What kind of results will families with "two suites" face in the next few years? Sun Hongbin explained thoroughly in "three sentences".

Housing, the cornerstone of life, has a profound impact on our daily lives and well-being. However, the real estate market in mainland China is currently caught in a double dilemma: on the one hand, some people are anxious about not being able to buy the property they want, and on the other hand, some people are burdened with the pressure of imminent property taxes because of the excess property in their hands.

According to recent statistics released by the central bank's survey team, the homeownership rate of urban households in mainland China has climbed to 96.86%, with a whopping 41.5% of urban households owning two or more properties. At the same time, 2020 rental market data shows that 220 million people across the country choose to live in rented housing, including many people who find it difficult to buy a house due to high housing prices.

Clearly, while the majority of households already own a home, nearly half of urban households still own more than one property. In the eyes of many people, the house is no longer a simple living space, but a tool for investment and a symbol of wealth. Buying a home is seen as an investment, and people expect to increase the value of their assets quickly through the rise in housing prices. Over the past 20 years, average home prices have soared fourfold, and in some cities by more than a dozen times, allowing many early homebuyers to amass considerable wealth. In particular, those who own multiple properties can enjoy the wealth growth that comes with rising property prices.

However, the era of "buying a house and making money" may be gradually fading away. With the transformation of the real estate market, the myth that house prices will only go up and not down will become a thing of the past.

1. People's demand for housing is changing a lot

Due to the continuous decline in housing prices in the past few years, housing prices have entered a general decline mode, resulting in many property speculators gradually withdrawing from the property market. As an important force in the property market, their exit has undoubtedly weakened the power of home buyers in the market.

At the same time, the number of buyers who just need to buy a home is also decreasing year by year. This is due both to the fact that more and more people have already met their housing targets and because the number of new arrivals continues to decline. According to the National Bureau of Statistics, the number of newborns in the mainland has been declining year by year in recent years, and it will drop to 9 million in 2023, and the birth rate has reached a historic low. Looking at the long term, the number of post-00s and post-10s is 103 million less than that of post-80s and post-90s.

Houses are ultimately about meeting people's living needs, so population is the real cornerstone of the real estate industry. As the number of new students continues to decrease in the future, the demand for housing will gradually weaken. Although urbanization is still advancing, it is expected that there will be 20% of the development space in the future, which means that 400 million people will move into the city, but this will mainly affect the first and second-tier hotspot cities, because they are attractive enough.

2. Housing resources are already in surplus

After years of development, the real estate industry in mainland China is no longer in short supply of housing resources, especially in many cities. Since the comprehensive reform of residential commercialization in July 1998, the real estate industry has ushered in a golden period of rapid development, and the completion and entry of a large number of commercial houses into the market have effectively alleviated the shortage of housing resources.

According to statistics, in 2000, the per capita housing area of urban residents in mainland China was only 10.3 square meters, but by 2020, the per capita housing area has increased significantly to more than 40 square meters, and the urbanization rate of household registration has also exceeded 44%. In addition, according to the data released by the central bank's survey team, 96.86% of urban households in mainland China already own houses, and the average household exceeds 1.5 units, of which 41.5% of households own two or more houses. These data show that, in general, there is a surplus of housing resources on the mainland.

However, it is worth noting that in first- and second-tier hotspot cities, housing resources are still tight due to the continuous inflow of population. In contrast, except for these economically developed first- and second-tier cities and regions, other third- and fourth-tier cities have a significant surplus of housing resources.

3. After the fall in house prices after the 2023 bailout, more and more people are starting to be bearish on house prices

As 2023 comes to an end, looking back at the changes in the real estate market over the year, a significant trend comes into view: even though governments at all levels have intensively introduced rescue policies, housing prices are still like a loose horse, all the way down. This phenomenon has caused ripples in society, triggered in-depth thinking from people from all walks of life, and the voices of bearish housing prices have come and gone.

In order to stabilize the turmoil in the real estate market, governments at all levels have actively adopted a variety of rescue strategies in the past year. These include lowering mortgage interest rates to relieve some of the financial burden on home buyers, lowering the down payment ratio to lower the threshold for home purchases, gradually relaxing the purchase restriction policy to provide more choices for home buyers, and directly giving financial subsidies to home buyers to boost market confidence. However, these measures do not seem to have reversed the downward trend in house prices.

The reasons behind this are complex. First of all, as the bailout policy continues to be introduced, the public reaction has changed from the initial enthusiasm to the calm and calm of today. Policy continuity and stability are essential to restore market confidence, however, frequent policy adjustments may instead exacerbate market uncertainty and lead homebuyers to take a wait-and-see approach. Second, as house prices continue to fall, homebuyers' expectations are also quietly shifting. They began to look at the real estate market from a more rational perspective, abandoning the investment mentality of blindly following the herd, and paying more attention to actual demand and investment value.

In the face of further intensification of bailout efforts by local governments in 2024, the response of the property market has become more and more cold. This partly reflects the market's lack of confidence in bailout policies, which people have become accustomed to and no longer expect them to bring about disruptive changes. At the same time, the continuous decline in housing prices has further deepened the wait-and-see atmosphere in the market, and the voice of bearish housing prices has become louder. Against this backdrop, the outlook for the property market still seems to be uncertain.

From the above three points, it can be seen that housing prices will no longer repeat the crazy trend of the past. After the property market has experienced a downward trend in the past three years, the entire market environment has been turned upside down. The dream of buying a house and getting rich in the past may become unattainable in the future. So, for families with more than two properties, they are at a crossroads: should they hold for the long term, or should they sell decisively?

(1) In the next 5 years, housing prices will neither rise nor fall sharply, but will be in a state of fluctuation, which is the consensus of everyone;

(2) We expect the real estate market to be more miserable in the second half of the year, and we must leave a safe boundary for ourselves;

(3) With the improvement of people's living standards, people's requirements for housing quality will be higher and higher, which means that there is still great potential for the development of medium and high-end improved housing in the future.

It can be seen that for the trend of housing prices, the era of rising all the way has passed, and stability is the main theme. For those who own more than two properties, the flattening of house prices means that their properties are struggling to deliver the good yields they once had. If house prices fall, they may even be at risk of shrinking their assets. In addition, with the gradual introduction of property tax and landlord tax, the cost of holding a property will become higher and higher. Therefore, for families with multiple properties, if the number of properties is too large, it is recommended to reduce their holdings in a timely manner to minimize the risk and ensure the safety of the assets.