The central authorities have made it clear that these four types of houses will be included in the scope of demolition in the future
As housing prices continue to soar, a house is more than just a place to live, it has become a sought-after investment tool and a symbol of wealth. Housing prices in county towns have climbed to seven or eight thousand yuan per square meter, while in bustling first- and second-tier cities, housing prices are as high as tens of thousands of yuan per square meter. Therefore, buying a property is almost equivalent to owning a million assets. In short, owning a house means having a starting point with a million dollars, which was undoubtedly a symbol of millionaires in the past.
Due to the continuous rise in housing prices, more and more people are devoting themselves to real estate investment, hoping to achieve rapid growth in wealth through real estate. In this process, a large amount of social wealth has gradually flowed into the real estate industry. According to statistics, real estate fixed assets account for more than 70% of the total wealth of urban households in the country. Therefore, the house has undoubtedly become the core pillar of a family's wealth.
When it comes to demolition, it is even more exciting, because it has the potential to make people rich overnight. Demolition has become almost synonymous with getting rich. Over the past decade or so, we have witnessed too many cases of people getting rich overnight due to demolition. Ordinary families have received millions of demolition funds due to demolition, and even more than a dozen resettlement houses have been obtained. Such stories have happened in various cities, especially in first-tier cities such as Beijing, Shanghai, and Shenzhen, where many evicted households have amassed hundreds of millions of dollars. For most people, this rate of wealth accumulation is difficult to achieve even if they work hard for a lifetime. However, for the demolition households, this is just an unexpected surprise brought by the demolition, and it has achieved a huge change in life. Although some people are dissatisfied with this, deep down, who doesn't want to be that lucky demolition household?
In the tide of rapid economic development, the pace of urban construction on the mainland is accelerating day by day. As the city continued to expand, demolition became an integral part. Urban villages and their surrounding villages have disappeared one after another, and demolition households have sprung up. However, with the introduction of the shantytown reform policy, the renovation of the old city has become a new focus. When the urban village gradually disappeared, the old community gradually became the main battlefield for demolition. Since 2005, the state has launched demolition and renovation projects for shantytowns and dilapidated houses in old urban areas, which has greatly improved the living environment of residents and injected new vitality into the city. It can be said that the shantytown reform policy is like a spring breeze, bringing new life to the old city.
However, in the past few years, the number of shantytowns in the mainland has been very small, and instead of the old reform policy, those old neighborhoods are no longer demolished, but renovated. There are two reasons for this: First, after more than 10 years of shantytown renovation and demolition, most of the shantytowns and dilapidated houses with hidden safety hazards in the country have been properly dealt with. Most of the old houses that are currently being demolished and stocked are only slightly dilapidated, and the quality is not a big problem. Second, in 2015, in order to cooperate with the "destocking" plan of the property market, the compensation method for shantytown renovation and demolition was changed from housing compensation to cash compensation, that is, the monetized resettlement policy for shantytown reform. Although this policy has effectively reduced the inventory of the property market, it has also led to a large influx of capital into the real estate industry, pushing up housing prices in third- and fourth-tier cities. It can be seen that the current monetization and resettlement policy of shantytown reform not only wastes social resources, but also contributes to the rise of housing prices.
Therefore, from many aspects, large-scale demolition is no longer a wise choice. However, we should not take the issue of living conditions in the old city residents lightly. To this end, the old reform policy came into being. Although most of the old houses will no longer be demolished in the future, the problems existing in the old community will be solved one by one under the promotion of the old reform policy. The old renovation policy aims to comprehensively renovate and transform the old community from the inside to the outside, from hardware to software. Although it may not be as strong as demolition, it can solve the problems existing in the old community to the greatest extent and create a more livable environment for residents.
Despite the careful planning, it is difficult to resist the twist of fate. The seemingly stable property market has suffered an unprecedented blow from 2021 to 2023, as if it had suffered a rout in the Battle of Waterloo. During this period, the triple red line of debt leverage of real estate enterprises, the impact of the epidemic and the pressure of interest rate hikes in the external environment were like heavy burdens, making the property market breathless.
In order to save the property market, we have taken unprecedented measures, and the degree of relaxation of regulatory policies has even exceeded that of the round from 2015 to 2018. However, the market's response has not been as expected. As the marginal effect of the policy diminishes, the wait-and-see sentiment in the market has become stronger, making the management deeply anxious and eager to find a way out.
Therefore, first-tier cities have relaxed the qualifications for buying houses, hoping to inject vitality into the property market in other cities through its demonstration effect. At the same time, thousands of real estate projects have been put on a "white list" for financing, which property commentators generally believe is to boost market confidence and encourage home buyers, developers and banks to work together to stabilize the property market and promote market recovery.
Against this backdrop, demolition is once again in the spotlight. In the deployment of the 2024 economic work conference, the central government clearly pointed out that it is necessary to meet the reasonable financing needs of real estate enterprises of different ownership systems without discrimination, and accelerate the "three major projects" such as the transformation of urban villages, with the focus on demolition and relocation. It's all about mitigating risk in the real estate sector.
So, why does the state attach so much importance to promoting the transformation of urban villages? Wang Feng, a member of the expert committee of the China Academy of Housing and Real Estate, reveals the answer for us. He calculated that the transformation of urban villages in 21 megacities alone could bring more than 10 trillion yuan of direct investment, and the total amount of other related investments would exceed 25 trillion yuan. This figure is a huge proportion of GDP. Therefore, it is urgent to accelerate the transformation of urban villages.
Shenzhen's new old city renovation plan launched in 2024 mainly focuses on two major areas. First, urban village demolition and new construction projects now only need to obtain the consent of two-thirds of property owners to start, compared with the previous consent rate of more than 80%, this adjustment significantly lowers the threshold for demolition. The aim is to reduce resistance in the demolition and renovation process and pave the way for the acceleration of the renovation project. Second, we have redefined the scope of demolition and relocation of urban villages, not only covering the traditional demolition areas, but also including the surrounding inefficient land, so that the scope of demolition and relocation has been significantly expanded. In order to clarify the priorities, we have designated four categories of houses that will be prioritized for demolition:
1. Located in key functional areas, key development groups, and rail hub areas determined by national economic and social development plans, land and space planning, and various special plans;
2. Located within the scope of major livelihood projects and major infrastructure at the national, provincial, municipal and other levels;
3. Located in the scope of major industrial projects in the top 20 advanced manufacturing parks (note: "Spatial Layout Planning of the Top 20 Advanced Manufacturing Parks in Shenzhen");
4. There are outstanding problems such as large public health and safety risks, many hidden dangers in housing safety and fire safety, backward supporting facilities, dirty and messy environment, and difficult social governance, or the relevant departments have assessed that it is urgent to implement transformation.
On the one hand, the demolition and reconstruction of houses that have fallen into disrepair and serious aging are carried out to inject new vitality into urban renewal, and on the other hand, the living environment and quality of life of relatively new houses are improved through old city renovation projects. These initiatives will provide a strong impetus for the prosperity and progress of the city, so that citizens can enjoy a higher quality of living life.
The renovation project and demolition of the old community are like a picture of mixed joy and sorrow, ancient poetry: "The moon bends and shines on Kyushu, and a few families are happy and a few are sad." "Residents who love old houses may find new hope in the renovation of old houses, while investors who hope to get rich from demolition and relocation hope that the houses will be demolished immediately, for example, in the past, many investors were keen to buy old houses with long age and poor quality, expecting huge profits from demolition. Now that the demolition has been restarted, it has given many owners of old houses hope for demolition.