial system.
The consumer market is shrinking
The collapse of the real estate market will lead to a contraction of the consumer market. Many people put most of their money into the real estate market, resulting in a lack of spending power. Consumption is one of the important drivers of economic growth, but people will be more cautious in spending if they are at risk of losing their jobs or their wealth is reduced. This will further lead to a contraction of the consumer market, adversely affecting all industries.
Taxes have been drastically reduced
The real estate market has always been one of the main sources of tax revenue for the country. Especially at the local level, the contribution of land finance to local tax revenues is crucial. However, if the real estate market collapses, resulting in land not being sold, tax revenues will be significantly reduced. This will cause financial difficulties for local governments, affecting the construction of cities and the provision of public benefits. It may even lead to delays in the payment of salaries for civil servants and teachers, causing social instability
The importance of real estate cannot be overstated. It is a barometer of the economy, the cornerstone of social stability, the sustenance of family dreams, and a symbol of investor confidence.