Beijing, Shanghai, Guangzhou and Shenzhen purchase restrictions are relaxed, and the property market has bottomed out? Feng Lun: When the banks can't stand it, it's the end

Feng Lun Feng Ma Niu

2024-05-17 11:12Posted on the official account of Beijing Feng Lun Feng Ma Niu

Cover image | Stills from "The Ultimatum of the Sea".

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Q: A few days ago, the two hot cities of Hangzhou and Xi'an announced that they would completely cancel the housing purchase restrictions and no longer review the qualifications for housing purchases. What do you think about the removal of purchase restrictions in these two cities? Will house prices go up as a result?

Feng Lun: Recently, the residential purchase restrictions in Hangzhou and Xi'an have been completely relaxed. I think this policy is long overdue. On the one hand, it is conducive to the market to restore normal supply and demand, and on the other hand, the lifting of the purchase restriction policy also enables a certain degree of price competition for various residential products.

Past purchase restrictions have led to market rigidity, with prices converging regardless of the quality of homes, which has reduced the incentive for developers to improve product quality and innovation. Now that the housing purchase restriction policy is relaxed, developers will be encouraged to pay more attention to product quality and market demand. As a result, price gaps will arise, with good products may be slightly more expensive, while general products may be less expensive, or even poor products may be difficult to sell. This situation will help motivate enterprises to do a good job and improve product quality and competitiveness.

Recently, the Ministry of Housing and Urban-Rural Development, including the central government, has issued a number of new housing systems and market policies, one of which is to encourage the construction of good houses. If we give the price mechanism to the market, for example, the guarantee belongs to the guarantee, and the market belongs to the market, then we can incentivize developers to build more high-quality housing to adapt to the change in consumption structure and the upgrading of residential consumption.

Therefore, this policy is not only conducive to the sustainable development of improved housing, but also a timely and beneficial policy.

As for whether the market will stimulate more people to buy houses after the market is liberalized, I don't think it will have much impact in the short term. Because in addition to the removal of purchase restrictions, there are already many other policies to stimulate supply and demand. Therefore, the short-term impact of the lifting of housing purchase restrictions on market supply and demand is limited, and will not have a significant impact on market prices, but it can stimulate enterprises to make more innovative products.

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Q: In addition to Hangzhou and Xi'an, Beijing, Shanghai, Shenzhen and other cities have also loosened their purchase restrictions. For example, for the first time in 13 years, Beijing's housing purchase restriction policy has been adjusted, allowing Beijing families who already own two homes to buy another set outside the Fifth Ring Road, and non-Beijing families who already own one house can also buy another set outside the Fifth Ring Road.

What do you think about the relaxation of housing purchase restrictions in first-tier cities such as Beijing, Shanghai, and Shenzhen? First-tier cities have successively relaxed purchase restriction policies, has the residential market really reached the "bottom"?

Feng Lun: Recently, the volatility of the residential market has continued, the overall trend is relatively downward, and the market is under great pressure, but I think it has not yet reached the "bottom".

What is the "bottom" of the residential market? The sign of this is that the bank can no longer afford it, that is, the personal housing loan bursts, and there is a large number of defaults, reaching a ratio that the bank can hardly afford. At this time, the residential market is almost at the "bottom".

Because if the banks can't stand it, it means that most of the buyers are in negative equity and are forced to sell their properties, resulting in a lot of bad debts from the banks, which can indicate that the housing market has bottomed out, and it is not yet the time.

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