There are more and more "bailouts", what signal does it send? Expert: The future real estate decline may become the norm
In the past year, the government has made great efforts to promote the development of the real estate market, which is like a spring breeze blowing on the face, making it vibrant. According to statistics, in 2023 alone, more than 700 bailout policies have been launched in various places, showing a significant increase compared with 2021 and 2022. This undoubtedly shows that the policy environment of the property market has been unprecedentedly improved this year.
However, with the relaxation of property control policies, people have begun to worry about the rise in housing prices. After all, there are still many people who are convinced that house prices will rise. Well-known experts such as Dong Mou, a professor at Beijing Normal University, Zhang Wuchang, an economist, Li Tie, an expert on small and medium-sized towns, and Meng Xiaosu, an expert on housing reform, all hold the view of rising housing prices. Among them, the views of expert Meng Xiaosu are particularly eye-catching. He pointed out that the demand for housing is still huge, and that housing is in short supply in most cities and regions. Once the property market control policy is relaxed, housing prices are bound to continue to rise.
Professor Meng Xiaosu's conservative views stand in stark contrast to Professor Dong Pan's bold predictions. However, when we dig deeper into the issue, we find that the reality is much more complex than any single point of view. Professor Dong's optimistic outlook for housing prices is based on the fact that there is still a large influx of rural people from the mainland to the cities. He predicts that as urbanization progresses, housing prices in first-tier cities will soar to 800,000 yuan per square meter in the next 10-20 years. Such predictions are undoubtedly staggering, but is this really the case?
Judging from the data, the urbanization rate of the mainland does still have room for growth, but the population growth has shown a stagnation trend, which has a direct impact on the demand for housing purchases. At present, the homeownership rate of urban households is quite high, which means that the housing needs of most people have been met. Therefore, it remains to be seen whether the future trend of housing prices will be as Professor Dong Pan said.
The government has introduced a series of property market policies to encourage home purchases, but the sales data for 2023 shows that the property market has not picked up significantly. According to the statistical reality, the sales area for the whole year of 2023 will also decrease by 8.5% compared to 2022. In this way, the sales area has dropped by nearly 40% compared to 2021. This status quo has left home buyers hesitant and banks anxious. The debt situation of real estate companies has not been alleviated by the decline in sales, which has led to huge operating pressures on them. If the real estate company is unable to stabilize the source of funds, it will trigger a series of chain reactions, affecting employee salaries, supplier payments and bank interests.
With the frequency of "bailouts", we can't help but ask: what kind of signal does this send, and does it indicate that the property market will gradually pick up in the future? However, experts believe that future property market declines may become the norm. So, why do the frequent bailouts in various places lead to such a conclusion? In fact, there are two main reasons:
1. The market has been rescued all over the country, which reveals a fact that cannot be ignored: the property market is facing an unprecedented predicament. As one of the pillars of the country's economy, the real estate industry is particularly influential in some cities. However, the downturn in the property market has led to a loss of confidence and home sales are becoming increasingly difficult. For new houses, especially off-plan houses, due to the shortage of funds of real estate companies, the possibility of quality problems, delayed delivery and even unfinished projects is increasing. As the second-hand housing market took a hit, many investors began to sell off in large numbers, causing its prices to continue to decline. However, the influx of second-hand homes poses a threat to the new housing market and has had a significant impact on real estate in some cities. But on the other hand, the inflow of a large number of investors' properties into the market has also curbed speculation in the property market.
2. People's confidence in the property market is gradually disappearing, indicating that the house will return to its essence of living. The introduction of the bailout measures just revealed the cold situation of the property market. The current bailout policy is constrained by the principle of "housing for living, not speculation", and its main role is to maintain the stability of the property market, help the real estate industry tide over the difficulties, and protect the rights and interests of home buyers. For speculators, the full lifting of purchase restrictions and large-scale bailouts as in the past no longer exists.
Therefore, even if local rescue policies are introduced, the impact on the overall trend of real estate is limited. In some areas where housing prices are too high, a correction in housing prices is still an inevitable trend. However, for those first- and second-tier hotspot cities that continue to attract population, as the population grows, the demand for housing is also rising, and housing prices will naturally continue to rise.