The city's ranking has declined, and the Guangzhou-Foshan economy and property market have also reacted

Deng Haozhi taught to buy a house

2024-06-04 17:20Published in Guangdong Intellectual Officer, Real Estate Economist, Director of the All-China Economic Federation

Text: Deng Haozhi

Foshan was once again selected as a new first-tier city, and the gap between Guangzhou and Shenzhen is widening

On May 30, Yicai and the New First-tier Cities Research Institute released the list of new first-tier cities, in addition to the four first-tier cities in Beijing, Shanghai, Guangzhou and Shenzhen, 15 cities were selected into the list of new first-tier cities, they are: Chengdu, Hangzhou, Chongqing, Suzhou, Wuhan, Xi'an, Nanjing, Changsha, Tianjin, Zhengzhou, Dongguan, Wuxi, Ningbo, Qingdao and Hefei.

It is worth noting that compared with last year, Kunming was kicked out of the list and Wuxi was added. Foshan has been kicked out of the new first-tier city for two consecutive years, and you must know that Foshan has been selected as a new first-tier city for three consecutive years in 2020~2022.

Indeed, Foshan's economic growth has slowed down in the past two years, which is likely to be related to the downturn in real estate. A leading enterprise in Foshan, one of the world's top 500 enterprises, is known as the first real estate company in the universe, Country Garden, which has caused a lot of impact. Second, the ceramics, steel, and furniture in Foshan's fist industry are all real estate peripheral industries, which have also been greatly impacted.

It is also worth noting that the gap between the two first-tier cities, Guangzhou and Shenzhen, is widening. Judging from the five-dimensional scoring items of the new first-tier cities of the list publishing agency, among the five dimensions, Guangzhou surpasses Shenzhen in 3 dimensions and lags behind in 2. However, the three projects that have exceeded it, including the concentration of commercial resources, urban hubs, and the activity of urban people, are only a little higher than Shenzhen's score. However, in the new economic competitiveness and future plasticity, the score is significantly behind Shenzhen. As a result, the final score of Guangzhou is much lower than that of Shenzhen.

In fact, the competition and comparison between Guangzhou and Shenzhen has a long history, and a few years ago, when Shenzhen just surpassed Guangzhou, many people would still say that Shenzhen was only economically strong. However, Guangzhou still has unshakable advantages in terms of scale, politics, transportation, medical care, education and other aspects. Looking at it now, Guangzhou's traditional advantages no longer seem to be prominent, while the gap between disadvantages is still widening, and the comprehensive gap seems to be further expanding.

The comprehensive evaluation of a city's competitiveness also determines the trend of its real estate market. In the past two years, in the context of the national property market downturn, it seems that the gap between Guangzhou's property market and the other three first-tier cities is also widening. Similarly, Foshan's property market seems to be gradually leaving the ranks of quasi-first-tier cities......

S&P: China's easing of mortgage policies has increased the risk of the banking sector in third- and fourth-tier cities

Recently, S&P Global released a report pointing out that measures such as lowering down payment requirements and removing the lower limit of mortgage interest rates in the mainland can boost real estate demand in the short term, but the increase in leverage may also lead to an increase in mortgage defaults. S&P Global said that the increase in demand for mortgages may weigh on banks in third- and fourth-tier cities, where property prices are expected to fall by about 14% between 2024 and 2025.

In general, China's real estate market has entered a dual market, in the first and second tier cities of population inflow, the demand for housing is still growing, and the long-term trend of real estate development is generally healthy. Third- and fourth-tier cities do not have the above foundations. This principle applies not only to the real estate industry, financial institutions, but also to real estate enterprises.

The focus of the project is on the real estate enterprises in the first and second-tier cities, and after the end of this round of property market downturn, their subsequent development prospects will be more optimistic. The real estate enterprises whose business is concentrated in third- and fourth-tier cities have fallen much more than those in first- and second-tier cities. After the implementation of support policies, first- and second-tier cities have begun to pick up, while third- and fourth-tier cities still have basically not felt it.

Whether it's housing investment, or real estate stock investment, the city is still the most important.

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Personal opinion, for reference only