In recent years, housing prices have been on a roller coaster, and the financial situation of real estate companies has also been in flux.
Buying a house has also become a trouble in the eyes of the people, and everyone is waiting and seeing, for fear of falling into the pit.
Under such circumstances, the Chinese government has made great efforts to fight a tough battle to hold the position of real estate and stabilize the pace of the economy.
Can real estate still be saved? Can the government's operation really save the real estate industry?
First, real estate will recover
Although China's real estate market has encountered many problems, foreign investors' confidence in the Chinese economy remains high.
The recovery of the Hong Kong and A-share markets, as well as the increase in the influx of foreign capital, show how bullish foreign investors are on various Chinese assets.
Especially after U.S. Treasury Secretary Janet Yellen returned from her visit to China, she said that China would make big moves to solve the real estate problem.
As soon as this news spread, foreign investors instantly felt a lot more relieved and their confidence was greatly increased.
In addition to foreign investors being optimistic about China's real estate economy, it is impossible for the government to let the real estate downturn.
This is because real estate plays a pivotal role in China's economy and has long been a major carrier of wealth.
The Chinese have a long tradition of farming and like to root themselves in one place.
A house is not only a place to stay, but also a root for people.
In China, owning a house means not only home, but also a range of additional social benefits.
In terms of the allocation of educational resources, school district housing has become a popular choice for many families.
In order to let their children receive a better education, parents are willing to go out and desperately buy a school district house.
And the location of the house is also a big problem, pick a good place, that is the feeling of a winner in life.
Live comfortably, you can buy fresh food when you go out and turn left, there is a bus stop when you turn right, it is convenient to go anywhere, hospitals, schools, these are not far away.
Not only that, but the real estate industry has a profound impact on all walks of life.
To build a house, you need a lot of building materials, such as steel, cement and sand.
In addition to building materials, a lot of labor and services are required.
In the real estate development process, there is a need for construction workers to be responsible for moving and erecting building materials, and there is also a need for designers and engineers to plan and design the structure and layout of the house.
There is also a need for a variety of service personnel, such as electricians, plumbers, and renovation workers, who are responsible for installing wires, plumbing, and furnishing the house to make it comfortable and functional.
After the real estate is delivered, people will hire renovation workers or do the renovation themselves, including remodeling of paints, floors, tiles, etc.
This will create jobs and drive demand in the building materials market.
When you move into your new home, new furniture and appliances become standard.
Everything from the bed to the sofa, from the TV to the refrigerator, is well stocked.
This not only gives the furniture and home appliance industry an opportunity to flourish, but also boosts the prosperity of the home furnishing market.
Throughout the process, real estate development has given rise to the demand for decoration and shopping, which in turn has promoted the vigorous development of related industries, forming a virtuous circle.
Real estate is not only an important economic pool, but also affects other economic pools such as the stock economy.
Although the stock economy is liquid, it is relatively volatile and risky.
In contrast, the real estate market is relatively stable and has a strong function of value preservation and appreciation, which is an important choice for many people to invest.
2. What efforts has the government made to defend real estate?
Although the set of sales and purchase restrictions in the real estate market has suppressed the soaring price of housing prices, it has also caused us to encounter the hurdle of excess inventory.
In order to solve this inventory saturation problem, major cities have begun to reverse this policy.
It takes 18 to 36 months for a house to sell across the country, and the removal of these restrictions is intended to shorten the cycle, give real estate companies a breather, and promote a healthier market.
Especially in big cities, the removal of these restrictions can effectively keep house prices stable and not go up and down like a roller coaster.
The stability of housing prices can not only attract buyers who just need to buy a home, but also prevent the spread of panic in the market and avoid the impact of large fluctuations in housing prices on the economy.
In particular, the problem of unfinished buildings caused by the high-turnover strategy triggered by the Evergrande incident has seriously damaged the wealth and willingness of residents to buy houses.
In order to stabilize the expectation of off-plan housing, the state has introduced a whitelist system by coordinating financial institutions and real estate enterprises to solve the problem of unfinished buildings and inventory housing.
At the same time, the issue of abolishing the pre-sale system has also sparked widespread discussion.
Some believe that the abolition of the pre-sale system can avoid the phenomenon of unfinished properties and protect the interests of home buyers.
However, the abolition of the pre-sale system may also bring new problems, such as increasing the financial pressure on real estate companies.
Each point of view is very reasonable, which requires careful consideration by the government to balance the pros and cons of the pre-sale system.
3. Will the monetization of shantytown reform be implemented?
In 2012, the real estate market was quite depressed, with very few people buying houses, and housing prices were basically unchanged or even a little down.
By 2015, the situation was even bleaker, and many developers and homeowners were running out of their way.
As a result, the government introduced a monetized shantytown reform policy to save the day.
Specifically, the government pays compensation to the residents of the evicted shantytowns, the amount of which is usually determined on the basis of market appraisals.
After receiving the compensation, residents can freely choose to buy commercial housing on the market.
This not only gives residents more choices, but also enlivens the real estate market.
At the same time, the government can redevelop the recovered shantytown land to promote urban renewal and economic transformation.
By 2016, the monetized shantytown reform policy had been further promoted and became one of the important tools to promote urban renewal and economic transformation.
At that time, through the monetization of shantytown reform, the government successfully solved the problem of a large number of real estate inventory.
It helped 23 million residents relocate and moved 100 million people from shantytowns to commercial housing.
This policy not only effectively reduced the inventory of housing, but also improved the living conditions of many people, driving the demand of the real estate market.
At that time, everyone could feel that more houses were sold, and the overall economy also improved significantly.
Why can monetized shantytown reform policies cause housing prices to rise? Actually, the reason is very simple.
After the implementation of the monetized resettlement policy, many shantytown residents received a large amount of compensation.
This gives them the ability to purchase a new home, which increases the demand for home ownership in the market.
The increase in demand for housing will inevitably have a push up on housing prices.
The resumption and redevelopment of shantytown plots takes a certain amount of time to plan and implement.
During this time, land on the market has become more scarce due to the reduced supply of land, which has led to further increases in house prices.
To put it simply, because of the lack of land supply, housing prices are rising.
Of course, this process is also absolutely indispensable for the active participation of property flippers.
When they heard the news that the monetization of the shantytown reform policy could lead to a rise in housing prices, they immediately began to rush to buy real estate, hoping to get a return on their investment.
This kind of speculation has undoubtedly intensified the market's enthusiasm for home purchases, which has further boosted the rise in house prices.
Why has the monetization shantytown reform policy been halted again?
This is because many local governments are aware that persistently high housing prices are not only putting pressure on residents' ability to buy homes, but also bringing hidden dangers to the healthy development of the economy as a whole.
As a result, since 2017, many places have gradually suspended or restricted this policy.
For example, measures such as reducing the proportion of monetary compensation or reintroducing in-kind resettlement have been introduced to curb the rapid rise in housing prices.
But in any case, the implementation of the monetization shantytown reform policy is well-intentioned.
However, in practice, for a variety of reasons, this policy has brought about a rapid increase in housing prices, exceeding many people's expectations.
Returning to our current topic, will the monetization shantytown reform policy be implemented?
As far as the current form of real estate is concerned, the market has not yet bottomed out, so it should not be implemented immediately now.
However, with the gradual advancement of various policies, if the effect is not obvious, the monetization policy of shantytown reform may finally be put back on the agenda.
4. What is the current situation of the real estate market?
According to the observation of Lin Zhenhong, head of real estate research at UBS Greater China, it is found that our real estate market in China is slowly warming up.
As long as housing prices are stabilized, those previously hidden desires to buy houses will gush out like opening the floodgates.
In the past few years, housing prices have gone up and down, like a roller coaster, making everyone panic, and no one dares to buy a house easily.
But when the market stabilizes, these long-hidden housing demand will explode like a flood beast, and the market transaction volume will soar instantly.
When the time comes, developers are smiling from ear to ear, sales and profits are swishing up, investors are full of confidence, and the stock price will naturally rise with the tide.
Zhang Xiaoduan, an expert in the real estate industry and vice president of Cushman & Wakefield, believes that real estate control policies will continue to increase to ensure that the market remains stable.
He expects the market to develop in the direction of "increment + stock", which means that the market will slowly recover and move towards long-term stability.
To put it simply, regulation is still there, but the market will become more and more vibrant.
Looking at the current real estate market data, President Pan Gongsheng can't help but come out to speak.
The real estate market has quietly shown several small green lights.
Especially in Shanghai's luxury housing market, it is so hot that everyone rushes to buy it.
There are also second-hand housing transactions, which are also swishing upwards and can't stop.
summary
The stability and recovery of China's real estate market is crucial to the healthy development of the national economy.
It is hoped that through a series of policy measures, the real estate industry can recover as soon as possible and avoid the economic crisis caused by high housing prices and plummeting housing prices.
Stabilizing the real estate market is not only to avoid the collapse of household assets and financial crises, but also to promote economic and people's livelihood development and ensure the long-term healthy development of China's economy.
Resources:
2024-05-13 Sakura Wolf Finance "Crisis Escalation! China has launched a real estate defense war! Abolish the pre-sale system, or monetize the shantytown? 》
2023-07-01 Wu Hook Essay "The Genius of Real Estate: Monetization and Shed Reform!" 》
2023-08-22 Buying and Selling Houses "The property market is not only the pillar of China's economy, but also the barometer of China's economy"