After several years of deep adjustment, China's real estate reached its peak in 2021, and then experienced two consecutive years of heavy decline, is there still a chance in this market?
In 2024, we need to focus on three important signals, grasp the trend and the timing of the start, and you still have the opportunity to catch the splash of wealth.
After more than 20 years of development, China's real estate industry has become more and more problematic due to the lack of housing to the surplus of the industry, coupled with the three-high model of "high turnover, high leverage and high debt".
Two days ago, we sorted out the real estate data since 2010 and found that the 12 years from 2010 to 2021 were the golden age of real estate, and the sales scale of the industry grew rapidly from 5.25 trillion yuan to 18.19 trillion yuan, a full 3.5 times increase.
In the past 12 years, the per capita housing area in urban areas has grown from 31.2 square meters (floor area) to 37.8 square meters.
The adjustment of the direction of real estate began in December 2016 when "housing is not for speculation", and since then various regulatory policies have been continuously increased until the three red lines reached their peak in 2020.
This is the first time that real estate has turned the ship's head, and some experts say that it is the most severe and long-term policy to restrict speculation and burst the financial bubble.
This transformation process has not taken us four years to complete, and the risk of a bubble in the real estate sector is still high.
The scale of the industry reached its peak in 2021 and began to turn downward in 2022, with the total sales of commercial housing reaching 13.33 trillion yuan, a year-on-year decrease of 26.72%, and 11.66 trillion yuan in 2023, a decrease of 6.5% again. In two years, it has dropped by 6.53 trillion yuan, a decline of 36%.
At the beginning of 2024, the big question is, has the industry fallen to the bottom?
The central bank believes that it is basically the end. At the end of 2023, the central bank has repeatedly voiced that the mainland real estate market is undergoing a major transformation after more than 20 years of long-cycle prosperity and is looking for a new equilibrium point.
The Ministry of Housing and Urban-Rural Development has also issued similar signals on several occasions. On December 13, 2023, the leaders of the Ministry of Housing and Urban-Rural Development said at the 2023-2024 China Economic Annual Conference that from January to November, the sum of primary and second-hand houses achieved positive year-on-year growth, which shows that housing demand remained stable, and there was no significant contraction, but the transaction structure changed, and second-hand housing transactions replaced some new housing transactions.
On November 27, 2023, S&P Global Ratings released a report titled "Bottoming and Equilibrium: A 2024 Outlook on Credit Trends in the Real Estate Development Industry." According to the report, 2024 is still the year of the bottom of real estate sales, but the market will not fall sharply again.
Therefore, we see that the state has begun to take action, from the "three major projects" to be established first and then broken, to repeatedly emphasizing that the financing of enterprises with different ownership systems is treated equally, and then to adjusting the property market policies in Beijing and Shanghai at the end of 2023, the ice of the property market is breaking.
The tail-end market in first-tier cities in November and December 2023 also shows that the market is gradually changing from the state of "not the coldest, only colder" in the past.
In 2024, it will be the second time that China's real estate will turn the ship's head. This time, the market is gradually stabilizing and shifting to residential properties.
So the property market in 2024 will be more complex and tangled, and you may see both cold and positive. In this new situation, no matter which city's property market you want to understand, you must carefully see three important signals.
The first important signal is whether the transaction volume of second-hand homes exceeds that of new houses.
If the second-hand housing does not exceed the new housing, it means that the city is still a little hot, and many people still want to speculate. If it exceeds, it means that the city has returned to rationality and officially entered the stock era, and you can consider buying second-hand houses.
The second important signal is how big is the scale of the release of rigid demand and improved demand?
After real estate enters the era of residence, rigid demand and improvement are the main demand, and the main goal of most people's purchases will also point to second-hand housing, and few people take the risk of buying new houses in the far suburbs.
If the above two signals occur at the same time, it is a sign that the city's real estate industry has entered a mature period. The mature market of developed countries in the world has entered the era of stock, and second-hand housing transactions account for more than 80%.
At the same time, most people who buy houses are just in need and need for improvement, and only a few people who are really rich and willing to take risks dare to go out and speculate.
The third important signal is how big is the scale of family investment to buy a house?
As we said before, supporting families to hold a small amount of property normally as one of the investment options is also a normal need of ordinary people. Therefore, the policies of many cities have already supported second homes, especially the down payment and interest rates have also been reduced.
In the current environment, many families have not much investment direction, and taking real estate as an option for family investment is a sign of the maturity of family investment and one of the signs of the maturity of the real estate market.
Therefore, in 2024, we must look at real estate more rationally, no longer expect big rises or falls, but carefully look at the trend behind the data.