2008 is a changing year for China real estate market. The role of the national macro-control policy shows that the transaction volume of commercial housing, which used to be booming in supply and demand, has dropped sharply, and the rising house prices are beginning to decline. The capital chain of real estate developers is tight, buyers are in a state of collective wait and see, and the real estate market is booming.
When the irrational fanaticism of "real estate speculation by the whole people" gradually weakens, people suddenly find that the changes in the housing market and the rise and fall of housing prices are not as simple as the figures themselves, but involve social and economic development and people’s well-being. As one of the pillar industries closely related to national life, how will China real estate industry at the crossroads balance the two propositions of "promoting growth" and "protecting people’s livelihood" in 2009?
The change of the market: the quantity falls and the price lags behind, and the "turning point" of the property market comes.
At the end of 2007, Wang Shi, the head of Vanke, put forward the "turning point" theory when the property market in China was still booming, which was refuted by many people inside and outside the industry. However, just one year later, even the most optimistic people have to admit that the real estate market in China is facing a severe situation.
According to the data released by the National Bureau of Statistics, from January to November 2008, the national commercial housing sales area was 490 million square meters, down 18.3% year-on-year. Among them, the sales area of commercial housing decreased by 18.8%. At the same time, the monthly year-on-year increase of house prices in 70 large and medium-sized cities nationwide reached an all-time high of 11.3% in January 2008, and the increase rate accelerated and decreased to 0.2% in November 2008. The house prices in index cities such as Shenzhen, Shanghai and Beijing declined to varying degrees.
In Shenzhen, where house prices rose all the way in 2007, the average price of commercial housing fell from 17,400 yuan in October 2007 to 11,800 yuan in September 2008, and even fell below the 10,000-yuan mark during the National Day. In the first nine months of 2008, the sales area of new commercial housing in Shenzhen was 2,599,400 square meters, a year-on-year decrease of 47.81%.
In Shanghai, with Vanke taking the lead in price reduction, many real estate giants followed suit, and house prices began to turn around. In August 2008, the second-hand housing price index in Shanghai changed from rising to falling for the first time. In September, the price of commercial housing in Shanghai showed obvious signs of decline. Beijing can’t be immune. In September 2008, house prices in Beijing dropped by 0.2% month-on-month, which is the first time that house prices in Beijing have declined since 2005. By November, the increase of housing sales price in Beijing dropped by 2.3 percentage points from the previous month, and the decline rate exceeded 2 percentage points for the first time.
The arrival of the "cold winter" in the property market has made the developers who used to be "monolithic" in price "flexible". Many properties have begun to be discounted, buying houses to send property, sending home appliances and even sending cars, and various promotional methods have appeared in BLACKPINK; Property buyers who have always been in a weak position have the confidence to wait and see.
Policy change: from "pressure" to "promotion" to ensure healthy development
In 2008, the China real estate market, which was at the turning point, began to feel the pressure. The capital chain of real estate developers began to be tight, and the phenomenon of bottom price transaction, auction and even "land withdrawal" began to appear in various places. The sharp cooling of the land market has led to a sharp drop in the land transfer income of local governments. More importantly, as one of the pillar industries, the prosperity of the real estate industry is closely related to the development of local economy.
In this context, some local governments have launched measures aimed at "activating" the real estate market. In August 2008, the Shenyang Municipal Government announced a series of plans to warm up the market, and Xi ‘an, Xiamen, Changsha, Chengdu and other places also successively introduced preferential measures for buying houses, including tax exemption and tax reduction, and housing subsidies, hoping to stimulate consumption in the real estate market.
After a wave of bottom-up actions to stimulate the recovery of the real estate market, China’s real estate regulation and control policies ushered in an "inflection point" from "suppression" to "promotion" in October 2008. On the 17th of that month, the executive meeting of the State Council made arrangements for the economic work in the fourth quarter. Besides "increasing the scale of affordable housing construction", it first proposed "reducing the taxes and fees for housing transactions and supporting residents to buy houses". In December, a series of preferential measures were introduced intensively. The executive meeting of the State Council held on December 17th put forward policy measures such as relaxing the second home loan, reducing business tax and increasing the credit of housing enterprises. On the 21st, the General Office of the State Council issued "Several Opinions on Promoting the Healthy Development of the Real Estate Market", proposing a number of policies such as supporting housing enterprises to reduce prices and promote sales; On the evening of the 22nd, the central bank announced a rate cut for the fifth time that year, and at the same time lowered the deposit reserve ratio. Among the five key tasks in 2009 assigned by the Central Economic Work Conference at the end of 2008, two of them are related to real estate, "to combine the desire of residents to improve their living conditions reasonably with the role of real estate as a pillar industry"; "Increase the supply of affordable housing, reduce the burden of residents’ reasonable purchase of self-occupied ordinary commodity housing, and give play to the positive role of real estate in expanding domestic demand".
In this context, 2009 will be a crucial year to accelerate the construction of affordable housing. Qi Ji, deputy director of the Ministry of Housing and Urban-Rural Development, believes that increasing the supply of affordable housing will make many low-income groups no longer be mixed with the supply targets of the commercial housing market, which is conducive to stabilizing the price of the commercial housing market. Relevant experts believe that the policy orientation of combining "satisfying residents’ desire to improve their living conditions reasonably" with "giving full play to the role of the pillar industry of real estate" and emphasizing "protecting people’s livelihood" at the same time of "promoting growth" will enable China’s real estate market to walk on two legs, and its future development will be more stable and standardized.
Change of demand: "De-foaming" can stimulate the return of "rigid demand" in the market.
A fact that is more comforting than various favorable and warm-up policies is that the desire and demand of China people to improve their housing conditions still exist rigidly. The sales of some well-known large-scale and some small-sized properties with large discounts have become a proof of the "rigid demand" for residents to improve their housing conditions.
However, there are signs that a large number of property buyers are still on the sidelines. The 2009 Blue Book of Economy published by China Academy of Social Sciences pointed out that in 2009, it is still difficult for real estate demanders to get out of the wait-and-see situation in a short period of time. Real estate speculators will withdraw from the market to varying degrees due to the decline in speculative ability, and the demand for self-occupation of first-time home buyers will be more cautious. Real housing demanders who remain in the market will put forward higher requirements for real estate products.
"The reason why ordinary people will wait and see is because the current housing prices are still far higher than the expectations of ordinary people." Wang Shengxue, president of Shaanxi Real Estate Research Association, believes that the current situation shows that the era of real estate profiteering is gone forever. If developers want to tide over the difficulties, they must reasonably control profit margins and win market recognition by "defoaming" housing prices.
However, although the housing market has turned around and walked away, an interest pattern that has not been shaken so far is that the cost of land acquisition and various "public relations" costs still account for 50% or even higher of the price composition of commercial housing. "We can cut profits, but gray costs cannot be compressed." At the end of the year and the beginning of the year, a real estate agent explained why he was still carrying the price down.
Real estate developers will die, and buyers will certainly die. The once-sung "Don’t sell after death" sound is still ringing in the stock market, and the clanging sound of "Don’t buy after death" seems to ring again in the property market. Relevant persons pointed out that when the "dream of living in peace" of thousands of households still has to be blended with the "land finance" of local governments in the housing market, the "blowout" of housing demand in the market will probably become a long wait. (Reporter Shi Zhiyong)
Editor: Gao Song
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