Core Viewpoint: The mode of stimulating real estate demand to drive economic growth will not be sustainable. Housing enterprises blindly buy land at high prices and engage in large-scale development. The business model of high inventory, high debt and high turnover has become a thing of the past. The mode of developing cities by relying solely on land dividends and land sales financing will not go far. In the future, the supervision of land supply and capital supply channels will be more rigorous, the rental market of commercial housing will be actively cultivated, the real estate tax and fee system will be reformed, the cost of real estate speculation will gradually increase, the house will gradually return to the essence of living, and the economic growth rate will gradually match the growth rate of housing prices.
From "the loan age period can be extended to 90 years old", to 23 cities where the interest rate of the first suite loan has been lowered, the first suite interest rate is 4.1% lower than lower limit of the mortgage interest rate, to 34 cities, and more banks have launched "heart-to-heart loans" for boyfriends and girlfriends, and advertisements for loans up to 100 years old, the housing market policy has been advancing all the way. In the heat of publicity. Despite the principle of not speculating in housing, the real estate policy has been gradually loosened, investors are ready to move, can real estate make a comeback under the fierce policy stimulus?
1. The top-level logic
of stimulating real estate demand According to the data of China Real Estate Association, the added value of domestic real estate industry accounts for about 7% of GDP. At the same time, the real estate industry chain involves all walks of life from upstream raw materials, construction machinery, landscape engineering, architectural decoration to downstream decoration design, home decoration electrical materials, property management and so on, which can indirectly stimulate economic growth of about 20%. From the perspective of the contribution of real estate to GDP, the correlation between GDP growth and real estate industry is high, accounting for about 15%. In addition, the value-added tax, deed tax, income tax, land value-added tax and land leasing income generated by the real estate industry account for about 40% of the government's revenue. Moreover, real estate is a livelihood industry, and real estate accounts for about 60% of household assets on average. It shows that real estate plays a decisive role in the national economy.
In 2022, China is facing greater imported inflation pressure, while the negative effects of the epidemic are expanding, the upstream raw material prices are high, the downstream demand is insufficient, the investment of enterprises is reduced, the supply and demand sides are under double pressure, and the economy is facing recession pressure throughout the year. In order to cope with the pressure of economic recession, macroeconomic policy regulation and control is active, and the broad currency + active fiscal policy model is adopted to provide liquidity for the market and expand effective demand. Entering 2023, the epidemic situation has been liberalized and global inflation has fallen, and the supply side has been improved. However, under the background of the global economic downturn, the pressure of import and export has increased, while the demand side has to be able to play a dynamic role. Last year, infrastructure investment and automobile consumption played a key supporting role, but this year, with the reduction of fiscal revenue and the decline of policy subsidies, infrastructure investment and automobile demand have been reduced. The pull of real estate consumption plays a key role in supporting the economy throughout the year, so there are some scenarios described at the beginning of this article.
2. Under the background of supply-side reform, the real estate industry is facing a turning point
. Over the past 40 years, four endogenous driving factors and several reform measures have jointly promoted the prosperity and development of the real estate market. First, the population and urbanization rate are expanding rapidly. In the 40 years from 1980 to 2020, the total population increased by 400 million, the total population size continued to increase, and the urbanization rate increased from 19.39% in 1990 to 64% in 2020. The sustained and rapid growth of urban permanent population has a direct pulling effect on housing demand. Second, the per capita housing area of the city is very small, the built-up area of the city is small, and a large number of old cities need to be transformed. In 1980, the per capita housing area of the city was only 5 square meters, and there were many dilapidated houses in Shanghai, Chongqing and other cities. The transformation of the old city was put on the agenda, which indirectly stimulated the housing demand. Third, the transportation infrastructure is in urgent need of improvement, and the urban industry is very weak. According to the Statistical Yearbook of China's Cities, the total industrial output value of 295 cities in 1985 was only 607.798 billion yuan, and the industrial development was sluggish. With the vigorous development of urban industry, the population gathered, urban employment and housing demand increased. Fourth, education, health care, culture and other facilities are seriously inadequate, the urban service industry is backward, with the improvement of people's livelihood infrastructure, urban housing demand is gradually escalating. Faced with the long-standing housing demand, from the reform of rural land contract system, allowing farmers to leave their homes to urban workers, land leasing, to allowing the construction of commercial housing, advocating the mortgage system, and innovating the government's investment and financing mechanism, the reform measures have been gradually liberalized, the real estate market has developed rapidly, and housing prices have been rising. The number of real estate developers has increased from 2500 in 1987 to 97900 in 2018, and the market has reached an unprecedented prosperity.
However, with the decline of the demographic dividend, the increase of the risk of the middle-income trap and the change of the international economic pattern. Since 2015, there has been a deviation between the linkage between economic indicators such as the sustained downward trend of economic growth and the sustained low level of CPI, the increase of residents'income and the decline of corporate profit margins, the increase of consumption but the decline of investment. This is neither traditional stagflation nor standard deflation, but the contradiction between the low quality of supply and the growing demand of Chinese residents, which shows that China urgently needs to optimize and improve the supply-side environment and mechanism, and also means that China's economy has entered a new stage of development.
On the surface, it seems that supply-side reform and real estate policy regulation have led to the depression of the real estate market, but in fact, the real estate asset-liability ratio has been rising, the contribution of real estate to economic growth has deviated from the economic growth rate, and the business model is facing many turning point. First, population growth has entered the turning point, aging is further aggravated, and the urbanization rate is close to the ceiling. According to the China Population and Development Research Center, China's population growth is expected to peak at 1.417 billion by 2027, and then begin to decline. By 2020, China's population over 60 years old will account for 18% of the total population. According to the current growth rate, it will reach 22% in 2025, 31% in 2035, and nearly 40% in 2050. In other words, by the end of the 14th Five-Year Plan, China will enter a moderately aging society, and by 2034, it will enter a severely aging society. With the aging of the population, the elderly will not stay in the countryside in large numbers, and the urbanization rate will slow down significantly. Second, the per capita housing area is close to saturation, and the total amount of new real estate area, inventory and idle housing has reached a high point every year. From the 1980s, the per capita living space was only 5 square meters to nearly 50 square meters in 2020, which has reached the average level of developed countries and is close to saturation. At present, the inventory of new houses overstocked by real estate enterprises for one year accounts for about 35% of the scale of new houses built, and about 20% of second-hand houses are idle. Third, large-scale demolition and reconstruction of old cities has ended, large-scale urban infrastructure is nearing the end, and the construction of educational, health and cultural facilities is close to the ceiling.
Third, the era of industry reform and soaring house prices has passed, and the matching
of house prices and economic growth shows that the difficulties faced by the real estate industry are not short-lived, and the real estate industry is facing new industrial structure and business model changes. Because real estate accounts for a large proportion of the economy and the real estate industry was a pillar industry in the past, in order to avoid systemic financial risks, resulting in large-scale bad debts of banks and thunderstorms of enterprises, loose policy stimulus is still needed to help the economy and the real estate industry make a smooth transition in the painful period of economic transformation.
However, the mode of stimulating real estate demand to drive economic growth will not be sustainable. Housing enterprises blindly buy land at high prices, develop on a large scale, and the business model of high inventory, high debt and high turnover has become the past. The mode of developing cities simply by eating land dividends and selling land financing will not go far. In the future, the supervision of land supply and capital supply channels will be more rigorous, the rental market of commercial housing will be actively cultivated, the real estate tax and fee system will be reformed, the cost of real estate speculation will gradually increase, the house will gradually return to the essence of living, and the economic growth rate will gradually match the growth rate of housing prices.
Despite the rapid development of real estate demand policy, under the background of housing non-speculation and industry change, residents'rigid demand is the main factor, real estate developers are cautious in taking land, compared with 2022, rigid demand and improved demand increase under policy stim ulation, supply is difficult to recover rapidly, new housing prices or a small rebound, but the era of soaring house prices has passed. Real estate is likely to drive a weak economic recovery. For investors, just need to use the policy to buy, speculators need to pay attention to the future investment in real estate yields will be reduced.
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