Image source/Xinhua News Agency
■ China Economic Times reporter Zhou xuesong
Recently, Ni Hong, Party Secretary and Minister of the Ministry of Housing and Urban-Rural Development of the People’s Rerublic of China publicly stated that this year’s real estate market is generally high, low and stable. As for the next policy direction, Ni Hong said that the real estate market has its particularity, and the transaction volume and price of each city are very different. Regarding real estate regulation and control, it emphasizes the policy of the city, the precise policy, and one city and one policy.
Experts interviewed by China Economic Times said that the incremental real estate market has peaked, but the real estate stock market is huge, especially the huge scale of urban renewal, which is expected to drive the real estate market to usher in the "second spring".
Real estate is expected to usher in the "second spring"
Ni Hong said that from the data, policies and measures such as "recognizing the house but not the loan" and "reducing the down payment ratio and interest rate" have played a positive role. From January to October, although the transaction volume of first-hand houses decreased, the second-hand houses increased. First, the second-hand houses together achieved positive growth year-on-year. In addition, the solid progress of the work of ensuring the delivery of buildings has led to a year-on-year increase of nearly 20% in the completed housing area in the country, which also reflects that it is effective for local governments to help enterprises bail out.
Chen Gui, executive president of Beijing Real Estate Society and founder of Wharf Think Tank, said in an interview with China Economic Times that with the real estate market entering the stock age, some old houses built in the past can no longer meet people’s needs for a better life, and large-scale urban renewal is expected to promote the "second spring" of the real estate market.
At the same time, rigid demand and improvement demand are still huge. However, due to limited income, the current real estate market demand has not been well met, and the price is in the exploratory stage. As long as the economy recovers and the price adjustment is in place, demand will break out again.
For the overall judgment of the next real estate market trend, the Ministry of Housing and Urban-Rural Development believes that at present, China’s real estate market is in a transitional period, and the future sustainable development still has solid support. Under the new model, real estate enterprises should have a clear understanding. What they want now is high quality, new technology and good service. Whoever can build a good house for the masses and provide good service for the masses will have a market and development.
Ni Hong said that the development model that used to pursue speed and quantity in solving the "whether there is" period can no longer meet the new requirements of solving the "whether it is good" problem and high-quality development stage, and it is urgent to build a new development model. In terms of system and mechanism, on the one hand, it is to establish a new mechanism for the linkage of "people, housing, land and money", starting with the scientific allocation of factor resources, and setting housing by people, land and money by housing to prevent market ups and downs; On the other hand, it is necessary to establish a life-cycle management mechanism of houses from development and construction to maintenance and use, including reform and development methods, financing methods and sales methods, and establish systems such as house physical examination, house pension and home insurance. In terms of implementation, it is necessary to implement the "three major projects" of planning and building affordable housing, transforming villages in cities and building public infrastructure for both peacetime and emergency use.
In an interview with China Economic Times, a medium-sized real estate developer said that in the past, financial support for real estate development mainly supported large-scale real estate enterprises, and small and medium-sized real estate enterprises did not support them enough or even received attention. However, recently, the housing enterprises that have problems are basically large-scale real estate enterprises, and financial institutions must have mortgages for the financing requirements of small and medium-sized real estate enterprises. On the contrary, many small and medium-sized real estate enterprises are living relatively well now, which is worth pondering. The reform of the future real estate development model must start from the financial field.
Commercial real estate investment is more active.
From the horizontal comparison, the current real estate market in China is still remarkable. According to the latest capital tracking data of Jones Lang LaSalle, the total investment in commercial real estate in the Asia-Pacific region in the third quarter of 2023 was US$ 21.3 billion, down 22% year-on-year, and China Mainland became the most active market in the Asia-Pacific region.
Pang Shudong, head of investment and capital market department of Jones Lang LaSalle in China, told reporters: "The real estate industry in China has gone through many cycles, whether it is a strong cycle or a weak cycle. In the long run, investors still hold a positive attitude towards the real estate market in China. We have seen that investors have seized special opportunities and made significant progress in strategic acquisitions. These acquisitions will bring rich returns to them in the future. "
The data shows that in the third quarter of 2023, the total investment in the Hong Kong market reached 800 million US dollars, a year-on-year increase of 15%. The Japanese market recorded an investment of US$ 4.1 billion, a year-on-year increase of 3%. Investment in Australia reached US$ 3.8 billion, down 47% year-on-year. Singapore’s total investment in the third quarter was $2 billion, down 11%. Mainland China has become the most active market in the Asia-Pacific region, with a total transaction volume of US$ 4.7 billion, an increase of 43% over the same period last year.
Pang Shudong told reporters that the investment activity in China’s mainland market rebounded after the second quarter of this year, mainly due to the strong acquisition actions of domestic buyers, including capital from domestic insurance, government platforms and financial institutions. Generally speaking, Jones Lang LaSalle maintains confidence in the resilience and long-term attractiveness of commercial real estate in the Asia-Pacific region.
Looking forward to 2024, Fitch Ratings predicts that the business environment of Chinese-funded housing enterprises will still be full of challenges in 2024, but with the help of government support policies, the sales of high-tier cities should gradually stabilize, thus laying the foundation for the long-term recovery of the market. Fitch predicts that the contracted sales will drop by 0%-5% in 2024, which means that the revenue will reach 10 trillion -10.5 trillion RMB.
Jin Tailun, senior director of corporate rating of Fitch Ratings Limited, told China Economic Times that the differentiation pattern of China’s real estate industry will continue: the sales of economically developed regions and cities will stabilize in the next 12 months, while the road for low-tier cities to absorb unsold housing stock is still long. Fitch believes that although the government’s measures aimed at improving the financing channels of private housing enterprises are intensively introduced, the dominant position of state-owned housing enterprises will be further expanded in 2024.
In addition, Fitch expects that the government will continue to work to curb the downward pressure on the real estate market and affect the stability of the system, and will issue follow-up measures to avoid negative interference to the market due to the backlog of unfinished real estate projects and large fluctuations in housing prices.
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