On July 24, the Political Bureau of the Central Committee of the Communist Party of China held a meeting to clearly put forward the tone of "major changes in the relationship between supply and demand in China's real estate market". The author believes that the change of supply and demand in the real estate market directly affects the change of supply and demand in the cement industry, and this new adjustment and a series of related measures will affect the future development of China's cement industry in the long run.
The new tone and a series of measures
for the real estate sector, the central government believes that we should not only defuse risks but also guard against risks. At present, the main risks in the real estate sector include the illegal misappropriation of pre-sale funds, the risk of debt repayment of real estate enterprises, the risk of housing failure and the risk of construction quality and safety. The author believes that defusing risks and preventing risks will remain the top priority in the real estate sector for a long time to come. In June this year, Ni Hong, Secretary of the Party Leadership Group and Minister of the Ministry of Housing and Urban-Rural Development, stressed that "guaranteeing the delivery of buildings, people's livelihood and stability" is a major decision-making arrangement made by the Party Central Committee and the State Council, whi ch should further improve the political position, enhance the sense of responsibility, accelerate the construction and delivery of overdue residential projects, and earnestly safeguard the legitimate rights and interests of buyers. The development of real estate industry should shift from "yes or no" to "good or bad", change the mode of "high leverage, high debt and high turnover", carry out pilot sales of existing houses, and promote the smooth transition of real estate industry to a new development model.
What is a major change in the relationship between supply and demand in the real estate market? The author believes that there are three connotations:
(1) The overall oversupply of real estate
In the process of rapid urbanization, real estate enterprises have solved the problem of insufficient housing supply by means of "high leverage, high debt and high turnover". With the slowdown of urbanization and the transition to a stable stage of development, the overall supply of real estate exceeds demand. Even if there is a partial shortage in some cities, it can also be met by increasing the construction and supply of affordable housing, implementing real estate policies according to the city, increasing the old transformation, building the rental market and revitalizing all kinds of idle real estate.
(2) Structural shortage
At present, the problem of "yes or no" in the real estate industry has been basically solved, but structural shortage ( "good or bad") is widespread. There are some common problems in the safety and quality of housing, the comfort of living and the surrounding supporting facilities (transportation, education, medical treatment, cultural facilities). Therefore, the central government has repeatedly proposed to better meet the demand for improved housing. Improved housing demand is not only the improvement of housing space and area, but also the improvement of housing safety and quality, surrounding facilities and other aspects. The future competition of cities and real estate enterprises will focus on the competition of improved housing, WYSIWYG-the future or general trend of the pilot sales of existing houses will greatly reduce the risk of safeguarding rights in the real estate field, and at the same time promote real estate enterprises to focus on the polishing of products.
(3) The way of supply and demand has changed
. In the past, real estate transactions were mainly based on the direct sale of houses by buyers and sellers. At present, the supply and demand mode of the real estate industry is undergoing profound changes. In the stage of oversupply of housing, the policy constraints of "no speculation in housing" and the change of living concept make the way of living more flexible. During the period of 2016-2022, the Central Economic Work Conference will gradually form the long-term rental housing market in the future, from the expression of "speeding up the legislation of the housing rental market, speeding up the development of institutional and large-scale rental enterprises" to "rectifying the order of the rental market" to "speeding up the development of the long-term rental housing market" to "exploring the construction of the long-term rental housing market".
In addition to the risk of real estate itself, the risk of local debt has been gradually exposed, which also needs to be resolved and prevented. On the one hand, we should continue to strictly control the scale of local debt, especially in high-risk areas; on the other hand, we should trade time for space and resolve debt risks through debt replacement and debt restructuring. Either way, it will continue to restrict the promotion of local municipal projects. Impact
on the cement industry (1) Cautious view of the future recovery
of cement demand in real estate In 2019, the new construction area of commercial housing reached 2.27 billion square meters, the highest in history, and then continued to shrink, with a 47% decline in 2022 compared with the high in 2019. It is expected to decline by more than 10% in 2023. In the context of the overall oversupply of the real estate market, even if the new construction area of commercial housing is restored in the future, the strength of the recovery is relatively mild. From January to June
2023, the completed area of commercial housing increased by 19% compared with the same period last year, and "guaranteed delivery" promoted the completion cycle. With the gradual completion of stock projects and the weak succession of new projects, we still need to be cautious about the recovery of cement demand in real estate in the future.
(2) Pay attention to product quality to better meet the downstream demand. There is still room
for supporting municipal cement demand in large cities. The consumption of improved housing is a long-term and long process, and how to meet the requirements of improved housing construction for cement quality and performance is a problem that cement enterprises should consider in advance. In the past, the homogeneity of cement was serious, and the competition of products was more based on price. In the future, how to better meet the needs of downstream users should be combined with the advantages of the entire industrial chain (concrete, cement products, concrete structure) to create higher quality housing, more emphasis on product competitiveness. In addition to quality, energy consumption, carbon emissions and environmental standards of products are equally important to better solve the downstream "good or bad" problem. Recently, Shandong Province has also issued the Guiding Opinions on the Development and Construction of High-quality Housing, which puts forward more detailed connotations and implementation tasks of high-quality housing.
In addition to housing itself, there is still room for cement demand for supporting municipal projects in cities, especially in large cities (densely populated areas). At present, the construction of municipal projects is mainly restricted by capital problems and return on investment. The resolution of local debt still needs time, but the supplement, optimization and adjustment of tax policy in the future will mostly replace land finance, which will open up space for the stability and growth of cement demand in municipal projects in the later period.
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