Editors: Weilan, Eleven
Source: Zhenghe Island (ID: zhenghedao)
In one day, Suzhou and Shanghai successively made big moves on the house.
First in Suzhou, on January 30, according to the news of the Suzhou Station of Phoenix Real Estate, Suzhou will no longer do the qualification review for buying a house.
It can be said that Suzhou, known as "China's strongest prefecture-level city", has fully liberalized purchase restrictions: the purchase restrictions on housing have been completely canceled, with no restrictions on area, number of units, and household registration.
Then, in the afternoon of the same day, Shanghai announced that non-Shanghai residents who have been in the city's social security for five years can purchase one house in the outer ring area (except Chongming District).
One day, two cities, two blockbuster policies, what is the signal behind this?
1. Real estate, hit the bottom?
In fact, there was a foreboding of the relaxation of purchase restrictions.
On November 14 last year, Guangzhou made it clear that "recognising housing does not recognise loans".
On January 27 this year, Guangzhou greatly relaxed the purchase restriction policy, firing the "first shot" of the relaxation of purchase restrictions in first-tier cities.
You must know that this is the first first-tier city since 2015 to fully optimize purchase restrictions.
It is worth paying attention to the comprehensive relaxation of purchase restrictions in Suzhou, but the successive relaxation of purchase restrictions in the two first-tier cities of Guangzhou and Shanghai is a milestone.
Why?
Because, in Suzhou last year, the purchase restrictions were actually relaxed, but a "small tail" was left, and it was also a good trend to cancel this small tail yesterday.
Here, we can first draw a timeline for canceling purchase restrictions: in 2022, most of the third-, fourth- and fifth-tier cities will no longer have purchase restriction measures; in September 2023, second-tier cities will cancel purchase restrictions one after another, mainly including 12 strong second-tier and provincial capitals such as Nanjing, Hefei, Jinan, and Qingdao; In January 2024, the first-tier city of Guangzhou will be close to fully canceling purchase restrictions;
On January 30, Suzhou, a strong second-tier city, completely lifted purchase restrictions, and Shanghai optimized and adjusted its purchase restriction policy.
At present, the cities that have not fully lifted the purchase restrictions are:
First-tier cities, Beijing, Shanghai and Shenzhen, and second-tier cities, Tianjin, Chengdu, Xi'an, Hangzhou.
And with the gradual lifting of purchase restrictions, it is time to really test the gold content of the property market.
Let's take a look at the summary of the key points of Guangzhou's relaxation of the purchase restriction policy:
1. The purchase restriction of houses with an area of more than 120 square meters will be lifted in the city, and outsiders will be encouraged to buy improved houses;
2. In essence, Guangzhou residents are completely unrestricted from buying, and they can continue to buy after renting or listing the original house for sale, without being restricted by the area;
3. There is no restriction on the transfer of commercial apartments.
It is worth mentioning that there is another point that accompanies the release of Guangzhou's purchase restriction policy, which is very important but also easy to be overlooked:
Further improve the supply structure and policy system of public rental housing, affordable rental housing and allotment-type affordable housing.
It means: I don't want outsiders to come in and speculate on the housing prices that just need them, so that more migrant workers can take root in Guangzhou, and at the same time welcome more outsiders to come to Guangzhou to participate in urban construction and share development dividends.
Behind this is the government's intention to practice the "dual-track system" of learning from Singapore, by dividing the attributes of houses, so that real estate can be fully marketized.
So, here comes the question that everyone is most concerned about.
First-tier cities have also begun to fully relax purchase restrictions, which means that real estate will hit the bottom in 2024?
Gao Shanwen, a well-known macroeconomist, pointed out in an article a few days ago:
The current real estate market, both in terms of investment and the corresponding residential sales area, is significantly lower than its long-term reasonable center.
That is, the real estate market is still in a period of adjustment, but the excessive downward adjustment of real estate triggers an overreaction in the market, resulting in a downturn in the real estate market.
In Gao Shanwen's view, under ideal conditions, some leading real estate companies can resume financing under normal market-oriented conditions, and financing cash flow can return to normal, which is the most reliable sign of the liquidity crisis.
The real estate market needs a certain recovery period, but it is not certain that it has bottomed out.
In addition, if we look at it in the long run, China's urbanization level needs to reach 75%-80% from 2035 to 2050, and compare the urban development process of developed countries such as Europe and the United States.
China's real estate will undoubtedly usher in an era of great divergence.
Second, the release of purchase restrictions means lying flat and returning to the "old way"?
Perhaps, many people may still have questions:
First-tier cities such as Guangzhou and Shanghai have successively relaxed their purchase restriction policies, including on January 26, the Ministry of Housing and Urban-Rural Development also proposed to give full autonomy to urban real estate regulation, and cities can adjust real estate policies according to local conditions.
Does this mean that we have given up the concept of "housing for living, not for speculation" mentioned in the past? We have to go back to the old way and return to the traditional model of real estate?
First of all, let's be clear.
Guangzhou's release of the purchase restriction on large houses this time is to let the house return to the market and return to the attributes of commodities.
The concept of housing is to make the house a market commodity and meet the balance of supply and demand in the market, rather than just simple control, resulting in more control, but an irrational bubble valuation of the house.
Therefore, whether it is the control in the past or the current liberalization, it is a means, and its purpose itself is the implementation of the main line of "housing not speculation".
Today, the fundamentals of real estate have changed: China has entered a period of major structural transformation of the real estate industry, that is, the era of buying a house as a speculation and achieving overnight riches is over, and the house has returned to the attributes of housing and investment value.
If at this time, many people still follow the idea of the traditional real estate development model in the past, this kind of thinking is destined to be unsustainable.
In the past, the logic of the traditional real estate development model was to build a good house and then sell it to make a difference, and as for the rest, it was a means to support this logic.
This requires most real estate companies to constantly buy land, and then build and sell houses. In addition to the real demand for living, it also needs rising housing prices. The continuous rise in housing prices has given rise to many negative effects:
On the one hand, the investment property of the house turns into a speculative property.
Many people who increase leverage may buy assets that are not of high value in the long run, and once the economic fundamentals, environment, and demographic factors change, these assets will depreciate;
On the other hand, real estate, as a heavy asset, is inherently financial, and a slight relaxation of local supervision may lead to excessive integration and linkage with finance, resulting in a variety of risks: local governments will be overly dependent on land finance; the real economy cannot do the real economy with peace of mind, and also wants to invest in speculative real estate; young people are facing huge pressure to buy houses, and there is more pressure on job choice, marriage, etc. Some low-income industries are not considered, which will also crowd out the ability of the real economy to obtain resources, and high housing prices will increase the labor cost/burden of enterprises;
……
Behind the traditional development model is the triangular relationship of "real estate-local government-finance", and the common interest of these three subjects is the continuous increase in land prices and real estate prices. Only if this logic remains unchanged will it be possible to continue the old development model.
But today, we see that in order to effectively control the real estate industry, the formation of three red lines, bank loan concentration restrictions, and centralized land supply control pattern have promoted the real estate industry to enter a period of major structural transformation.
The real estate industry is destined to not return to the past model and method, if you try to take the "old way" of real estate, it is undoubtedly to "drink doves to quench thirst".
3. Real estate, the next three stages
Although there is a consensus among most people that real estate is unlikely to return to the "old ways".
However, how to find a new development model and explore a path for the transformation and development of the real estate industry with Chinese characteristics requires the concerted efforts of the government, enterprises, the financial system and regulators.
Among them, it is necessary to consider the short, medium and long-term stages of the new real estate development model:
The first stage (1~3 years): immediate/short-term, focusing on the residential market to explore a new development model
At this stage, it is first necessary to make it clear that the "old development model" is still the foundation and that it should play a supporting role in the transformation and development.
From the perspective of regulators and the state, the short-term goal of the real estate market is to stabilize land prices, house prices, and expectations.
Therefore, on the one hand, the bottom line of the entire real estate is that systemic risks cannot be detected and there is a "hard landing";
On the other hand, we should not relax policies because of risk prevention, which will lead to a new round of housing price increases, or further increase the binding relationship between finance and real estate, and then form new systemic risks.
From the perspective of market participants such as real estate enterprises and local governments, on the premise of preventing systemic risks, they can take the lead in testing the waters around the residential market to explore "new development models", such as rental housing, renovation of old communities, property and community services, etc.;
Then, we will further make extensive attempts and apply the "asset-light" model to increase our own service industry dimension, and provide value-added services and asset management other than basic property management around community/residential properties.
In any case, the current situation may not be enough to solve the problem by relying solely on bottom-up, purely market-oriented forces, and purely by monetary policy.
First, it is necessary for the central government to have a clearer and unified understanding of the situation, and to take the lead in the overall planning and coordination of various ministries and commissions and localities from top to bottom to accomplish various goals.
Second, the real estate industry cannot be "left alone", and the macroeconomic fundamentals need to be stable and improving. At present, the real estate industry has fallen into some negative cycles, such as: "real estate is not good, the economy is not good, the economy is not good, the economy is not good, real estate is not good......
The improvement of the industry ultimately requires the improvement of residents' ability and willingness to buy houses. The industry still needs to rely on the "old development model" to avoid a "hard landing" and help China's real estate industry smoothly transition to the "new development model".
The second stage (3~5 years): the medium-term exploration of a "new development model" around the broad real estate industry
As for the second stage, first of all, the entire real estate market has solved the systemic risk problem in the industry and entered the stage of stable and healthy development and virtuous cycle.
On the one hand, the real estate market has built a diversified, multi-level, multi-subject, multi-form, and reasonable housing supply model that can meet the reasonable needs of residents such as rigidity and improvement;
On the other hand, at the level of simultaneous rental and purchase, a housing supply structure and model that conforms to the "long-term mechanism" and meets the interests of the broadest range of people have also been formed, that is, the ratio of rent to purchase is equal, or gradually approaching, and the proportion of rent in the stock supply of housing is increasing.
Secondly, the real estate market as a whole is further exploring a "new development model" in the field of real estate in a broad sense.
In terms of "living", we will explore rental housing and residential properties, as well as continue to renovate old urban communities, and establish a set of business models that can be self-financing and virtuous cycle.
In terms of "non-residential", it will vigorously turn to all businesses, formats, tracks and fields that serve the "new development model". We can start with the real estate fields supported by national policies, such as warehousing, industrial parks and other infrastructure, and further build asset-light service capabilities in real estate such as shopping malls, office buildings, and industrial parks, including agency construction, agency operation, value-added services other than rent and basic property management, and asset management.
At the same time, it is also necessary to increase resource input and support in the financial field.
When the real estate market enters the stage of steady and healthy development and virtuous cycle, and the path of the "new development model" is clearer, under the guidance of supervision, the financial system will also begin to explore the provision of financing policy support for other real estate sectors.
The third stage (5~10 years): long-term completion of the construction of a "new development model" in the field of real estate in the broad sense
At this stage, the real estate has achieved an overall virtuous cycle and stable and healthy development.
At the same time, major market players have also found their new roles, tracks, and positioning, entered a relatively stable growth path, and can rely on the "new development model" for sustainable development, and the real estate industry has achieved transformation and "balance" in several major areas:
1. Housing supply and structure: balance between "rent" and "buy" to cater for the widest range of people;
2. Policy: It is necessary to find a balance between housing regulation and control (housing for living, not speculation) and policies for real estate in the broad sense, so as not to affect the investment, financing and business development of other real estate formats because of the policy of "housing for living, not for speculation";
3. Relationship with assets: find a balance between "light" and "heavy", and a larger proportion of business is asset-light;
4. In terms of the relationship between increment and stock, manufacturing and services: from increment/real estate/real estate to stock/real estate and community operation and services, market players should find a balance between the two business models and types.
In the financial sector, the investment and support of real estate resources should also match the "new development model" to achieve transformation:
First of all, it is necessary to get rid of the dependence on the development and sales model of new housing, and provide financial support for different types of businesses, formats and models (heavy vs. light, manufacturing vs. service, residential vs. non-residential, etc.) for the development, investment and operation services of real estate in a broad sense.
Second, we need to achieve a better balance between equity and debt financing, and help the real estate industry achieve overall "deleveraging".
The connection between finance and real estate should always be clear, and it should be efficient, market-oriented, strictly abide by the bottom-line thinking of financial risks, conform to the policy program of the real estate industry, and serve the national strategy.
In fact, from market players/participants, regulators to the whole society, they all need to think about the development of the real estate industry in the next one to two years, three to five years, and five to ten years, and think about what the new development model of China's real estate is, at what speed and pace of transformation, and in what direction of development.
Perhaps there are still many variables and uncertainties in the evolution of the future situation of real estate, but I hope that each of us can still have confidence and go through the cycle of the industry.
After all, there is no winter that is insurmountable, and there is no spring that will not come.
References: [1]."Real Estate Transformation and Reshaping: Exploring the New Development Model of China's Real Estate", Chairman Rabbit, CITIC Press[2]."Real Estate, Great Changes!", Zhenghe Island[3]."Another One, Just Cancel the Purchase Restriction, I'm Afraid It's Not Enough", Mr. Middle Class[4]."First-tier Cities, Relax the Purchase Restriction!", Zimu Chat House
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