Author: Liang Zhonghua

Source: Liang Zhonghua Macro Research

In the history of the development of China's real estate market, house prices in Wenzhou, Sanya, Haikou, Dali and other cities have risen sharply in a short period of time, and finally ended up stopping rising or even falling for many years in a row. Over the past 17 years, housing prices in Xiamen have also fallen sharply after a big rise. Recently, the regulation and control policies of many small and medium-sized cities have been relaxed, and the familiar "formula" seems to reappear.

However, we believe that the current round of rising house prices over the past 15 years is completely different from the past, and the current situation facing the real estate market is not as simple as deregulation. When the asset bubble comes, while "drunk" in it, we should also keep a sober mind.

Abstract

1The price of house in a small town has risen by an unprecedented rate.The past.10Over the past two years, prices in China's real estate market have experienced a total of three waves of rise, but15The current round of rise since 2000 is completely different from the first two waves: this round of rise is the most lasting and the biggest; the overall increase in house prices in small and medium-sized cities is not obvious, and the increase in first-tier cities is the most prominent, but this round is an all-round rise in house prices in all cities. For example, housing prices in Zhongshan, Kunshan and Langfang, which are among the top gainers, have been flat in the previous five or six years, and Zhongshan City has even dropped slightly, but2016Over the past few years, house prices in these cities have all started to soar.

2. The driving force and hidden worries behind the surge. The expansion rate of urban construction land area in China is much higher than the urban population growth rate, which is the main reason why house prices in small and medium-sized cities have not risen sharply before. However, since 2014, there has been an oversupply in the national property market, and the monetization of shed reform has promoted a surge in real estate sales and prices in small and medium-sized cities. At present, housing prices in all cities across the country are on the high side, and the price-to-income ratio in even small cities is much higher than the international level. While the first generation of "baby boomers" will accelerate retirement, most of their assets are allocated to highly frothy real estate, and aging and the real estate bubble will resonate in the coming years. In recent years, there is no sign of a decline in supply in the real estate market in small and medium-sized cities, the potential supply is still very high, and the second-hand housing market is very small. Once the strong stimulus policy weakens, or even begins to withdraw, housing prices in small and medium-sized cities will once again face risks. The stimulus policy is indeed the time to stop but can not stop.

3. "get drunk" in it, leave a sobriety. Since 2017, house prices in Beijing, Shanghai, Xiamen and other cities have begun to adjust significantly, and the cities where real estate has loosened recently are mainly concentrated in areas where there has been a large increase in the previous period and where prices are under pressure. Housing prices in small and medium-sized cities will be tested in 2019, and the biggest uncertainty remains policy. However, no matter how the policy is chosen, the only choice is to postpone or advance the bursting of the bubble, which is difficult to stop. As ordinary investors or home buyers, when the asset bubble comes, the fastest way to make money is to embrace the bubble, but when the bubble is irrational, "drunk" in it, but also keep a sober mind.

The house price in the small town has risen by an unprecedented rate.

According to the National Bureau of Statistics, in the past 10Over the past two years, the price of China's real estate market has experienced three waves of rise, with a cumulative increase of 38%.，但15The current round of gains since 2008 is completely different from the first two waves.

On the one hand, this round of rise is the most lasting and the biggest.08Ten years later, the first wave of house price increases across the country came from09年2Monthly arrival11年8Month for a duration of30For six months, the cumulative increase reached14%In the following9Pullback within six months2.3%The second wave is from12年5Monthly arrival14年4Month for a duration of23For six months, the cumulative increase is6.2%But it was called back in the following year5.3%The third wave is from15年3Since the beginning of this month, the duration is44For six months, the increase is as high as24%Both the rising time and the rising rate are far ahead of two waves.

On the other hand, the overall increase in house prices in small and medium-sized cities is not obvious, and the increase in house prices in first-tier cities is the most prominent, but this round is a comprehensive rise in housing prices in all cities.在09-15Over the past six years, house prices in first-tier cities have increased as a whole.30%Much higher than in second-tier cities12%And the third and fourth lines.8%. Especially14-15In 2008, house prices in most small and medium-sized cities fell sharply, basically flattening the increase in previous years. And from2015Since 2000, the cumulative increase in house prices in first-tier cities has reached44%, second line33%There are also third and fourth tier cities as a whole.33%。

From the perspective of specific cities, the increase in house prices in small and medium-sized cities is also relatively high.According to the statistics of house prices in a hundred cities2015年3The city with the biggest increase in house prices so far this month is not a first-tier city, but Zhongshan City, with an increase of as much as76%Closely followed by Dongguan, also in70%The house prices in Kunshan, Langfang, Zhuhai, Huizhou, Baoding, Foshan and Jiaxing all increased by more than50%House prices in Hefei, Nanjing, Haikou and Wuhan are among the highest in second-tier cities.

If you look longitudinally at the historical data of house prices in specific cities, the characteristics of this round of surge in small and medium-sized cities are more obvious.For example, housing prices in Zhongshan, Kunshan and Langfang, which are among the top gainers, have been flat in the previous five or six years, and Zhongshan City has even dropped slightly, but2016Over the past few years, house prices in these cities have all started to soar. Besides, we saw it.100The historical data of house prices in Xiangtan, Changzhou, Luoyang, Weifang, Huzhou, Yangzhou, Rizhao, Yantai and most other small cities, as well as Hangzhou, Chongqing, Tianjin, Chengdu, Changchun, Kunming, Nanchang and other second-tier cities are the same.

The driving force and hidden worries behind the surge

Why is the house price in most cities between 2010 and 2015?There has been almost no increase between the years? The main reason is the expansion of supply.Although the urban population is increasing with the rapid development of urbanization, the urban area is increasing even faster. Over the past decade, various localities have been promoting the development of new towns and increasing the supply of commercial housing. According to the data from the Statistical Yearbook of Chinese cities2006-2016The area of urban built-up areas in China expanded cumulatively in61%Expansion of urban construction land area54%While the urban population has only increased21%。

A direct result of the excessive growth in the supply of commercial housing is that to 2014In 2000, we began to find that too many houses were built!The area for sale of commercial housing is2016The year even soared to7An all-time high of more than 100 million square meters. It is because of oversupply and overstocking that it appears.14-15House prices fell in all cities in 2008, especially before many small and medium-sized cities almost flattened out.5The total increase in house prices for the year.

Since there is an oversupply, why are most cities at 15?、16Did house prices soar again after 2000? In fact, there has been a lot of discussion about this issue: in the face of high inventories in the real estate market and falling house prices, the government has gone from 2015The monetization proportion of shed rehousing has been greatly increased since 2000, to less than 10%.Quickly increase to 50%Above.Under the stimulation of the monetization of shed reform, the real estate market of small and medium-sized cities in China has seen a high increase in sales and prices in the past three years. The effect of getting rid of inventory is also very obvious, and the area for sale of commercial housing across the country has returned to2014At the level of 2000, the area for sale of residential buildings has even returned to2013The level of the year.

However, the negative impact of the policy stimulus is that the national housing prices were on the high side in the first-tier cities before, but now the 2345th-tier cities are on the high side, and the bubble risk is prominent.The price-to-income ratio in most countries in the world is in15At present, the price-to-income ratio in most cities in China has exceeded that of less than one.15Times. This means that even if most urban residents spend all their income on buying a house, they will at least need15If you spend half of your daily expenses in two years, you will need to30You can't buy a house until the end of the year. If the expenses of parents and children are taken into account, house prices in all cities are now so high that they cannot be bought by husband and wife alone, and they can only be paid for by "six wallets".

And if we link the country's generally high housing prices with China's aging, the problems we will face in the future will be even bigger.The past decade has been the second generation of "baby boomers" in China.1982-1992The time when they get married and buy a house, and the money they spend on buying a house depends largely on the first generation of "baby boomers" because of the Chinese custom of parents helping their children buy a house. However, from an economic point of view, parents to help their children buy a house is not only a kind of savings, but also a "hidden" debt faced by their children, because children have the obligation to support the elderly.

In the next decade, the first generation of baby boomers will accelerate their retirement, and most of their assets are allocated to highly frothy real estate. Once house prices fall, where will they be funded for retirement? And in order to provide for the aged, do you need to sell the house? This is actually a problem that we will have to face in the next few years.

In fact, there is a long-term population inflow in big cities, which will support housing prices to a certain extent, but it is very difficult to maintain high housing prices in small and medium-sized cities.

On the one hand, the potential supply of the real estate market in small and medium-sized cities is still very high.At the national level, the real estate market is2014In 2008, there was a situation of oversupply, otherwise prices would not have fallen and stocks would not have been high. However, under the policy stimulus, we do not see any sign of a decline in supply. The area of newly started housing is14-15After a short-term decline in 2000, it rebounded for three consecutive years, before this year.11The number of months has rebounded to14The high position of 100 million square meters, and the construction area is also from14Yearly51100 million square meters all the way up to before this year.11For six months56100 million square meters.

Although the current nominal inventory level of real estate is very low, this inventory counts the area of commercial housing that has been completed but has not been sold, and does not represent the supply situation of the real estate market. Unlike ordinary goods, houses last for decades, and the decline in official inventory levels only means that house ownership has been transferred from developers to residents, who currently hold a huge supply. According to our estimates, in the past three years, we have not only been able to guarantee annual residential sales of more than 1.1 billion square meters, but also the cumulative additional sales area each year will be enough to completely digest the high inventory of real estate in that year.

On the other hand, the second-hand housing market in small and medium-sized cities is much smaller than that in first-tier cities.Especially in small cities with an unlimited supply of new houses, people are more willing to buy new houses. This also leads to once the price turns, it is difficult to find a buyer to take the offer, the stock of second-hand housing prices will fall faster. This is the case in14-15It has already happened in small and medium-sized cities in 2000, and there is a good chance it will happen again.

In a market with oversupply, there is no reduction in supply, and only strong stimulus policies can stimulate sufficient demand, supporting prices can not only remain unchanged, but also rise sharply. Once the strong stimulus policy weakens, or even begins to withdraw, the house prices of small and medium-sized cities will be at risk again, and the stimulus policy does come to a time when it wants to stop but can't stop.

"drunk" in it, leave a sober

In fact, in the history of real estate development in China, house prices in small and medium-sized cities have soared in a short period of time.For example2010At the beginning of the year, driven by the construction of an international tourism island in Hainan, house prices in Haikou and Sanya soared nearly in less than three months.40%But in the following7Over the past five years, house prices have barely risen, and prices in Haikou have even fallen.20%多。

There has been a similar situation in Wenzhou, Dali, Ordos and other real estate markets. Prices in Wenzhou have not only not risen, but also fallen over the past decade. The real estate bubble caused by a short-term surge in a city often takes many years to digest.

2017Since 2000, housing prices in Beijing, Shanghai, Xiamen and other cities have begun to adjust significantly, and the cities where real estate has loosened recently are mainly concentrated in areas where the previous increase is relatively large and prices are facing adjustment pressure.As we analyzed earlier, there are many policy tools when house prices fall in big cities, but if house prices in small and medium-sized cities fall, the effect of loosening policy is not obvious. For example14-15In 2008, many cities relaxed their controls, but house prices still fell sharply, eventually relying on theQEThe strong stimulus to hold up the price.

2019Housing prices in small cities will be tested in the middle of the year, and the biggest uncertainty remains policy.If the monetization of shed reform continues to maintain a high proportion and strong stimulation, housing prices in small and medium-sized cities may be able to support for some time, but if the efforts are weakened, high housing prices in small and medium-sized cities will not be able to hold up. Any asset price bubble will eventually digest the bubble risk with the fall of the price. No matter how the policy is chosen, we can only choose to postpone or advance the bursting of the bubble, which is difficult to stop.

As ordinary investors or home buyers, when the asset bubble comes, the fastest way to make money is to embrace the bubble, but when the bubble is irrational, "drunk" in it, but also keep a sober mind.

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