The Great Change Has Come......

Original Liu Xiaobo

A vigorous "supply-side revolution" in the property market is starting from the fourth, third and fifth tier cities, which will affect the lifestyle of most Chinese people.

Today (January 22), a number of media paid attention to the "New Deal for Urban Renewal" in Xiangtan, Hunan. However, it is a pity that the media did not grasp the key points, and only focused on "allowing land division" and "commercial settlement".

What's more important is the content in the red box below.

On the official website of the Xiangtan Municipal Government, I found the original text of the "Several Measures to Strengthen Land Use and Promote Urban Renewal in Xiangtan City (Trial)", in which the original text of Article 6 "Supporting the Development of Improved Housing" is as follows:

Guide real estate enterprises to provide diversified products, increase the proportion of high-quality, green ecological and health care housing development, and give priority to improving housing projects in the annual land supply plan. Encourage the introduction of improved residential products such as large flats, fourth-generation residences, and low-rise low-density residences, relax the requirements for the control of the surface width of residential buildings, encourage innovative design within buildings, cancel the restrictions on high and low allocation, and build residential products other than low-rise buildings with single-family houses.

After the release of the annual meeting of the Ministry of Housing and Urban-Rural Development, I wrote that the "good house" was mentioned seven times in the draft, which means that the property market has undergone a historic change. In the past, it was to solve the problem of "whether it is good or not", and in the future, it is to solve the problem of "whether it is good or not".

Under this principle, a series of historic changes have taken place in the property market:

First, Circular No. 14 of 2023 clarifies that what is guaranteed is guaranteed and what is protected is commodity. In the future, the placement of affordable housing will be completely closed for circulation and cannot be converted into commercial housing for free trading. Commercial housing will mainly build "good houses", and no longer emphasize rigid needs.

Second, under this line of thinking, the old methods such as the "7090 policy", "ban on villas", "land auction price limit", "new house price limit", and even "second-hand housing transaction reference price" will be gradually abolished.

In the future, the commercial housing market will mainly develop improved housing and encourage differentiation and luxury housing.

Recently, a number of third- and fourth-tier cities have issued documents like Xiangtan. For example, Lianyungang:

Another example is Nantong:

China's cities are being divided into "two groups" to usher in a new era of property market.

The first group is the mega and mega cities represented by Beijing, Shanghai, Guangzhou and Shenzhen, which are mainly engaged in affordable housing, urban village transformation, and redevelopment of inefficient land. In such cities, there is a large number of immigrants, and there is still a lot of room for improvement in the self-owned housing rate, so the focus of future work is still to solve the problem of "whether there is housing", and at the same time, it has begun to pay attention to the problem of "whether it is good or not".

The second group is the third-, fourth- and fifth-tier cities represented by Xiangtan, Lianyungang and Nantong, focusing on fourth-generation residences, large flats, and courtyards. In these cities, the migrant population is small and the self-ownership rate is high, so the focus in the future will be to solve the problem of "good or bad" housing.

There are more people living in third-, fourth- and fifth-tier cities than in megacities and megacities. Therefore, the new trends in third-, fourth- and fifth-tier cities have a more far-reaching impact on China's property market.

What kind of house is a "good house"? The definition is diverse, and in the end, it is up to the people and the market to have the final say.

However, the official still gave a definition first, which can refer to the expression in the latest document of Xiangtan, and its theme words are: large flats, fourth-generation houses, low-density houses on the ground floor, etc.

What is a "fourth-generation home"?

The "generational division" of housing is roughly as follows: in ancient China, the thatched houses of the common people were the first generation of houses, the later brick bungalows were the second generation of houses, and the multi-storey, high-rise units that have been popular in the past 40 years were the third generation of houses.

The so-called fourth-generation house, Baidu's entry describes it like this:

It is a derivative of green building, which integrates and superimposes the characteristics of traditional Chinese architecture courtyards, alleys and alleys, low-rise villas and third-generation housing elevator rooms, and can develop into high-rise buildings, also known as "sky courtyard houses" and "sky urban forest gardens". Each floor has a shared public courtyard and open streets and alleys where people can drive their cars to the door of their homes, and each household has a private yard where it can live an idyllic life of planting flowers, vegetables and dogs, and the exterior walls of the building are covered with plants.

Here's what it looks like:

Maybe some friends suddenly realized: Isn't this kind of house already there?

Indeed, fourth-generation homes have already appeared in some cities, such as a "forest garden" in Chengdu, which is known as China's first fourth-generation home. Some avant-garde office buildings have also been made to look like this, such as the Country Garden headquarters building.

But the question is, is such a house comfortable to live in?

On the Internet, there are many voices complaining about the above projects.

The main problem that netizens complain about is: in order to maintain the uniformity of appearance, the green plants on the balconies of each family are planted uniformly, not what each family wants to plant, and it is a unified maintenance of green plants, and the cost must be paid. Greenery will affect indoor lighting, but it cannot be pruned at will (whether this is still required to be further verified). Green plants can bring problems such as mosquitoes and dampness.

The advantage is that in order to encourage fourth-generation housing, developers are allowed to "expand the area" or partially exclude the area, and the area of the house is often more than the floor area. Even so, the occupancy rate of the project is not high.

To be honest, I don't like this lush architecture either. I pay more attention to daylighting, I want to stay away from insects, ants and ants, and I want to have the power to manage my balcony.

My ideal fourth-generation home would look like this:

First, the right to design and set prices should be completely handed over to the market, so that there can be truly improved housing that is full of flowers and suitable for different needs.

Second, if you buy a house by yourself, you must have the right to decide what to plant on the balcony (within the scope of not affecting public safety) and whether to plant greenery. If you buy a house yourself, you can't decide what to have on the balcony, it's not as good as a first-generation house.

Third, the biggest pain points of the third-generation housing are the small proportion of parking spaces and elevators, poor sound insulation, floor height, small surface width, low level of property management, insufficient façade grade, incomplete community facilities, and not green and low-carbon enough.

The house that solves the above pain points is the real fourth-generation house and improved house. We can't be too radical and superficial in green and low-carbon. Either a house full of greenery is green and low-carbon. Green plants affect lighting, and you need to turn on the lights during the day, so it is not low-carbon.

Fourth, in the fourth-generation house, don't rush to set the standard, let the bullets fly for a while, and let the market create and play on its own.

In short, the era of great change in the property market has arrived.

The cause of the great change is that in the vast majority of cities, the problem of "whether housing is available" has been solved. Ordinary people want to have improved housing, and the development of this kind of housing can allow the property market to continue to drive the economy and create a huge amount of demand.

Third-, fourth- and fifth-tier cities are the first to enter the era of pursuing "good or bad" because of the small incremental population and small foreign population, and the first- and second-tier cities will be a few years later and will eventually enter this era.

In the future, commercial housing will be highly differentiated, personalized luxury homes will continue to emerge, superimposed with good location, good facilities, the price will be very high, intermediate improvement, entry-level improvement and other products will also emerge to meet the needs of families with different purchasing power.

The value of high-density, just-in-demand housing built in the past will be suppressed. In particular, ordinary prefecture-level cities, county-level cities, and county towns are still vacant in rigid demand and high-density real estate, and the future fate is worrying. A considerable number of them will be demolished after years of vacancy.

If the third-generation housing is not in the core area of the big city, the ability to resist inflation will continue to decline, or even lose this ability.

Just as I was about to finish this article, the stock market continued to break down, and the Shanghai Composite Index fell more than 40 points. Today's market has seen an irrational overshoot, and it is time for the "visible hand" to intervene strongly.