Is it "stupid" or "wise" to sell the house now? Wang Jianlin said in one sentence and understood
In recent years, China's property market is entering a new stage of in-depth adjustment under the background of the continuous introduction of real estate market regulation policies and profound changes in the relationship between market supply and demand. Official statistical reports and real-time market observations reveal this unprecedented correction.
Although some have claimed over the past few years that house prices have not fallen in real terms, but only by how much, this is not the case. Since the second half of 2021, China's property market has shown a clear pattern of adjustment. Although the price of new homes in the bustling areas of first-tier cities and some second-tier cities seems to have risen due to the characteristics of new property launches and supply structure, this has not masked the overall decline in the market.
In fact, the average price of the second-hand housing market, which best reflects the true face of the property market, has been falling for 20 months. According to the data jointly monitored by a number of authoritative institutions, as of the end of last year, the prices of second-hand houses in representative 100 cities fell across the board. This trend is not only evident in first-tier cities, but also extends to second-tier and even some third-tier cities. The reasons for this are complex. The gradual deepening of regulatory policies has effectively controlled the overheating of the real estate market, the demand for speculative housing has shrunk significantly, and the market has gradually returned to rationality. In addition, changes in population mobility and urbanization have also led to an oversupply of real estate in some cities, which in turn has led to a decline in housing prices.
In the current market environment, speculators' expectations for rising housing prices have vanished, and they have chosen to sell off their backlog of properties. Observing the current situation of the second-hand housing market in many cities across the country, it is obvious that a large number of second-hand housing is pouring into the market, and the supply of second-hand housing in many cities has far exceeded the demand, forming a serious oversupply situation. As owners are eager to sell their properties, the selling pressure on the current second-hand housing market continues to increase, which has directly led to the continuous decline in second-hand housing prices. The decline in second-hand housing prices has dealt a heavy blow to the new housing market. It is foreseeable that with the continuous intensification of the selling pressure of second-hand housing, the price of new housing will also be affected, and it may decline along with the price of second-hand housing.
In 2024, various places will increase their efforts to rescue the market, which makes many people who are ready to sell their houses start to worry. So is it "stupid" or "wise" to sell the house at a lower price now? But if you don't sell it, according to the current downward trend of housing prices, you are worried that you will lose more in the future. In fact, on the question of whether to sell or not, Wang Jianlin of Wanda Group is the most convincing.
In 2017, Wang Jianlin decisively announced that Wanda would completely withdraw from the real estate industry, and he did not hesitate to sell off more than 70 hotels and cultural tourism projects. It is a boom period in the real estate market, and people are full of curiosity about whether Wang Jianlin will have a follow-up big move. It was not until 2019 that he once again made it clear at the company's annual meeting that Wanda would completely abandon the real estate business and not leave a single square meter. At this time, everyone really understood that Wang Jianlin had made up his mind to take the road of asset-light operation. However, coincidentally, in this year, Evergrande Group's stock price fluctuated violently, and then it issued an announcement admitting that there were serious problems in the company's capital chain. Is this just a coincidence? The answer is clearly no.
Just like the prophet of Chunjiang plumbing duck, the bigwigs at the forefront of the real estate industry have a keen insight into market changes. However, what is surprising is that in the past two years, Wang Jianlin has started to sell houses again, and since May 2023, he has successively sold 10 Wanda Plazas, all over Shanghai, Taicang, Huzhou, Guangzhou, Xining, Jiangmen, Beihai, Xiamen and other places. What is the reason behind this? Perhaps, by looking back at his real estate views in recent years, we can get a glimpse of it.
1. The real estate industry cannot thrive forever
"No country's real estate industry has been thriving for more than 50 years, and Wanda's shift to the cultural industry is precisely for long-term development in the future. This is the fundamental reason for the transformation of Wanda Group under the leadership of Wang Jianlin. In fact, Wanda Group's transformation strategy has been remarkably successful. Although its debt ratio is currently at a healthy level, when we look at the current debt pressure faced by real estate companies and the challenges of the 'three red lines', it is not difficult to find that Wanda Group has moved away from the risk center.
Looking back on the past 20 years, the real estate industry in mainland China has experienced rapid development, and in some respects has even surpassed the accumulation of developed countries in Europe and the United States for hundreds of years. According to the National Bureau of Statistics, the per capita housing area in mainland China has exceeded 39 square meters, which significantly exceeds the 33 square meters per capita housing area of urban households in Europe and the United States. In addition, data from the central bank's survey team shows that 96% of urban households in the country already own their own homes, with an average of 1.5 houses per household. These data undoubtedly reveal the fact that the mainland has a surplus of housing resources. The essence of real estate is to provide people with living space, and population is the key factor that determines the development prospects of the real estate industry. Therefore, the current overabundance of housing resources heralds the end of the golden age of the real estate industry. "
2. Optimistic about the property market in first- and second-tier hot cities, not optimistic about the development of the property market in third- and fourth-tier cities
Wang Jianlin is relying on the rise of the real estate industry, in the face of the audience's questions about the trend of housing prices in the next 10 years, Wang Jianlin said frankly: "In the next 10 years, there is still room for housing prices in China's first- and second-tier cities to rise, which is mainly due to the promotion of urbanization. However, for third- and fourth-tier cities, especially county seats, where there is a net outflow of population, the room for housing price growth will be limited. Looking back at the trend of housing prices over the past eight years, we find that Wang Jianlin's forecast for housing prices in first- and second-tier cities is basically consistent with the actual situation, but there are some differences in third- and fourth-tier cities.
Still, Wang's prediction wasn't entirely wrong, and he failed to fully account for the policy's far-reaching impact on housing prices. Originally, due to the lack of population and economic support, many third- and fourth-tier cities lacked momentum for housing price growth. However, the implementation of the monetized resettlement policy for shantytown reform has injected a lot of money into these cities and spawned a number of relocated households with purchasing power, thus driving up housing prices. However, with the end of the shantytown renovation and demolition project in 2020, these cities have lost financial support and the purchasing power of the relocated households. For economically developed cities with a continuous outflow of population, as well as areas where housing prices are already seriously high, the basis for housing price increases no longer exists, and the likelihood of a decline increases significantly. Thus, while Wang's prediction partially came true, policy factors played a key role.
It is not difficult for us to find that Mr. Wang Jianlin's prediction eight years ago is very forward-looking from the perspective of experts. This also reflects from the side that the real estate market in first- and second-tier cities in the future may still have the potential to rise, as he said. This trend is not accidental, and first- and second-tier cities have naturally become a strong support for housing price growth due to their strong development potential and continuous population inflow. Although the state has continuously introduced regulatory policies aimed at promoting the steady development of the real estate industry, the rise in housing prices in first- and second-tier cities is still logical under the dual impetus of the economy and demographic dividend. Looking ahead, the differentiation of housing prices between cities will become more and more obvious, with the strong always strong and the weak always weak, which will be the new normal of the real estate market.