What signal does the big push for the old house to trade in reveal behind it?

Luo sir's words

2024-04-23 17:37Posted in Sichuan Workplace Creators

One question: How big is the demand for improved housing?

With the continuous saturation of the mainland real estate market, the market increment has been visible to the naked eye approaching the ceiling, the property market transaction volume has fallen, and with the stagnation and aging of population growth, the demand for real estate is also decreasing.

In this context, can the trade-in of housing stimulate the recovery of the property market?

Recently, more than a dozen cities, including Zhengzhou and Shenzhen, have successively launched the housing "trade-in" policy, hoping to stimulate new housing and second-hand housing transactions simultaneously, which is similar to the recent promotion of consumer goods trade-in.

Not only can it save the real estate market, but also can promote consumer appliances, but the trade-in is essentially a new house to live, considering the pessimistic expectations of the market for housing prices today, there are indeed some difficulties in the trade-in to make achievements in the property market.

On April 17, the "LVGEM Baishizhou" project in Shenzhen was launched, and customers only need to pay a deposit to lock in the intended house for 2 months, during which the intermediary will actively help customers sell the old house, and once the new house transaction is successfully sold, the transaction can be successfully completed.

LVGEM Baishizhou is located in the core area of Shenzhen, which is one of the "urban village" renovation projects in Baishizhou a few years ago.

In a first-tier city like Shenzhen, the middle class already has their own houses and is accustomed to the living functions around the home, and the most important thing is that there is no price advantage in the trade-in, and the intermediary only helps sell the original building, rather than giving price concessions.

In such a situation, it is difficult to stimulate the property market.

If you want to trade in the old for the new, you still need to come up with real money subsidies.

Shenzhen's "help sale model" is one, and there is also an "acquisition model", that is, the local government or developers directly purchase old houses and use them as affordable or talent housing.

The third is the "subsidy model", where the local government gives corresponding preferential policies, such as a 30% deed tax subsidy for families who buy a new house.

In contrast, the subsidy model may be more favored by homebuyers.

As long as it can be reasonably priced, it is equivalent to including second-hand housing in the national balance sheet, which is conducive to removing excess new houses, while increasing the volume of asset transactions and saving the real estate market.

In addition to destocking, trade-in also has a great effect on stabilizing real estate prices with transaction volume, so that real estate prices will not continue to fall as the market continues to decline.

The only way to support the real estate market today is to increase momentum, that is, demand, and the second is to ensure that housing prices do not collapse, and local governments need to come forward to make acquisitions, so as to stabilize housing prices.

Otherwise, as housing prices continue to fall, residents' pessimistic expectations for housing prices will be further consolidated, and transactions in the real estate market will only become more and more sluggish.

From a logical point of view, the importance of housing trade-in for the real estate industry can be seen.

However, although the trade-in is logically feasible, there are still many problems to be solved in the implementation process, such as loans and subsidies.

Once an optimal solution is found to drive the maximum trade-in with minimal administrative costs, then the model is likely to be rolled out nationwide to address the problem of weak real estate transactions and destocking.

Trade-in is not only this year, from the existing domestic consumption behavior, weak demand is objective, so in the next few years, trade-in may be an important measure to stimulate consumption, in addition, trade-in will not be limited to the real estate industry.

In any industry, it can be redone in a trade-in way.

On April 11, the National Development and Reform Commission and other departments jointly explained the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in".

During the meeting, it was pointed out that the number of cars in mainland China exceeded 300 million, the number of home appliances exceeded 3 billion, the demand for replacement was more than one trillion yuan, and the installed capacity of new energy equipment such as industrial robots and wind power and photovoltaic was the highest in the world.

Jiang Feng, chairman of the Household Appliances Association, published an article on April 15, arguing that household appliances have a shelf life like food.

She said that according to the association's home appliance safety service life, the life of refrigerators and air conditioners and heaters is 10 years, and washing machines and water heaters should be replaced in 8 years, according to which it is estimated that the total number of related products in mainland China that can be updated in 2022 will be about 150 million units, accounting for more than 80% of domestic sales in 2022.

Judging from the data, of course, this is the case, but the essence of trade-in is still driven by subsidies; just like the household appliances that went to the countryside more than ten years ago, if there is no administrative subsidy, it is difficult to persuade families to spend their own money to replace "no problem" equipment by relying only on the words "old for new".

It's a similar story with houses.

Whether it is home appliances or real estate, in essence, the trade-in still needs subsidies to reduce the cost of people's trade-in, if the cost remains the same, people's needs are unlikely to change with the four words of trade-in.

Conversely, as the mainland's labor costs rise and trade exports face greater tariff barriers, it is difficult for us to rely on exports to support economic growth, so stimulating consumption and expanding domestic demand is the most direct antidote to the economy, and in the end, if we want to achieve greater results, we must rely on official subsidies.

Trade-in, in essence, is still to solve the problem of employment, not economic growth as many people seem, what is the purpose of economic growth?

In fact, it is so that more people are employed, more people can eat better, live better, and their incomes can grow.

This is the essence of our pursuit of economic growth.

And the trade-in, whether it is real estate or consumer goods, involves hundreds of millions of people's jobs and hundreds of millions of people's food problems, why trade in the old?

One person's consumption is another person's income, and trade-in essentially encourages people to spend more, which in turn generates more income, more jobs, and thus economic growth.

For an economy with a population of more than one billion, the problems and risks it faces are actually very large, and any macro problem is a big deal in a society with a population of more than one billion.

Taking the photovoltaic industry as an example, the mainland occupies more than 80% of the global market share every year, what does this mean?

This means that once other countries do not pay the bill, or start to erect high trade barriers, will we be able to absorb 80% of the global market share by ourselves with our billions of people?

Once it can't be digested, there will be a wave of layoffs and unemployment, which will then lead to greater social problems.

Therefore, behind the big push for the old for the new, it is actually turning inward, stimulating consumption, and solving the problem of production capacity.

The problem of trade-in comes out at this time, the demand is insufficient, we need to trade in the old to stimulate demand, but simple trade-in is not able to stimulate demand, because the cost remains the same, at this time subsidies are needed, especially administrative subsidies, to reduce the cost of people's trade-in.

But the question is, is there any money in the place?

Actually, there is no money.

At this year's two sessions, the premier reminded seven times in his work report that we must "live a tight life without wavering", emphasizing that "what can be saved must be saved".

Now the problem becomes: the local government has no money, so it has to live a tight life, but ordinary families have no money, but they encourage the trade-in of the old and the new to expand consumption.

So, who should we rely on to drive consumption?

Or, in the development of the market economy in the past few decades, where has the money gone?

If this problem is not solved well, it is easy to cause a structural imbalance in consumption.

Trade-in to stimulate consumption is still a way to treat the symptoms rather than the root cause, and can be used as a transitional tool, but in the end, it is necessary to return to stable income and good social security, and only this path is the ultimate way to solve the problem of consumption to stimulate the economy.

Local financial resources may also lead to a certain amount of pressure on the trade-in.

For example, The Paper reported on April 12 that people in some places have bought houses for more than a year, but they have not received the previous promise, about 50,000 yuan in subsidies.

It is difficult to cash out the housing purchase subsidy and the issuance is not timely, which may also be due to the fact that some cities blindly follow up the housing purchase subsidy but do not estimate their own financial situation in place.

And this time for the trade-in of the house, will there be a similar situation?

There are too many real estate, consumer goods are also facing too many problems, coupled with more and more external tariffs and trade, it is true that the internal and external environment has forced us to a moment where we have to rely on domestic demand to solve, but the trade-in as a transition can be, the real essence is to increase income and more social security.

In the past 40 years of development, under the development of high leverage, localities and families have fallen into a moment of "living a tight life", and today's macro situation may be the most important for us to reflect on.

end.

Author: Luo sir, concerned about the economy, society and everything in our world, curious about the logic behind the development of things, optimistic pessimist.

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