Economist Ren Zeping: The top ten real estate predictions in 2024 show that the per capita housing area will exceed 34 square meters

Text: Ren Zeping's team

Guide

Real estate is the first pillar industry of the national economy, which is related to economic recovery, people's livelihood and employment and financial risks. The mainland is currently in a critical stage of the transformation of old and new kinetic energy, and if the real estate is stable, the economy will be stable, the employment will be stable, and the financial sector will be stable.

At present, the relationship between supply and demand in the real estate market has undergone major changes, what is the real estate situation in 2024, and how to break the situation?

Top 10 Real Estate Predictions for 2024:

1. The era of large-scale real estate development has come to an end, and the era of stock housing dominance has begun, mainly due to the long-term inflection point of the population of the main home buyers aged 20-50, with an urbanization rate of 66%, a household ratio of more than 1.09, and a per capita housing area of more than 34 square meters. "Real estate looks at population in the long term, land in the medium term, and finance in the short term."

2. Land finance is facing transformation, land finance accounts for half of local financial resources, and the problem of local debt is prominent, which needs to be resolved urgently to promote the transformation to tax finance and equity finance.

3. The real estate market is facing adjustment and differentiation, which is to digest the previous high housing prices, high inventory and high leverage, and the differentiation is that the market of population inflow and outflow of cities will be significantly differentiated.

4. Population migration to urban agglomerations in metropolitan areas, the population of northeast, northwest, and low-energy cities is facing continuous outflow pressure, and the United States, Japan, South Korea, etc. will have the phenomenon and law of population agglomeration in the second half of urbanization.

5. Whether the real estate market can land softly affects whether China's economic growth can be smoothly shifted, which is related to the employment of tens of millions of people, dozens of upstream and downstream industrial chains, and the security of financial credit, which accounts for more than one-third, and is critical in the next 2-3 years. It is not to be oversumed that global economic history shows that real estate is the mother of cycles, with nine out of ten crises.

6. Relaxation of restrictive measures such as purchase restrictions, loan restrictions, and price limits is the general trend, which are the tightening measures introduced during the previous overheating period of the real estate market, the situation has changed, and the real estate market has shifted from preventing overheating to preventing overcooling, and the restrictive measures should be removed to promote a soft landing in the real estate market.

7. The reshuffle of the real estate industry is the trend of the times, most of the real estate companies will disappear or be merged and reorganized, and increase efforts to support the restructuring of high-quality real estate enterprises in the industry, survival of the fittest, which is inevitable for all industries to develop to a mature stage.

8. Real estate sales and investment will gradually slow down, and are expected to bottom out in the next 2-3 years, and the main support for the future housing market will come from urbanization, improved demand, urban renewal, and affordable housing demand.

9. The three major projects are the main support for real estate investment in 2024, and the funds mainly come from the central government.

10. The strategy of urban agglomeration, the linkage between people and land, financial stability, and the simultaneous development of rental and purchase are the fundamental policies to achieve the balanced and healthy development of supply and demand in the real estate market, change cognition, and conform to economic laws.

The key to the current situation is to promote the recovery of market confidence, support high-quality real estate enterprises, and improve local land finance, so as to drive investment and improve the upstream and downstream of the industry, which is the key to the current problem.

Policies are shifting towards friendliness, but effective and forceful measures are needed to turn the situation around, and there are more ways than difficulties. On November 17, 2023, the People's Bank of China, the Financial Regulatory Bureau, and the China Securities Regulatory Commission jointly held a symposium for financial institutions to discuss a number of real estate financial support policies, emphasizing the need to meet the reasonable financing needs of real estate enterprises under different ownership systems without discrimination, support real estate enterprises to raise reasonable equity financing through the capital market, and increase financial support for guaranteed delivery of buildings.

We conducted a scenario analysis of the real estate market in 2024. Under the neutral scenario, in 2024, the sales area of commercial housing will be -5.3% year-on-year, the area of new construction will be -8.2% year-on-year, and the area of completed construction will be -2.5% year-on-year.

We have calculated the real estate market in the next six years: taking into account the urbanization process, improvement demand, urban renewal, etc., the average annual new urban residential demand from 2024 to 2030 will be about 1.00 billion square meters, compared with the average annual new urban residential demand of 1.13 billion square meters from 2011 to 2023, and the total residential demand in mainland China may drop to 910 million square meters in 2030.

In order to promote the soft landing of real estate, three major measures can be considered in the short term: 1) take the opportunity to completely cancel the purchase restrictions, release reasonable housing demand, reduce the interest rate of existing housing loans, including second homes, and reduce the burden of interest expenses on residents; 2) set up a housing bank to acquire land and commercial housing inventory from developers for rental housing and affordable housing; 3) accelerate the construction of the "three major projects" to support real estate investment.

In order to build a new model of real estate development, a long-term mechanism based on "urban agglomeration strategy, human-land linkage, financial stability, and simultaneous rental and purchase" can be considered in the long term.

If substantial and effective measures are taken to combine the long and short, it will definitely boost the confidence of the property market, avoid a hard landing for real estate, achieve a soft landing, and contribute to economic recovery and improvement of people's livelihood.

directory

1. Situation: In 2023, real estate will be "stable after high, medium and low", and the first pillar industry will drag down economic recovery and local finance

2. Policy: In 2024, the year of real estate breakthrough, the policy inflection point has arrived

3. Forecast: 2024 real estate market scenario analysis

Fourth, demand: In 2030, it will drop to 910 million square meters of new demand, and there is still some room for the medium and long-term real estate market, and the inflection point of long-term population demand will appear

5. Short-term: Comprehensively easing to release reasonable demand, resolve main risks through multiple channels, and promote a soft landing

6. Long-term: Promote the reform of the housing system with the five pillars of urban agglomeration strategy, people-land linkage, financial stability, real estate tax, and simultaneous rental and purchase

body

1. Situation: In 2023, real estate will be "stable after high, medium and low", and the first pillar industry will drag down economic recovery and local finances

In 2023, the overall sales of real estate will be sluggish, the sales collection of real estate enterprises will be sluggish, and in addition to private real estate enterprises, individual mixed-ownership real estate enterprises will also experience tight cash flow. From January to December 2023, the top 100 real estate companies achieved sales of 5,404.95 billion yuan, a year-on-year decrease of 16.5% (-14.4% from January to November). The threshold for the sales amount of the top 100 real estate companies decreased by 4.9% from the same period last year to 11.04 billion yuan. In addition, in 2023, only 16 large-scale real estate companies will exceed 100 billion yuan in full caliber, and the number of 100 billion real estate enterprises will further decrease from 20 in 2022 and 43 in 2021. From a monthly perspective, in December 2023, the number and area of commercial housing transactions in 30 large and medium-sized cities showed a "tail" month-on-month, but the year-on-year growth was -7.4% and -11.6% respectively. The confidence and ability of short-term residents to buy houses have not recovered for the time being, and the market is still in the bottoming stage.

In 2023, the real estate market will show a trend of "first, high, medium and low and then stable", and the real estate market has cooled rapidly since the second quarter. In 2023, driven by the concentrated release of demand after the epidemic, residents' demand for housing will be released in February and March 2023. However, real estate sales slowed down significantly after Xiaoyangchun, and the recovery momentum was insufficient, and the volume and price fell in the middle of the year. At the end of August, the central government and governments at all levels stepped up policy support, and the year-on-year decline in new home sales narrowed from September to October, but the policy effect was not sustainable enough, and the market was still facing downward pressure at the end of the year.

From the perspective of new home sales, the number of new home transactions in April 2023 decreased significantly, with the number of units sold in 48 cities -28.7% month-on-month, and the number of units sold in July and August was -26.7% and -0.4% month-on-month, respectively. From the perspective of second-hand housing sales, the transactions in the sample cities in April turned from positive to negative month-on-month, the year-on-year transactions in July turned from positive to negative, and the transactions in August and September rebounded slightly. According to CRIC data, the monthly sales volume of the top 100 real estate companies in October and November was 0.6% and -4.1% month-on-month respectively. In December, the monthly "tail" increased by 15.7% month-on-month, but the cumulative performance decline from January to December continued to expand.

In 2023, the real estate market sales will be weak, real estate companies will be cautious in acquiring land, and the first pillar industry will drag down the economic recovery and local finances. At present, the mainland economy is in the process of recovery, the real estate industry is in the bottoming stage, and home buyers are not expected to have enough "income and asset prices". The real estate market is generally cold, the cash flow of real estate companies is tight, some real estate companies "lie flat and do not take land", real estate investment and government land finance have declined sharply, dragging down economic growth. According to the data of the China Index Institute, from January to December 2023, the launch and transaction area of residential land in 300 cities across the country decreased by 22.4% and 23.1% year-on-year respectively, and the absolute scale was the lowest level in the past decade. Only some cities or individual plots are hot, the overall downturn has not changed, and the investment of private enterprises is still insufficient. By the end of 2023, most cities, except Beijing, Shanghai and Shenzhen, have abolished the maximum price limit for land, but only a small number of high-quality land plots in core cities have been auctioned at high premiums, and the overall popularity is still low.

Although the policy environment continues to be loose, the property market has not yet recovered significantly due to various factors. In 2023, mainland government departments will use fiscal and monetary policies to promote "stable growth", and government departments at all levels will frequently optimize property market policies to promote the stable operation of the real estate market, and by the end of the year, the policy environment has approached the most relaxed stage in 2014. However, the poor performance of the real estate industry is mainly limited by: 1) the supply-side balance sheet shrinkage, the lack of development and promotion, the financial institutions are still cautious about housing-related credit, and it is difficult to implement the reasonable financing needs of various real estate enterprises; 2) the real estate industry is in the stage of the cycle bottoming, the expected decline in asset prices and the expected decline in residents' income, and the demand side is not as good as expected; 3) the bail-out progress of some urban real estate projects is slow, which drags down the recovery of confidence.

2. Policy: In 2024, the year of real estate breakthrough, the policy inflection point has arrived

Since 2023, industry demand and financing policies have continued to exert force, and the credit repair of real estate enterprises is also expected to accelerate in 2024, promoting the recovery of property market demand.

1. Macroeconomic policy: In 2023, we will expand domestic demand to stabilize the economy, increase fiscal and monetary policies, and do not engage in "flood irrigation", and there is still some room for policy implementation; in 2024, we can continue to increase policy expansion in a timely and appropriate manner to consolidate the foundation for the economy to stabilize and improve.

1) Monetary policy: In 2023, the monetary policy will increase counter-cyclical adjustment, and the prudent monetary policy will be precise and powerful, and the monetary policy in 2024 is expected to continue to exert force and open up policy space to meet the financing needs of the real economy. In March and September 2023, the reserve requirement ratio was lowered twice, releasing more than 1 trillion yuan of medium- and long-term funds, and the policy interest rate was lowered twice in June and August, driving the one-year LPR and LPR over five years by 20 and 10 basis points respectively, but the magnitude was smaller than the level of the mainland in 2008 and 2015, leaving room for policy. The Central Economic Work Conference set the tone for 2024 that "a prudent monetary policy should be flexible, moderate, precise and effective". It is expected that in 2024, the marginal easing of internal and external constraints faced by the mainland and the reduction of monetary policy constraints will be made, and decisions can be made according to the economic and financial operation and the internal and external situation, and the space for policy implementation will be further opened.

2) Fiscal policy: Fiscal development in 2023 will begin in the second half of the year, and the proactive fiscal policy in 2024 still needs to be moderately strengthened, improve quality and efficiency, maintain moderate expenditure intensity, and continue to be effective, so as to provide support for macroeconomic stability. In July 2023, the Politburo meeting emphasized that "the current economic operation is facing new difficulties and challenges, mainly due to insufficient domestic demand", and to this end, it emphasized that "it is necessary to accurately and effectively implement macroeconomic regulation and control, strengthen counter-cyclical adjustment and policy reserves". In the second half of 2023, the fiscal policy will be significantly strengthened, and a series of policies such as steady industrial growth, the issuance of an additional 1 trillion yuan of national bonds to increase the mainland's fiscal deficit rate in 2023, and the replacement of local hidden debts with special refinancing bonds have been introduced.

2. Real estate policy: In 2023, government departments at all levels in mainland China will frequently optimize property market policies, and the policy environment is close to the most relaxed stage in 2014. In 2024, the supply side will restore the main credit, resume financing, and "guarantee the delivery of buildings", and the demand side will restore residents' expectations for the real estate industry and restore income expectations, which is the short-term policy direction.

Since the meeting of the Political Bureau of the CPC Central Committee in July 2023 set the tone to "adapt to the new situation of major changes in the supply and demand relationship of the mainland real estate market", many ministries and commissions have clarified the direction of real estate policy optimization, and local policies have continued to be implemented. According to our monitoring, as of December this year, more than 200 provinces and cities (counties) have issued real estate regulation and control policies more than 660 times, most of the city's restrictive policies have been completely liberalized, and the four major first-tier cities have implemented the policy of "recognising houses without recognising loans", Guangzhou has relaxed the purchase restrictions in the four districts, Beijing and Shanghai have lowered the down payment ratio and mortgage interest rates, and some second-tier cities have fully liberalized purchase restrictions. In addition, with the repeated emphasis of the central government on satisfying the financing of real estate enterprises, the financing of private real estate enterprises and mixed-ownership real estate enterprises is expected to be substantially strengthened.

In 2024, the real estate policy can take a combination of long-term and short-term measures to promote a soft landing of real estate. In the short term, we should consider setting up a "housing bank" to destock the supply side, help "ensure the delivery of buildings" and restore confidence, greatly reduce the interest rate of existing housing loans, revitalize the funds of residents and real estate enterprises, and accelerate the construction of the "three major projects" to support market demand and investment start. Supplemented by medium- and long-term measures such as "urban agglomeration strategy, financial stability, human-land linkage and real estate tax" to build a long-term real estate mechanism.

3. Forecast: 2024 real estate market scenario analysis

Looking forward to 2024, we will comprehensively consider multiple dimensions, such as changes in macroeconomic policies, the restoration of real estate enterprises and residents' confidence, etc., and adopt three perspectives of optimism, neutrality and pessimism to present the future trend of real estate.

Under the neutral scenario: in 2024, the overall supply and demand are expected to continue to narrow slightly, with the sales area of commercial housing -5.3% year-on-year, the area of new construction will hover at a low level, but considering the low base in 2023, it is expected to be -8.2% year-on-year, the area of completed construction is expected to be -2.5% year-on-year driven by the "guaranteed delivery of buildings", and the amount of development investment is expected to be -4.5% year-on-year due to the constraints of sales and financing recovery.

1. Optimistic scenario

Macroeconomic:

In 2024, more than expected favorable policies will be introduced, such as multiple interest rate cuts, RRR cuts, and the economy will enter a period of transition from domestic and foreign demand growth momentum, the internal and external environment and conditions for development will be significantly improved, the GDP growth rate will return to the normal range, and residents' income will improve.

Real Estate Industry:

1) On the demand side, led by the core first- and second-tier cities, China has completely lifted purchase restrictions, the interest rate on existing housing loans has been significantly reduced, the amount of provident fund loans has been further increased, and residents' wait-and-see sentiment has reversed, reversing real estate price expectations, and sales have increased significantly.

2) On the supply side, the financing side of high-quality real estate enterprises has been strengthened with favorable policies, the "white list" and "three not less than" financing of real estate enterprises have been implemented quickly and with obvious results, the reasonable financing needs of real estate enterprises of different ownership systems have been fully met, the disposal of suspended projects in various places has been significantly accelerated, and housing banks have been established to solve the inventory problem of real estate enterprises. The construction of the "three major projects" has been accelerated, becoming the focus of housing construction investment in 2024, effectively stimulating real estate investment, and building a dual-track housing supply system of "affordable housing + commercial housing". The price restrictions of local land auction rules have been fully relaxed, and the confidence of most real estate companies has recovered, and the enthusiasm for land acquisition has increased.

2. Neutral scenario

Macroeconomic:

In 2024, the economic policy will be slightly increased and slowly relaxed, the interest rate cut and RRR cut will be similar to that in 2023, the central government will maintain the same deficit rate level, the economy will maintain the current prosperity level in 2024, and residents' income will gradually stabilize.

Real Estate Industry:

1) On the demand side, the real estate regulation and control policies continued to be loose, but did not relax beyond expectations, such as the relaxation of purchase restrictions in the peripheral areas of first-tier cities and the main core areas of major second-tier cities, the issuance of housing purchase subsidies in low-energy cities, the willingness of some residents to buy homes has been restored, and real estate prices are expected to improve slightly. The market has recovered in a differentiated manner, with sales in core cities with population inflow picking up slightly, while the real estate market in most cities with population outflow and oversupply remains sluggish.

2) On the supply side, the policies for bailing out the financing of real estate enterprises, such as the financing "white list" and "three not less than", have been implemented one after another, with clear positive signals but no increase in expectations, the reasonable financing needs of real estate enterprises under different ownership systems have been basically met, the disposal of suspended projects in some cities has been alleviated, and the confidence of high-quality real estate enterprises has been restored, and the positive trend of land acquisition has been restored. The "three major projects" will provide new increments for fixed asset investment in 2024, but the actual pull is limited and does not exceed expectations.

3. Pessimistic scenario (it should be noted that the probability of this situation is low, but it is also necessary to prevent the risk of hard landing and prevent it from happening)

Macroeconomic:

In 2024, the overall uncertainty still exists, the policy strength is less than expected, the economy will enter a slow growth range after a short recovery, and residents' income may decline further.

Real Estate Industry:

1) On the demand side, the real estate control policy did not exceed expectations or maintain the status quo, and the real estate relaxation policies introduced in various places failed to effectively boost the market.

2) On the supply side, the financing policy of real estate enterprises maintains the status quo, the financing problems involving the debt problems and potential risks of private enterprises still exist, the operating cash flow gap of insuring real estate enterprises continues to expand, the delivery progress of suspended projects in various places is slow, the confidence of real estate enterprises continues to weaken, and the enthusiasm for land acquisition continues to be conservative.

Under the neutral scenario, we make the following judgments on the expected scale of the core indicators of the real estate industry: in 2024, the macro economy will enter the recovery channel, residents' willingness to buy homes will recover, and the transformation of urban villages will be carried out as scheduled, and the sales area of commercial housing in the country may be bottomed out, with an absolute sales scale of about 1.06 billion square meters; Restricted by factors such as a large inventory for sale, it is difficult to change the downward trend of new construction in 2024, and the absolute scale of new construction is about 870 million square meters; In the past two years, the trend of land transaction shrinkage has not changed, which may lead to a further decline in land purchase costs, but the transformation of urban villages and the construction of affordable housing will make efforts, and the investment in real estate development will be about 1.10 billion yuan in 2024.

In order to achieve the healthy and stable development of the industry and prevent financial risks, it is necessary to increase efforts to break the situation in the short term in 2024 and form a "combination punch" with the long-term mechanism of real estate.

Fourth, demand: In 2030, it will drop to 910 million square meters of new demand, and there is still some room for the medium and long-term real estate market, and the inflection point of long-term population demand will appear

For six consecutive years, we have followed up on the China Housing Stock Report series and found that taking into account the urbanization process, improvement demand, urban renewal, etc., China's real estate market will decline in demand in the future, but there is still room for development in the medium to long term.

According to our estimates, the average annual new urban residential demand from 2024 to 2030 will be about 1.00 billion square meters, which is a certain decrease from the average annual new urban residential demand of 1.13 billion square meters from 2011 to 2023.

In 2024, the annual new urban housing demand in mainland China will be about 1.06 billion square meters, and the increase in urban permanent population (excluding changes in administrative divisions, the same below), the improvement of living conditions, and the demand for urban renewal will account for 28.8%, 34.5%, and 36.7% of the total demand, respectively.

In 2030, the fluctuation of total demand will drop to 910 million square meters, and the increase in urban permanent population, improvement of living conditions, and urban renewal demand will account for 20.3%, 35.8%, and 43.9% of the total demand, respectively.

The total amount and proportion of improvement demand are increasing year by year, and it is expected to surpass the demand brought by the growth of urban permanent population from 2023 onwards.

Real estate demand can be divided into three categories:

1) The demand for urbanization brought about by the new urban permanent population. In the future, the growth rate of population and urbanization rate in mainland China will slow down, and the demand for housing due to the increase in urban permanent population will decline steadily. It is estimated that by 2030, the permanent urban population will increase to about 1.07 billion, bringing an average annual housing demand of 4.9-600 million square meters (if the actual residential demand of the new permanent population is calculated, the area of housing brought by farmers bringing houses to the city caused by changes in administrative divisions should be excluded).

At the end of 2022, the urbanization rate of the permanent population was 65.2%, and combined with the average annual growth rate of China's permanent population from 2020 to 2035 estimated by the United Nations World Urbanization Outlook of about 0.85 percentage points, it is estimated that the permanent urban population in mainland China will increase from 990 million to 1.07 billion from 2024 to 2030.

2) The demand for housing improvement driven by the improvement of living conditions. Due to the rapid downsizing of Chinese households and the people's need for a better life, the demand for per capita housing area of urban residents will further increase in the future. It is estimated that from 2024 to 2030, the per capita housing area in urban areas will increase from 35.5 square meters to 37.8 square meters, bringing an average annual demand of about 390 million square meters for improved housing.

First, in 2022, China's per capita urban housing floor area is only about 26 square meters and less than 30 square meters of per capita usable area according to a coefficient of 0.7. According to Qipu data, the average household size in China in 2020 was 2.62 people, a decrease of 0.48 people from 3.10 people in 2010, and it has fallen below the number line of "three-person families".

In terms of per capita urban housing area, based on the per capita housing area of households announced by the census, China's per capita urban housing floor area increased by 2.5% and 1.3% respectively from 2010 to 2015 and 2015-2020. In the future, China's real estate industry will enter a stable and healthy stage of high-quality development, and it is expected that the per capita urban housing area will increase from 35.5 square meters to 37.8 square meters from 2024 to 2030.

3) Housing demand due to urban renewal. Residential demand of urban permanent population = housing demand of new urban permanent population + improvement demand brought about by the improvement of living conditions + urban renewal demand. Urban renewal will mainly replace shantytown reform with old reform, and it is expected that the effect of shantytown reform will gradually weaken in the future, and it is estimated that the housing demand brought by demolition and transformation will be about 3.3-360 million square meters from 2024 to 2030.

In 2020, the Ministry of Housing and Urban-Rural Development made it clear that "in future urban planning, it is necessary to abandon the rush for quick success and quick profits, as well as large-scale demolition and construction". The transformation of urban villages in the "acceleration of the construction of three major projects such as affordable housing" set by the Central Financial Work Conference in October 2023 will also focus on the improvement of dilapidated communities and the improvement of living quality in megacities, rather than demolition and reconstruction. Therefore, based on the census housing construction age data, we expect the demolition rate to be about 1.0% in 2024 and a linear decrease to 0.8% in 2030 based on the trend of the demolition rate over the years. Based on the urban housing stock data in our "China Housing Stock Report", it is estimated that the housing demand brought by urban renewal from 2024 to 2030 will be about 330 million to 360 million square meters.

5. Short-term: Comprehensively easing to release reasonable demand, resolve main risks through multiple channels, and promote a soft landing

Real estate is the first pillar industry, which is related to the employment and livelihood of tens of millions of people.

The main challenges to the current economic situation come from exports and real estate, with real estate having a particularly strong impact. In extraordinary times, extraordinary strategies are needed, and three measures can save the current real estate.

1) Take the opportunity to completely cancel the purchase restrictions, reduce the interest rate of the existing housing loans, and release the reasonable housing demand. Now that the market is sluggish, it is a good opportunity to lift the purchase restrictions. Developed countries do not have purchase restrictions for domestic residents, and they are all regulated by prices and taxes, rather than artificial administrative means. If the first- and second-tier markets are active, the release of reasonable rigid demand and rigid demand can promote the recovery of the industry. In addition, economic growth will be stimulated by contributing more land finance, taxes and fees. The complete abolition of purchase restrictions, in line with the trend of population inflow into urban agglomerations in metropolitan areas, and the linkage between people and land on the ground can alleviate the historical problems of high housing prices in the first and second tiers and high inventory in the third and fourth tiers.

Significantly reduce the interest rate on existing housing loans, including residents and real estate enterprises, and the monetary policy department supports banks to reduce debt costs through targeted RRR cuts. Now the interest rate is too high, the pressure on employment and income is high, the residents can't carry it, and the real estate companies can't carry it, so the stock interest rate should be greatly reduced.

2) Establish a housing bank, which can purchase developers' land and commercial housing inventory at a suitable price through special funds to rent housing and affordable housing, improve people's livelihood, save housing enterprises, and alleviate financial pressure. Since the second half of 2021, real estate companies have faced operating pressure and the improvement of the capital chain has been slow. At the same time, the delivery of the building is the top priority, the establishment of a housing bank, after the developer gets the special funds, the limit must be carried out to ensure the delivery of the building, so as to prevent the unfinished, resolutely not let the buyer bear the risk of real estate adjustment. The current approach is to let local governments ensure the delivery of buildings, but there is a certain amount of financial pressure on the local government, and the capacity may be relatively limited. If there is excess funds for real estate enterprises to collect money, real estate enterprises will resume investment and land acquisition, land finance will also recover, local debt pressure can be alleviated, and infrastructure construction is expected to rebound. The acquisition of inventory commercial housing and land for rental housing and affordable housing, will help improve people's livelihood, if the additional land for rental housing will lead to a certain degree of waste, killing multiple birds with one stone.

3) Accelerate the construction of the "three major projects" to support real estate investment. The construction of the three major projects, including affordable housing, urban village renovation, and "level-emergency dual-use" public infrastructure, is an important starting point for building a new real estate development model, and will further support market demand and investment in 2024. Among them, the future of affordable housing as one of the "dual tracks" parallel to commercial housing, whether it is a new affordable housing or the acquisition of stock housing for affordable purposes, it is good news for real estate enterprises. Promoting the "transformation of urban villages" can expand and standardize the existing housing business formats, and increase the business space for housing construction and subsequent property management. The construction of "level-emergency dual-use" infrastructure has also increased the demand for a large number of public construction and urban space services. In line with the policy of the financing segment, it will further support market demand and investment in 2024.

6. Long-term: Promote the reform of the housing system with the five pillars of urban agglomeration strategy, people-land linkage, financial stability, real estate tax, and simultaneous rental and purchase

We propose an industry analysis framework: "real estate looks at population in the long term, land in the medium term, and finance in the short term". If a combination of long-term and short-term measures is adopted, it is expected to promote a soft landing for real estate and avoid a hard landing, contributing to China's economic recovery and employment.

Based on our research on the housing system and real estate market in developed economies, combined with the current situation and development stage characteristics of China's housing system, it is recommended to accelerate the construction of a new real estate model with the urban agglomeration strategy, people-land linkage, financial stability, real estate tax, and simultaneous rental and purchase as the core.

1) Promote the strategy of urban agglomeration in metropolitan areas. People go with the industry, and people go to higher places. The report of the 20th National Congress of the Communist Party of China pointed out that the strategy of regional coordinated development, major regional strategies, main functional areas and new urbanization strategies should be implemented in depth.

2) Reform the "man-land linkage" with the increase of permanent population as the core to optimize land supply. Promote the linkage between the new permanent population and land supply, the balance of inter-provincial cultivated land occupation and compensation and the increase and decrease of urban and rural land, and strictly implement the principle of "linking the inventory destocking cycle with land supply" to optimize the current land supply model.

3) Maintain long-term stability of monetary policy and real estate financial policy. Stabilize home buyers' expectations and support rigid and improved housing demand. Standardize the financing use of real estate enterprises, support the reasonable financing needs of real estate enterprises, and provide a certain time window for real estate enterprises with problems to have a chance to save themselves.

4) Steadily promote the pilot of real estate tax. Real estate tax substitution of land finance is the general trend, and it is necessary to establish a scientific economic model to evaluate the impact of real estate tax on all parties in the future. At present, the economy is in the bottoming period, and the real estate has not yet come out of the predicament, and the conditions for the collection of real estate tax are not met.

5) The report of the 20th National Congress of the Communist Party of China emphasized that "accelerate the establishment of a housing system with multi-subject supply, multi-channel security, and simultaneous rental and purchase". Enriching the supply forms of commercial housing, rental housing, co-ownership housing and other categories, and forming a multi-party supply pattern of the government, developers, leasing intermediaries, long-term rental companies, etc., can accelerate the solution of housing difficulties for new citizens and young people, and promote real estate enterprises to find new growth space in the leasing business.