The "demolition wave" has finally restarted? The central government sets the new tone! From 2024, all 6 types of houses may be demolished

New Talks on Real Estate

2024-05-18 08:40Posted in Henan

When it comes to demolition, words such as "getting rich overnight" and "rolling wealth" immediately come to people's minds, as if "demolition households" have become synonymous with wealth. Indeed, over the past two decades, with the boom in the real estate market, it has been common for cities to become wealthy as a result of demolitions, and many have achieved financial freedom with just one demolition. Especially in the urban villages of the metropolis, tens of millions, or even tens of millions, of demolition compensation, or the harvest of more than a dozen properties, are enviable.

There are such voices circulating on the Internet: the probability of winning the lottery for demolition is much higher than that of the lottery, and many of the compensation amounts for demolition far exceed the lottery jackpot. As a result, many people dream of their homes being demolished. However, in recent years, with the promotion of the old community renovation policy and the downturn in the real estate market, the scale of demolition has gradually decreased, and there was even news that the demolition will be completely stopped.

But with a little thought, we can understand that demolition is not completely gone. After all, homes also age over time. As long as the economy continues to grow, many old houses will eventually face the fate of demolition or reconstruction.

In recent months, there has been an increasing number of news about demolition and relocation in various cities, and many places have successively issued demolition notices, and the scale is not small. So, in the context of the current downturn in the property market, why should the demolition be restarted? The reason for this is likely to boost the property market and stimulate market vitality. The following is a summary of the work report of the central government on demolition and the development of the real estate industry, which mainly involves four points of demolition:

1. Adapt to the development trend of new urbanization and the changes in the supply and demand relationship of the real estate market, and accelerate the construction of a new model of real estate development.

2. Actively promote a new type of urbanization. We should give prominence to the acceleration of the urbanization of the rural migrant population, deepen the reform of the household registration system, improve the policy of linking "people, land and money", and let migrant workers who are willing to move to cities settle down in cities and towns.

3. Focus on urban agglomerations and metropolitan areas to promote the coordinated development of large, medium and small cities. Promote the construction of the Chengdu-Chongqing Economic Circle. Cultivate and develop the county economy, make up for the shortcomings of infrastructure and public services, and make the county an important carrier of new urbanization. Steadily implement urban renewal actions, and promote the construction of "peacetime and emergency" public infrastructure and the transformation of urban villages.

4. Fiscal policy should be moderately strengthened, and quality and efficiency should be improved. It is planned to arrange 3.9 trillion yuan of special bonds for local governments, and issue ultra-long-term special treasury bonds for several consecutive years starting this year, and issue 1 trillion yuan of ultra-long-term special treasury bonds this year.

After the core content of this report, we can make a detailed interpretation from four dimensions. First of all, there is a discussion on urbanization and the supply and demand of housing resources, which actually emphasizes the importance of promoting the process of urbanization and encouraging farmers to integrate into urban life and purchase housing. So, how to effectively motivate farmers to buy houses in the city? An obvious and efficient way to do this is through demolition policies. Because it is only through demolition and relocation that farmers can get enough money to realize their urban dreams. Otherwise, even if the peasants have the desire to buy houses in the cities, it will be difficult to realize them due to the lack of funds.

It is worth noting that the urbanization rate of the mainland has reached 66.16%, which is already quite impressive. However, in this context, if you want to further accelerate the urbanization process, demolition is undoubtedly the most direct and effective method.

As for the third and fourth contents of the report, they are closely related to demolition and relocation. Article 3, in particular, can almost be said to elaborate on the necessity and importance of demolition. Whether it is urban renewal or urban village transformation, its essence is inseparable from the key link of demolition. The pace of urban development in mainland China is accelerating, and many cities are actively promoting urban renewal while expanding their scale, and these efforts are inseparable from the help of demolition.

It can be said that if a city wants to achieve sustainable and healthy development, demolition and relocation work is crucial. Because whether it is the renovation of old houses or the renovation of urban villages, it needs to be promoted through demolition. Of course, the smooth progress of the demolition work is inseparable from the support of funds. Therefore, Article 4 elaborates on the issue of the source of funds, including the issuance of 1 trillion yuan of ultra-long-term special treasury bonds and 3.9 trillion yuan of local bonds, so as to ensure the smooth progress of the demolition and relocation work.

The financial requirements for demolition work are enormous, and given the high housing prices, a single project often costs billions or even tens of billions, not to mention large-scale demolition operations across the country. Taking Chengdu as an example, the 62 urban village demolition and reconstruction projects in its 2024 plan are expected to invest a staggering 120 billion yuan. According to relevant statistics, 28 cities across the country have announced plans for the transformation of urban villages, and the total funds for these projects have approached 920 billion yuan.

Obviously, even the 1 trillion yuan of ultra-long special government bonds or 3.9 trillion yuan of local bonds are still a drop in the bucket. This is precisely the deep-seated reason for the country's decision to issue extra-long special treasury bonds, and indicates that similar treasury bonds may continue to be issued in the next few years to make up for the funding gap for demolition and relocation. This move undoubtedly demonstrates the country's firm determination and strong action for the demolition work.

When it comes to the motivation for the country to restart demolition and relocation in 2024, we can get a glimpse of the clues from the "three major projects" openly promoted by the central government. First, demolition and relocation can help digest the backlog of housing stock, which has various problems, and the released demand can effectively alleviate the inventory pressure of the property market and achieve optimal allocation of resources.

Second, the construction of affordable housing is also a top priority. Although most people already have a home, the high housing prices still make many people look forward to housing, especially for young people who are just starting out in the workplace, it is even more difficult to buy a house. Therefore, the construction of affordable housing and talent apartments is particularly crucial. Through demolition, various localities have been able to build a large number of affordable housing with financial support, which not only helps to solve the problem of people's livelihood housing, but is also an indispensable part of the "three major projects".

It can be seen that the resumption of demolition and relocation by the state is not a temporary move, but is based on deliberate strategic considerations, aiming to promote social harmony, stability and sustainable development by optimizing resource allocation and solving housing problems.

Demolition and relocation in the past 3 years seemed to be the preserve of big cities, but after June 2023, the situation seems to be quietly changing. According to the financial trend, ordinary prefecture-level cities have been included in the grand blueprint of the "three major projects" one after another. This means that in the next two years, not only will the metropolises set off a wave of demolition, but also small and medium-sized cities and counties will follow suit and restart the demolition journey.

As for the specific scope of demolition, only Shenzhen has taken the lead in unveiling the mystery. According to the information released by it, the following types of houses may become the focus of demolition:

First, those houses located in key functional areas, development clusters and rail hub areas determined by the national economic and social development plan, territorial spatial planning and various special plans;

second, housing involving major livelihood projects and major infrastructure construction at the national, provincial, municipal and other levels;

third, houses located within the scope of the top 20 advanced manufacturing parks and major industrial projects;

Fourth, those houses that have serious public health and safety risks, housing and fire safety hazards, obsolete supporting facilities, dirty and messy environment, social governance problems and other outstanding problems, or are considered to be in urgent need of renovation after assessment by relevant departments.

Through the four major demolition scopes announced by Shenzhen, it is not difficult for us to get a glimpse of the future demolition trend. In short, the following types of houses may become the focus of demolition: houses that affect the city's new planning and construction, houses involved in major industrial projects, houses with major safety and health risks in the vicinity, and houses with obvious quality problems. With the change of the times, these houses may usher in a new metamorphosis in the future urban development.

In addition, there are two types of housing that are also facing the fate of demolition. One is the prefabricated slab houses in the city, which hide many safety hazards and are worrying. For example, when planning future community construction, Zhejiang Province has explicitly stipulated that all perforated panel (prefabricated panel) houses built before 2000 in the province's blueprint for demolition and reconstruction. The second is the old houses in the old town of the county, why are these houses also among the demolition? The reason is that the core force to promote the construction of new urbanization often comes from those counties adjacent to the countryside. However, many of the old houses in the county are in a worrying condition, and if you want to attract farmers to buy houses and settle in the city, the first priority is to renovate the infrastructure and appearance of the county. Only when the construction of the county town flourishes can it attract farmers to come and become new residents of the city.

It is clear that the demolition is quite extensive, and is expected to start in 2024 and gradually spread to various cities in the coming years. In the author's opinion, this round of demolition is undoubtedly a great thing for the benefit of the country and the people. It can not only alleviate the current predicament of the real estate industry, but also solve the housing problem of many residents, so that a large number of people can benefit and become rich. More importantly, the demolition work will also drive the common prosperity of multiple industries and practitioners and achieve a win-win situation for all parties.

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