The house prices in the top 100 counties fell from 16,000 to more than 5,000, and the buyers concerned: they should not have followed the trend in the first place

New Talks on Real Estate

2024-04-23 09:30Published in Henan

As the foundation of life and the symbol of home, the house carries a special meaning in the hearts of Chinese people from ancient times to the present, it is not only a place to live, but also a sustenance of emotions and memories. In today's society, housing is closely related to young people's love and marriage, as well as children's education and medical welfare. Therefore, many young people embark on the journey of buying a house without hesitation for the sake of a happy life in their hearts.

However, in the face of high housing prices, many people are deterred. At present, the national average house price is close to 10,000 yuan, and in the top 100 cities, this figure is as high as 15,000 yuan / square meter. This means that an ordinary house can easily cost millions of yuan, and in popular first- and second-tier cities, the price is even more staggering. Buying a home requires not only a huge down payment, but also a decades-long mortgage, which is undoubtedly a heavy burden for many families.

However, it is confusing that despite the high housing prices, the mainland's housing resources are not in short supply. After decades of rapid development, the mainland's overall housing resources have become excessive. According to the central bank's survey data, by 2020, more than 96.86% of urban households already owned a house, with an average of more than 1.5 houses per household, and an average housing area of more than 40 square meters per urban residents. This means that the housing owned by urban households alone is enough for all people in the city, and there is even a surplus.

Around 2015, benefiting from a series of favorable policies, housing prices began to climb gradually. The influx of speculators into the property market has doubled home prices in most parts of the country. Not only have housing prices doubled in popular first- and second-tier cities, but even housing prices in many third- and fourth-tier cities and counties have doubled. Especially in September 2016, when the first and second-tier cities began to implement purchase restrictions, property speculators turned their attention to third- and fourth-tier cities and counties, resulting in a rapid rise in housing prices in these areas. For example, in the fifth-tier county where my hometown is located, the housing price once exceeded 10,000 yuan per square meter.

However, just as flowers can't bloom in a hundred days, housing prices can't keep rising. As housing prices continue to rise, the leverage effect of the real estate market has gradually increased, bringing serious financial risks. The central bank has figuratively dubbed this phenomenon the "grey rhinoceros", suggesting that if left unchecked and addressed, the housing bubble will eventually burst. To this end, the state has put forward the regulation and control principle of "housing for living, not speculation" as the basic bottom line of the property market policy.

In recent years, the property market has encountered unprecedented difficulties, and the real estate industry has rapidly fallen from the golden age of the past to the black iron age. Especially in 2024, although local governments have stepped up their efforts to rescue the property market and create favorable conditions for the development of the real estate industry, the property market still seems sluggish. Many people had predicted that the property market would pick up quickly after the epidemic ended, which is one of the reasons for the sharp increase in property market transactions at the beginning of 2023. However, it soon became difficult for people to sustain this upward trend, and the property market quickly turned cold after a short two-month recovery period. Especially in the second half of 2023, houses are becoming more and more difficult to sell, and in order to cope with this dilemma, many developers have stepped up price reduction promotions and launched various preferential activities to attract home buyers.

At present, the new housing market is already struggling, and the second-hand housing market is even worse. The challenges faced by homeowners in selling their homes are even more daunting due to the lack of the vast sales network and promotional strategies that developers have. According to authoritative data, the number of second-hand housing listings in many first- and second-tier popular cities has exceeded the 100,000 mark, and the number of some cities has soared to more than 200,000 units.

However, with such a large number of listings, the actual trading volume is stretched. In Hangzhou, for example, the number of second-hand houses listed has reached 250,000 units, but the monthly transaction volume is only about 5,000 units. This means that even if there are no new listings in Hangzhou's second-hand housing market, it will take up to 50 months for the existing 250,000 units to digest. And such a speed of digestion is still in the context of a popular city like Hangzhou, which is rich in educational resources, perfect medical resources, and many employment opportunities. For third- and fourth-tier cities, the plight of the second-hand housing market will be more severe, and the pressure on housing prices will be unprecedentedly huge.

A vivid case comes from the author's Zhengzhou fan Ms. Wan, she personally experienced the difficult process from buying a house to selling a house, looking back on the past, she was full of emotion, as if she had a nightmare, and decades of savings were instantly wasted. This also reflects the harsh reality of the current second-hand housing market.

Ms. Wan, a woman who has struggled in Zhengzhou for more than ten years, has accumulated a certain amount of wealth with her own efforts. In 2017, Zhengzhou's housing prices soared like a rocket, which made Ms. Wan consider investing her money in the real estate market. However, Zhengzhou's purchase restriction policy forced her to set her sights on the suburban county - Zhongmu County. Zhongmu County, a place with a special status in the hearts of Zhengzhou people, is known as the bridgehead of Zhengzhou's eastward development and an important node of Zhengbian's integration. Developers and real estate agents are touting the huge potential of the county, and Zhongmu County itself is one of the top 100 counties in the country, ranking more than 70 counties, and various Zhengzhou-level public facilities have been settled here. Ms. Wan firmly believes that housing prices in Zhongmu County will inevitably continue to rise, and it is even expected that the county will be removed from the county and become a new urban center.

However, at that time, the housing market in Zhongmu County was in full swing, housing prices were soaring, and housing was in short supply. Many property viewings require capital verification, and only eligible buyers can get the opportunity to view the property. Ms. Wan recalled that she only had 2 minutes to view the property, and when the time came, she had to make a decision. This tense and exciting atmosphere made Ms. Wan feel a little at a loss, and she barely had time to think, so she took out a loan to buy a 120-square-meter house at a price of 16,000 yuan per square meter in the Zhongmu Lubo area. From stepping into the sales department to paying the deposit, the whole process took less than 10 minutes, which made Ms. Wan still a little in a trance. After buying the house, Ms. Wan began the long road of repaying the mortgage. But she did not give up her attention to the housing prices in Zhongmu County because of this, but looked forward to the continued appreciation of the house she bought. Every day, she keeps an eye on various properties and hopes to see her investment in double in value one day.

However, since 2018, the growth momentum of housing prices in Zhengzhou has slowed down and gradually stabilized. Especially in the second half of 2019, due to the tightening of regulatory policies, housing prices in the suburbs of Zhengzhou began to show a downward trend. In the next few years, Zhengzhou was not only repeatedly hit by the epidemic, but also suffered a heavy blow from floods in 2021, which undoubtedly brought a heavy blow to Zhengzhou's property market. What is even more serious is that the state has begun to gradually tighten the policy of withdrawing counties and demarcating counties, which makes Zhongmu County's plan to withdraw counties and demarcate counties become far away. Under the influence of this series of negative factors, the decline in housing prices in the suburbs of Zhengzhou has gradually expanded, especially in the Zhongmu Lubo area, where Ms. Wan bought a house, and the housing prices have fallen sharply from the peak in 2017. Although the house purchased by Ms. Wan has been successfully delivered, the price of the house has fallen from more than 16,000 yuan to more than 5,000 yuan now, which is a staggering drop.

This means that Ms. Wan not only has a down payment deficit, but also a six-year mortgage has come to naught. What's even more distressing is that the current house price is now below her loan amount, making her house a negative equity. Her years of savings went down the drain and she was saddled with heavy debt. Now, Ms. Wan is desperate to sell the house, however, she is unable to fill the gap in her mortgage as the house has become negative equity. Selling a home, she says, is no easy feat. At present, there are many listings in the second-hand housing market in Zhongmu County, and the prices are also hitting new lows. In order to get rid of it as soon as possible, she had to reduce the listing price to the lowest level in the same community and wait for someone to appear. However, the current housing prices in Zhengzhou's urban area are generally not high, and the Green Expo area has lost its former investment value, making it difficult to attract buyers who just need to buy a house.

Ms. Wan deeply regretted this. She regretted blindly following the trend of investing in real estate, which made her years of hard work go to waste. Today, she still has to pay off a high monthly mortgage, and her life is very stressful. The author believes that with the urbanization rate rising year by year, the pace of urbanization construction will gradually slow down in the future. At the same time, considering the continuous decline in the birth rate of the mainland's newborn population, the number of potential receivers in the property market will be decreasing day by day. Especially in third- and fourth-tier cities, the phenomenon of population loss is becoming more serious, and the problem of oversupply of housing resources in these areas will become more prominent. The house, no matter what added value it is given, is still essentially a place for people to live in. Therefore, as the relationship between supply and demand continues to evolve, house prices will eventually return to a reasonable level in line with their actual value.

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