Wu Xiaobo: Has the property market "changed"?

"The magnitude and depth of the decline in the property market is unpredictable, and the bottom may not be a rebalancing of supply and demand. ”

Text / Wu Xiaobo 

A year ago, when I talked about saving the property market, I would be beaten as a "rat crossing the street", and I tasted this ("Only by saving the property market can we save domestic demand"). When talking about saving the property market today, many people will feel that it is too late.

I don't see it that way. In today's economic growth model, real estate is still running in the existing fluctuation logic, and the basic conditions for the property market to "change" have not yet been formed.

One

Let's start with the formation of the dilemma.

Many people believe that the current situation of China's real estate is the result of the arrival of an inflection point in the industry, and in my opinion, this is just an afterthought, and the core essence of the dilemma is the liquidity crisis of private real estate enterprises.

Since 2017, the policy has been a thunderbolt of tightening for the property sector. The real deterioration of liquidity occurred at the end of 2020, when two very strict policies were introduced, one is the "three red lines", and the other is the centralized management system of housing loans, the former is mainly for real estate companies, and the latter is for banks.

The policy was transmitted to the industry, and the landmark event was the Evergrande thunderstorm in July 2021. Then like the collapse of dominoes, large real estate companies exploded one after another. In October 2021, the WTO suffered a "double kill of stocks and bonds", and in September 2022, CIFI, which has always been regarded as a "good student", defaulted on its debts.

Vanke's predicament has nothing to do with the development model and financial model, but the "double kill" of the rapid shrinking market and blocked financing channels. By the spring and summer of 2023, except for the central state-owned enterprises and local urban investment companies with direct access to bank banks, almost all market-oriented real estate companies will not be spared.

When all the vehicles on a highway roll over and cause an accident, then the problem must not be with the driver.

Two

Let's talk about the current situation.

It was not until December 2023 that everyone reached a consensus on saving the property market. But at this time, the most terrible thing happened, and consumers' expectations of buying a home have changed decisively. Since 1998, mainland real estate has entered the era of commercial housing, during which it has experienced many ups and downs, especially in 2008, there was a very serious crisis, however, the public class has widespread doubts about buying houses, which is the most profound.

There is a subtle difference between the property market and the stock market. Investors speculate in stocks, and when they see that the situation is not good, they can scold and run away, so most retail investors suffer from "ADHD". The property market is characterized by the reluctance to start when housing prices rise, and it is difficult to find a receiver when it falls, so it is called "real estate".

In the past few months, the government's rescue of the property market can be said to be quite frequent, many times giving people a sense of vertigo with a 180-degree turn, but in terms of policy logic, it is basically "take new medicine and take the old road".

For real estate companies in crisis, many cities have established real estate financing coordination mechanisms, most of which are led by the deputy chief executive, focusing on the delivery of guaranteed buildings, opening white lists, targeted financing, increasing the tolerance of bad debts, and proposing "no rescue of enterprises to save projects".

At present, in addition to Beijing, Shanghai and Shenzhen, almost all cities have relaxed purchase and loan restrictions and price limits, especially in mid-March, Hangzhou announced the full opening of second-hand housing, which is triggering a comprehensive follow-up in other cities.

Three

Through such an analysis, we will find that the two major causes of the current downturn in the property market are the liquidity crisis of private real estate enterprises on the supply side, and the suspicion of urban residents about the preservation and appreciation of real estate on the demand side.

Now, the consensus of most people is that from now on, there will never be a hundred cities rising together, there will never be the next Evergrande or Country Garden, and the proportion of real estate in the asset allocation of high-net-worth families will also decline significantly.

In view of the current situation, there are even more opinions on the debate of "what to do about the property market", and there are about the following three common views:

▶ ▷ Let property prices fall freely until "everyone can afford to buy a house";

▶ ▷ Take advantage of the time window of the crisis to carry out structural "major surgery" on the property market;

▶ ▷ Adopt a conservative approach that gradually loosens the restrictions and takes a step at a time.

What about the property market, you come to vote? Single selection

1. Let the property price fall freely

2. Structural "major surgery"

3. Conservative therapy that gradually loosens

4. Terminally ill and incurable

Four

No matter which treatment it is, the basic premise of judgment is: has China's property market "changed"?

The so-called "changing sky" refers to the fundamental change in the operating logic and interest structure of a certain industry, and the new productive forces and organizational methods have achieved a revolutionary replacement for the existing pattern. From this point of view, until today, the basic logic and interest chain pattern that support China's real estate industry have not been broken.

They are: the high dependence of local governments on land finance, the ability of high-quality real estate to resist inflation, the large dependence of commercial banks on residential housing loans, urbanization and population absorption in megacities.

In today's China's national economy and wealth structure, real estate has a "four-five-six" characteristic: real estate-related loans account for 40% of bank credit, real estate-related income accounts for 50% of local governments' comprehensive financial resources, and real estate accounts for 60% of residents' assets.

In the past two decades or so, real estate has not only been a market-oriented industry related to housing, but for the government, it has been a "policy tool" to achieve economic growth, absorb social capital and solve employment, and for urban households, it is almost the only reliable subject matter for the growth of property income.

Therefore, if the huge and important chain of interests still exists, and the dreaded "four, five, six" characteristics have not been effectively changed, there is no such thing as "changing the sky" in real estate.

So, is it a good time to take advantage of the crisis and push for a "change in the sky"? I am afraid that the answer is also no.

The long-term management of real estate in China has been a hotly debated topic for more than a decade. Whether it is the debate over property tax or the exploration from affordable housing to placement affordable housing, there has been no suitable model and time window for change so far. Recently, some people have put forward policy proposals for the establishment of a "housing bank", but the feasibility of this has only just begun.

Therefore, it may be difficult to start with a "hard landing" of the property market or the adoption of radical shock therapy.

In the next few months, the reduction of mortgage interest rates for second homes is a high probability event, and local governments will come up with a lot of preferential policies in terms of land transfer. Historical experience tells us that the recovery of the property market in these three cities is the North Star indicator of the recovery of the national property market.

In the coming period, China's property market will present three very noteworthy observations:

◎ First, all cities are facing a "big test", and the degree of differentiation is further widened.

Whether a city's property market can recover will all depend on the activity of the industry and the net inflow of population, and the attractiveness of regional core cities will be greater, and the surrounding small and medium-sized cities and towns may appear "dark under the lights".

◎ Second, the demand for improvement will exceed the demand for rigidity.

In the past three years, the sales of home appliances and household products have shown that the proportion of local renovation and renovation has exceeded the proportion of new home decoration, and the new middle class's planning and confidence in the future determine the residential and investment value of real estate.

Third, the magnitude and depth of the property market decline are difficult to predict, and its bottom may not be the rebalancing of supply and demand, but the expectation and occurrence of interest rate cuts and price increases. In other words, "fear" will become the last productive force.

If today's Chinese property market is compared to a seriously ill patient, the condition has been clear, all drugs and physical means have been or will be used, the next thing to do is to look forward to its desire to survive and the recovery of its own functions.

本篇作者 | 吴晓波 | 责任编辑 | 何梦飞

主编 | 何梦飞 | 图源 | VCG