Here comes the blockbuster essay on real estate again. According to Bloomberg, Chinese authorities are considering allowing local governments to use bank loans to buy millions of unsold homes to alleviate the problem of housing surplus.
For this reason, in the context of today's sharp drop in A-shares, real estate stocks have bucked the trend and carried the banner of a big rise, such as Vanke once soared by more than 6 points, Poly even soared by more than 7 points, and many small real estate companies such as Cinda Real Estate are even more up and down.
But the question is, is this news reliable? Is it possible to actually land? In my opinion, the possibility is still very high. But if you do, do you support it? Let me first express my point of view, I am firmly opposed to this practice. This is tantamount to using taxpayers' money to pay for real estate companies, so that their money is beyond their shells, and finally the state and the people will pay. At most, this is a transfer of risk, not an elimination of risk.
Let's talk about why this is so likely to be implemented.
First, as we all know, at the high-level meeting at the end of last month, it was clearly proposed to study and digest the stock of real estate as a whole. This is equivalent to the state is setting the tone, and one of the main tasks of real estate in the future is to destock. Since destocking is a policy and the general direction, and if you destock through subsidies or other concessions, this cycle is very long, and the effect is very limited. And if local governments or local state-owned enterprises are directly allowed to buy a large number of housing stocks through the power of direct visible hands, then the effect will be immediate. This is one of them.
Second, there are already pilots of similar behaviors. You should remember that last year, the central bank issued the "Notice on Matters Concerning the Pilot of the Rental Housing Loan Support Program". The notice is to set Chongqing, Jinan, Zhengzhou and other eight cities as pilots, and the central bank is to support seven national financial institutions, including Workers, Farmers and China Construction, to issue rental housing loans to local governments or local state-owned enterprises in these pilot cities by the end of 2023, with a quota of 100 billion yuan.
The intention of this is to encourage local governments or local state-owned enterprises in these cities to acquire local idle housing stock and use it as rental housing, so as to achieve the purpose of reducing the inventory of the property market and expanding the supply of rental housing. This pilot can be seen as a precursor to the subsequent large-scale acquisition of housing stock. Therefore, the authenticity of the news spread on the Internet today should still be very large. Moreover, this kind of large-scale purchase of housing stock by local governments or local state-owned enterprises is also advocated by many experts and scholars.
But I am opposed to such an approach. Although this kind of behavior of the government directly intervening by administrative forces is short-lived, the negative consequences are also very large.
As we all know, the future of real estate lies in the population, and the current Chinese population has been negative growth for two consecutive years, which means that the ceiling of China's future property market has been very obvious. Moreover, the current per capita housing area of Chinese is in the middle of the world, and the vacancy rate is not low. It can be said that there is no shortage of houses in China at present, especially in third-, fourth- and fifth-tier cities, which are seriously oversupplied.
Good guys, now let local governments or local state-owned enterprises spend a lot of money to buy houses that can't be sold by real estate companies. This is not a typical case of using taxpayers' money to pay for real estate companies. Real estate companies are out of the shell, and there is no risk. But what about the houses acquired by the local government? Is it really improved to be used as affordable housing? Is that appropriate? Will this lead to rent-seeking? These are very real questions.
Such an approach is not a release of risks, but a transfer of risks, and a risk that should be borne by real estate companies is transferred to the country and the people.
Do you support this?