Hello dear readers! After three years of trough adjustment, the real estate market has finally ushered in a glimmer of light. Recently, the meeting of the Political Bureau of the Central Committee decided to "coordinate the study of policies and measures to digest the stock of real estate and optimize the incremental housing", which indicates that real estate destocking will become the focus of the next step. Let's take a look at how this destocking is different from the last round nine years ago.
Introduction: The old picture scroll is restarted and the inventory is coming again
In July 2014, the Minister of Housing and Urban-Rural Development called for "doing everything possible to destock", and the introduction of that round of destocking policy allowed real estate sales and real estate stocks to regain their vitality and get out of the strong market. After nearly 10 years, the central government once again reiterated the destocking, but the market environment it faces is completely different.
1. The Death of Inventory: Current Situation and Challenges
At present, the inventory of commercial housing has climbed to a record high. According to the data, as of the end of March 2024, the area of commercial housing for sale in the country was as high as 748.33 million square meters, although it was slightly lower than the 759.69 million square meters at the end of February, but still higher than the peak of 739.31 million square meters in the previous round in February 2016.
Inventory is at a record high at a time when the real estate market is at an unprecedented low. In February 2024, the area of commercial housing for sale hit a new record of 759.69 million square meters. Entering 2024, real estate sales are still not improving, which undoubtedly adds new challenges to destocking.
Unlike the previous round, when the last round of destocking, real estate was in an upward cycle, and the current market has been adjusting for three years. In addition, China's urbanization rate will reach 66.16% in 2023, and the population will also enter a negative growth stage, which will affect the prospects of real estate development.
Second, the policy combination punch: multi-pronged inventory
In response to the current severe situation, the central government has made a top-level design and adopted a multi-pronged response to the policy measures of "comprehensively studying and digesting the stock of real estate and optimizing the incremental housing".
On the one hand, the stock is depleted. There are two main models: one is "trade-in", that is, buyers are allowed to exchange second-hand mortgages or discounts for new houses; The second is the direct acquisition of housing for sale. Among them, "trade-in" is regarded as an important starting point, which can boost domestic demand and resolve risks.
Up to now, more than 40 cities have introduced the "old for new" policy. In addition to providing preferential treatment for home buyers, it has also introduced market-based means of support, such as the termination of new housing contracts without liability. In some cities, local state-owned enterprises have also recycled second-hand houses and converted them into affordable housing. It is estimated that in 2024-2025, if the "old for the new" is carried out on a large scale, sales can be boosted to a certain extent.
On the other hand, it is controlled from the incremental side. The Ministry of Natural Resources issued a document pointing out that cities with a commercial housing de-conversion period of more than 36 months should suspend the increase in the supply of residential land, and "revitalize and supply" for 18-36 months. It is expected that 48 cities will reduce or suspend the supply of residential land, and the amount of residential land transfer nationwide may decrease by 34.6%-42.6%.
3. Rebuilding Confidence: Real Estate Turning Machine
If you want to revive real estate, confidence is more important than Mount Tai. Recently, relevant departments have stepped up efforts to stabilize expectations. In 2023, the delivery rate of guaranteed delivery will exceed 86%; Real estate financing channels have been opened up, and as of the end of March, 469 billion yuan of credit has been granted to 1,979 projects.
With the introduction of various benefits, the bottom of real estate stocks may have been basically established. Some analysts pointed out that the central government's decision to de-inventory this time means that a series of top-down balance between supply and demand and destocking measures will be introduced one after another, and the impact may hit a historical level.
Looking back, the last two rounds of destocking policies have brought real estate back to life. After destocking in 2016, the inventory of commercial housing has been declining, falling to a low level of 490 million square meters in 2019. Therefore, we also look forward to resolving the current inventory dilemma and revitalizing real estate development through this round of policy combinations.
Conclusion: Opportunities and challenges coexist
Looking ahead, the new destocking policy will open a new chapter in real estate development, but the road ahead will not be easy. Some industry insiders reminded that the current living environment of real estate companies is severe, and it will still take time to alleviate inventory; The need for inventory destocking and economic growth form a virtuous circle, and the two are mutually causal.
Readers and friends, we must maintain a cautious and optimistic attitude, prudently grasp market opportunities, and at the same time clarify risks and make rational decisions. If in the long run, China is still in a period of rapid urbanization, coupled with the continuous release of residential housing demand, we have reasonable grounds to believe that China's real estate will eventually usher in a new development cycle.
Let us encourage us to maintain a positive attitude, wait patiently for the opportunity in this new development process, and grasp the dividends of a new round of real estate development!