China's property market embraces a new cycle or promotes industry transformation with existing home sales

(Economic Observer) China's property market embraces a new cycle or promotes industry transformation with existing home sales

　　China News Agency, Beijing, January 19th, title: China's property market embraces a new cycle or promotes industry transformation with existing home sales

　　China News Agency reporter Pang Wuji

　　In 2022, China's real estate industry will undergo a rare in-depth adjustment, and the entire industry will experience a clearing cycle.

However, from another point of view, after "removing putrefaction and regenerating muscle", with the rebalancing of supply and demand, the real estate industry is also expected to move towards a truly virtuous circle.

Property market embraces new cycle

　　According to data recently released by the National Bureau of Statistics, in 2022, the sales scale of commercial housing in China will drop from nearly 1.8 billion square meters in 2021 to 1.36 billion square meters; fell to about 13.3 trillion yuan.

The scale of commercial housing sales hit a multi-year low.

At the same time, last year, the growth rate of investment in real estate development experienced a year-on-year negative growth for the first time.

Indicators such as the newly started area of ​​housing, the area of ​​land purchased, and the funds in place for real estate companies all fell sharply.

　　Zhang Bo, director of 58 Anjuke Research Institute, pointed out that although several important dimensions supporting real estate development (population, urbanization speed, etc.) cycle.

　　Ni Pengfei, director of the City and Competitiveness Research Center of the Chinese Academy of Social Sciences, also believes that in recent years, the high level of real estate operation is unreasonable and unsustainable.

Due to changes in some long-term variables, such as per capita housing area, population aging, etc., real estate cannot grow as high as in the past. "We predict that the scale of real estate and housing additions in the next ten years will range from 1 billion square meters to 1.2 billion square meters About meters, matching the corresponding real estate investment scale".

　　After the in-depth adjustment last year, he pointed out that in terms of the total amount, the current real estate market is approaching a reasonable range.

　　Economist Ren Zeping also believes that the era of large-scale real estate development has come to an end and has entered the era of stock.

He pointed out that the current urban housing-to-household ratio (the ratio of the number of housing units to the number of households) has reached 1.09, and the supply and demand are basically balanced. In the future, most cities will face housing surplus. shrink.

Existing home sales drive transformation

　　In the process of rebalancing supply and demand, a new cycle may kick off.

A key change recently mentioned by officials is worth noting.

　　The recent national housing and urban-rural construction work conference summarized the current and future real estate work priorities as "stabilizing expectations, preventing risks, and promoting transformation."

In terms of promoting transformation, the meeting clearly pointed out that those who have the conditions can sell existing houses, and those who continue to implement pre-sales must put the responsibility for fund supervision in place to prevent funds from escaping and avoid new risks of handover.

　　What does this change mean from the pre-sale system of "selling unplanned flats" to the sale of existing homes?

　　In an interview with a reporter from China News Agency, Liu Shui, director of enterprise research at the Middle Finger Research Institute, said that the sale of existing houses can help reduce unfinished buildings and quality problems. For real estate companies, it can also guide them to focus on product quality and high-quality services, and guide Real estate companies operate steadily, reducing leverage and debt levels.

He believes that in the future, the sale of existing houses may be piloted in some plots in key cities, or it may be specified as a condition for land transfer.

　　However, Liu Shui reminded that from pre-sale to existing home sales, it should be a slow conversion process, and there should be no "sharp turn" or overnight completion.

The pre-sale system has been in China for nearly 20 years. If it is suddenly switched to existing home sales, it may aggravate the financial difficulties of real estate companies.

　　Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, also told a reporter from China News Agency that the sale of existing houses will no longer have the problem of guaranteed delivery, which means that future housing supply will put more emphasis on people's livelihood protection.

Li Yujia also reminded that the sales of existing houses should be implemented according to the region and time, matching the inventory on sale in each city and the land supply plan in the next few years, and it is not suitable to be in place in one step.

　　For areas with less short-term inventory, Li Yujia believes that it is more appropriate to increase land supply in advance, and then adopt the "new and old division" model.

For areas with a large amount of short-term inventory, the pilot program of existing house sales should be clearly stipulated in the land transfer conditions step by step, or an optional transition plan.

Weak Volatility Recovery

　　Recently, Vice Premier Liu He of the State Council delivered a speech at the 2023 Annual Meeting of the World Economic Forum, saying that in response to risks in the real estate sector, China will focus on stabilizing expectations, providing reasonable liquidity, relaxing regulatory measures during overheating periods, and actively expanding effective demand.

In the future, there will still be sufficient demand support for the stable development of China's real estate industry.

　　The National Housing and Urban-Rural Construction Work Conference also proposed that in 2023, more efforts will be made to accurately support rigid and improved housing demand and enhance market confidence. At the same time, it is also clear that speculation in real estate will be strictly controlled.

　　Ni Pengfei pointed out that in 2023 and for a period of time in the future, if there is no impact of unexpected events, the overall trend of real estate will be weak volatility recovery.

　　Zhang Bo believes that the bottom of the real estate market has gradually become clear, and housing prices may stabilize in the second quarter of this year.

(Finish)