From the second half of 2021, the property market began a correction that surprised many people. Initially, the property market in Zhengzhou, Shijiazhuang and the Beijing area was the first to fall. Housing prices in the Beijing area have risen wildly due to its proximity to Beijing, but the lack of industrial support has made it bear the brunt of the property market adjustment.
Subsequently, Shanghai and Shenzhen, two iconic cities, also entered a period of adjustment, and housing prices entered a long-term sideways downward trend. This change caught the speculators off guard. They thought it would be just a short-term fluctuation and that house prices would soon recover, but the reality was the opposite. Now, they are in an extremely awkward position. It is a dilemma to sell at a reduced price, and if you continue to hold it, you can only watch the house price continue to fall.
For a long time, "housing is not speculation" has been the main tone of property market regulation, and the current property market situation has fully confirmed this concept. For owner-occupiers, the impact is relatively small, but those who invest in buying a home are deeply affected.
At present, the urban homeownership rate in mainland China is as high as 96%, and the proportion of households with more than two houses has reached 42%. In this context, whether it is a professional speculator or an ordinary real estate "financial manager", the future will face many problems.
1. Shrinking household assets
House prices have become a trend, and excess properties are at risk of depreciation. Taking Beijing's Hummingbird Home as an example, a 50-square-meter house could be sold for about 10 million yuan during the peak housing price period, but now it is only worth 4.5 million yuan, a drop of 50%.
If a family owns eight houses out of ten, the amount of wealth evaporating can be staggering. This means that household assets are shrinking, and properties that were once seen as wealth appreciation are now a source of wealth loss.
Second, it is difficult to sell
Today's property market not only has the problem of depreciation, but also the difficulty of selling houses. In big cities such as Chongqing, Chengdu, Shanghai, etc., the number of second-hand housing listings has exceeded 150,000 units. A large number of properties are flooding the market, and there is an oversupply, and prices naturally fall.
The situation is even more severe in third- and fourth-tier cities, where most people who want to buy a house choose to go to big cities due to the attractiveness of big cities, and houses in small cities are not cared for. For example, in some third- and fourth-tier cities, even if the developer gives various preferential promotions, there are still very few people looking at the house.
Third, the risk of supply interruption increases
The financial risks caused by the fall in housing prices should not be underestimated. Most buyers buy their homes through loans, and those who just need to buy a home, investors and developers borrow from banks. When a group of people has difficulty repaying their loans, it affects financial stability.
The decline in housing prices has led to an increase in supply disruptions, and the number of foreclosure houses has increased significantly in recent years. For example, in some cities, the number of foreclosure houses per month has increased to a few hundred. This is all due to the inability of homebuyers to repay their loans due to falling home prices.
From the perspective of home buyers, for investors, they originally bought a house with the expectation of income through the rise in housing prices, but now they are stuck in the dilemma of asset depreciation and difficulty in realizing it.
Some investors blindly follow the trend in the early stages, without fully considering the market risk and the actual value of the property. When buyers who just need to buy a house see the decline in housing prices, although they do not have to worry about the shrinkage of assets, they will also worry about whether the house they buy will continue to depreciate, affecting their psychological expectations.
From the perspective of market supply, the number of second-hand housing listings has surged, on the one hand, investors want to sell and stop losses, and on the other hand, some improvement demanders want to replace real estate. However, due to weak market demand, a large number of listings are backlogged. The construction of new real estate has also slowed down due to poor market conditions, and developers are facing huge financial pressure.
Looking at financial institutions, as the risk of supply disruption increases, the risk of bad debts faced by banks increases. In order to reduce risk, banks have been more cautious in approving loans, raising the loan threshold, making it impossible for some people who would otherwise want to buy a home to get a loan.
On the Internet, the public has always paid close attention to the topic of the property market. Netizens have left messages to discuss related topics. Some netizens said that there were speculators around them who were anxious because of the fall in housing prices, and some were glad that they did not blindly invest in real estate at the beginning.
There is also discussion about whether the property market will continue to fall in the future, and whether the government will introduce new policies to stabilize the property market. Some people believe that as urbanization slows down and population growth slows, demand for the property market will further decrease, and housing prices will continue to fall.
Others feel that the property market is an important part of the country's economy, and the government will not sit idly by, but will introduce policies to regulate and control, and housing prices may gradually stabilize or even recover.
Different people have different views on the future direction of the property market. However, it is certain that the predicament faced by investors will not be improved in the short term. For the entire property market, how to meet the people's housing needs while stabilizing the market and preventing financial risks will be a problem that needs to be continuously explored and solved.
With the changes in the economic situation and the adjustment of policies, the property market may gradually find a new balance, but this process is bound to be full of challenges and uncertainties.
From a macroeconomic perspective, changes in the property market are closely related to the overall economic development of the country. In the past, real estate, as a pillar industry, made a huge contribution to economic growth. Today's falling housing prices will not only affect real estate-related industries, such as construction, decoration, building materials, etc., but also affect the financial sector, which will have a knock-on effect on the entire economic system.
In the construction industry, many construction sites have been shut down due to financial constraints for developers, and construction workers are at risk of losing their jobs. The decoration market has also become deserted, and building materials companies have reduced their orders, and they have to reduce production and even lay off employees.
In terms of policy regulation, the government has been seeking a balance. On the one hand, it is necessary to adhere to the principle of "housing for living, not speculation", curb the rapid rise of housing prices, and prevent the real estate bubble from further expanding; On the other hand, it is necessary to avoid excessive decline in housing prices, which will lead to systemic financial risks. For example, some cities have issued fall limit orders to limit the extent of the decline in housing prices.
At the same time, it is also stabilizing the property market by adjusting credit policies, tax policies and other means. For example, some places have lowered the interest rate of the first home loan to reduce the burden on those who just need to buy a home; There are also places that give certain tax incentives for the purchase of new homes.
From the perspective of social impact, changes in the property market also affect people's lifestyles and social perceptions. In the past, people were keen to buy a house for investment, believing that property was the most stable asset. Now, with falling house prices and increasing market uncertainty, people's investment perceptions are gradually changing.
More people are starting to pay attention to other investment channels, such as stocks, funds, bonds, etc. At the same time, the concept of housing is also changing, from the pursuit of large area and multiple suites to the pursuit of quality and practicality. Some young people no longer regard buying a house as their primary goal in life, but instead choose to rent a house in pursuit of a more free and flexible lifestyle.
Internationally, other countries have had similar experiences in property market adjustments. For example, Japan experienced a long period of economic recession and a downturn in the housing market after the housing bubble burst. The assets of many households have shrunk sharply, and bad bank debts have surged, with a huge impact on the entire social economy.
During the subprime mortgage crisis in the United States, housing prices plummeted, a large number of foreclosure houses sprung up, and financial markets were in turmoil. These experiences have provided a certain reference significance for the development of the mainland property market. The mainland can draw lessons from this experience and adopt more scientific and rational regulation and control measures to avoid repeating the mistakes of the past.