Sunday , October 24 2021

Real Estate Enters the Adjustment Cycle What cities have pressure to lower housing prices? -Financial Channel – Financial Circle



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The last market can be described as "scars and fascinating eyes": First, Vanke shouted the word "live", after which Jin Jiuyin 10 did not sell well, and 10% of the payment was heard everywhere, and then the market sent a certain property to court. Message about 30% discount at the auction … People can not help but wait: Will the house price drop?

Sales of commercial apartments are weakening

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First of all, look at the real estate market trend this year from the sales point of view.from

To sum up, the real estate market will bounce back in May this year, but the warming lasted only a short time: gold, nine silver and ten silver seasons were not good enough, and the sale was not good, some cities reported a reduction in the price of 11 properties. From the data point of view, the growth rate of sales in third-order cities started to decrease significantly in August, and the sales growth rate in first-order cities began to decline after October, while the growth rate of sales in second-order cities was still weak.with

(See Figure 1).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

In addition, compared to history, the growth rate of real estate sales this year has been shortened. For example, the growth rate of real estate sales in 2012 lasted about a year and a half, but this year's growth rate of real estate sales lasted only one quarter.

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Secondly, from the perspective of housing prices, prices are rising and falling hot cities.from

Judging by the prices of new homes, the number of new homes in September fell by the number of new homes, in August only the price of new homes in Xiamen fell, but in September fell prices of three cities in Shanghai, Shenzhen and Jinhua. When it comes to the price of second-hand homes, the prices of second-hand homes in seven cities fell in September, and prices of Shanghai-type dwellings dropped in eight months, and in Xiamen, 18 months. In general, the rise in prices of new homes in September 70 cities decreased.with

(See figure 2).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

How to get a market price?

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First of all, from the point of view of population and leverage, the real estate market is struggling with lowering pressure.from

After 2014, the growth rate of the population in China aged 20-45 turned negative, and the necessary foundation gradually weakened: 1.1 households per household indicate that the improvement in demand is the main hero of the other half of the real estate. On the other side of the coin, the leverage of our residents is still growing, and the ratio of housing loans to deposits increased from 23% in 2006 to 65% in September 2018. It is borrowed in the country and must be repaid. In the environment, the space to further increase the leverage to buy a home is very limited.with

(See figure 3).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

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Secondly, foreign experience shows that the price adjustment can take about 6 years.from

An example of this may be the United States. After housing prices began to fall in 2007, there was a sub-prime mortgage crisis, from 2009. Until 2014, the long-term increase in US residents' debt was negative for six years, which means that residents will mainly use net repayments over 6 years.with

(See Figure 4).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

It was not until 2015. US residents again increased long-term loans, but long-term loans in 2017 increased by USD 300 billion, or less than USD 400 billion in 2000. Therefore, adjusting the resident leverage cycle is slow, and after that, as residents will be forced to reduce their debt, they will be able to compress consumption and repay loans for a long time. Responding to the low willingness of residents to mortgage loans, real estate prices in the US continued to decline in 2007-2012, with the declining cycle being around 6 years.

Which cities have pressure to lower housing prices?

Then, in the cycle of correction of housing prices, which cities have more pressure to lower housing prices?

According to experience, when the real estate market enters the adjustment cycle, house prices usually follow the first three or four lines, the second and second line, the first satellite city, the second major city, the first suburbs, city area, first-hand home, new home fine.

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First, the policy of monetizing the vacancy reform has been withdrawn, and the pressure to adjust housing prices in third and fourth level cities is high.from

At the end of 2016, together with strengthening the regulation of real estate in the first and second-class cities, the prices of third and fourth-level cities grew steadily with the monetization of the raccoon. Especially this year, the price increase in the third and fourth-tier cities is much higher than in the first and second-order cities.with

(See Figure 5).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

with

However, according to the central bank statistics, PSL added 150 billion yuan in February this year, and then gradually declined, and by August this year, PSL added only 9 billion yuan. In September, PSL started supporting the financing of infrastructure projects.

As the so-called "Spring River Plumbing Duck Prophet", which ended the reform of monetization, developers gradually abandoned the strategy of the so-called satellite city in third and fourth level cities. From August to October this year, the area of ​​land transactions in third and fourth-tier cities fell by 35% year-on-year.

Secondly, the prices of second-hand homes in new homes will continue to fall. Starting from October 2016, the main cities of the first and second order introduced price limits for new homes, so after correcting the market, the real estate market in such cities will enter a state of illiquidity.with

(See Figure 6).

Real estate is entering a cycle of adaptation, which cities have pressure to reduce housing prices?

From the end of 2006 to the price of used houses and new homes in September 70, 2018. Prices of apartments used in Wuxi, Hangzhou, Shenzhen, Wuhan and other cities have a higher rate than new homes. After the market of the waiting mood, the prices of real estate used in such cities will gradually decrease, and theoretically drop to the same level as new house prices.


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