Why can’t house prices fall?

  The words of Greenspan, the former chairman of the Federal Reserve, are suitable for the real estate market in China.

  In the downturn of the global economy, China’s housing prices have continued to rise, and housing prices in many areas have exceeded the highest point in 2007.

  The miserable property market in 2008 was not only warming up in 2009, it was a frenzy. In November 2009, the average price of first-hand and second-hand houses in Beijing has reached an all-time high. The average transaction price of Beijing commercial housing monitored by the China Real Estate Research Center reached a high of 18088 yuan / square meter in November, and the average price of the newly opened project rose to 17,550 yuan / square meter. In 2009, the average price of commercial housing in Beijing rose by more than 60%, which is more than six times that of Beijing’s GDP.

  The internationally accepted two important criteria for measuring the reasonableness of housing prices – the ratio of house price to rent and the ratio of house price to income – have basically failed in the face of the frantic Chinese housing market. The “price-to-sale ratio” is an internationally accepted numerical ratio used to measure whether a property market is operating well in a region. The ratio of the monthly rent to the total price is a measure of whether there is a reasonable gap between rent and house price. In general, the international standard rent-to-sale ratio is 1:100 to 1:200, but Beijing’s rental-to-sale ratio has deviated from this value since 2004. At present, Beijing’s rental-to-sale ratio is a serious departure from the safety line. In November 2009, Beijing’s property market rent-to-sale ratio reached another record, breaking through 1:500 for the first time, reaching 1:525, and some regions even reached 1:700. The so-called “price-to-income ratio” refers to the ratio of housing prices to the annual income of urban households. According to the relevant data of Beijing Municipal Bureau of Statistics and Beijing Real Estate Transaction Management Network, as of July 2009, Beijing’s house price-to-income ratio has reached 27:1, which is equivalent to the husband and wife not eating or drinking for 27 years to buy a suite. , exceeding the international average by 5 times.

  The price of an asset or a series of assets rises sharply in a continuous process, and the initial price increase causes expectations that prices will rise further, attracting new buyers—they are generally speculators who profit from the sale of assets. As prices rise, there is often an expected reversal and a sharp fall in prices, which leads to a financial crisis. This is the interpretation of the bubble economy by American economist Charles P. Kindelberg.

  China’s real estate is presenting and bearing the high risk of a bubble economy. The national housing prices have basically continued to rise or even skyrocket. The price of commercial housing has risen far more than the increase in household income. The higher the land price, the more frequent the “land king”, the real estate developers have taken the land to build houses, and the debt ratio has generally continued to rise. The ratio of house price to income and the ratio of house price to rent are extremely unreasonable… Behind all kinds of phenomena, housing becomes a capital-like operation like stocks. In the “high-profile” expectations of speculators and the “panic buying houses” that are common in society, Too much virtual value is given, which is far from its true value. The difference in value between them is growing, and it constitutes an increasingly expanding bubble.

  State-owned enterprises take the money and the local “land finance”

  The rise in housing prices has made the enthusiasm of developers re-emerge, and they have forgotten that the 2008 winter has just passed. Beijing, Shanghai, Chongqing and other places have become more frequent. Not only Beijing and Shanghai, but also in cities such as Shenzhen and Ningbo, the “land kings” have appeared one after another. The vastness of their shots and the vast momentum are all shocking.

  However, what is even more surprising is that state-owned enterprises and central enterprises have become the main force of this crazy land acquisition. In the absence of a comprehensive recovery of the industrial economy, in addition to the traditional state-owned real estate enterprises, those state-owned enterprises that were originally engaged in the steel, electronics, food, energy and other industries have also stepped into or ready to enter the real estate industry.

  These central enterprises or real estate companies with large state-owned enterprises have pushed most of their private capital into second- and third-tier cities. According to statistics from the Midland Real Estate Market Research Department, among the residential land sold in Beijing in 2009, the privately-owned enterprise acquired a land area of ​​4.237 million square meters, with a transaction price of 16.79 billion yuan, while the state-owned enterprise acquired a land area of ​​6.54 million square meters. A total of 41.73 billion yuan. In the total investment of residential land plots in 2009, state-owned enterprises accounted for 71%, far exceeding 29% of private enterprises. It is no wonder that Pan Shiyi, the chairman of SOHO China, after bidding for the auction of No. 15 Guangqu Road, said: “Now the king is a central enterprise.” The direct consequence of the “land king” is that the floor price is high, even exceeding The sales price of the real estate in the same area in the same year, this phenomenon of “flour is more expensive than the steamed bread” is likely to cause the flour and steamed bread to turn over the price, the pressure will eventually be transferred to the buyers.

  The reason why state-owned enterprises take the land is “not bad money” is because the credit funds flowed to state-owned enterprises in 2009, especially some state-owned large and medium-sized enterprises. At the time of the country’s huge lending in the first half of 2009, a large number of enterprises that did not lack money in the economic recovery still received a large amount of loans. The recovery of the real estate industry and the rise in prices have led to a large amount of capital flowing to the property market and the local market. The strong entry of state-owned enterprises into the market is an important reason for raising land prices and accelerating house price increases. What is even more worrying is that the main business of some state-owned enterprises is not real estate, but they frequently create “land kings”, which will aggravate the bubble and irrationality of the market.

  However, a slap is not sounding.

  In fact, in recent years, land transfer income has become an important source of local fiscal revenue. According to the 2009 China Land Transfer Gold Year-end Inventory Report issued by the China Index Academy, the total amount of land transfer fees in China reached 1.5 trillion yuan in 2009. Land transfer fees have become the main source of extra-budgetary revenues for many local governments. In some places, land transfer fees account for 60% of the government’s fiscal revenue, and individual cities and counties reach about 90%.

  Loose credit and inflation expectations

  The appearance of the rise in housing prices is the continued recovery of the consumption power of home purchases. The deeper reason is the relaxed policy environment, such as a series of bailout policies including the second home loan concession, which reduces the cost of purchasing houses, transaction costs, and expands the group of buyers. Increase market demand. On the other hand, the loose monetary policy has alleviated the developer’s financial difficulties, and the developer’s sales since the “Xiaoyangchun” has returned to the market. According to the National Bureau of Statistics, credit funds entering the real estate industry in the first half of 2009 exceeded 800 billion yuan.

  4.58 trillion yuan – When the People’s Bank of China released a report in the first half of last year to announce the credit figures for the first quarter, inflation expectations became more apparent. Under the pressure of inflation expectations, seeking asset preservation and appreciation has become a top priority for many homebuyers, especially investors. In addition to the funds of the investors, there are funds transferred from the physical industry. According to media reports, in October 2009, Cheng Siwei, former vice chairman of the Standing Committee of the National People’s Congress, said that 2.1 trillion credit funds did not enter the real economy, but entered the stock market and the property market.

  Japan’s “lost decade”

  The Japanese land price bubble, which began to accumulate in the 1970s and broke down in the early 1990s, is the longest-lasting real estate bubble in history. Its development is divided into four periods. 1. The bubble sprouting period: After the “Plaza Agreement” in 1985, the US dollar depreciated, and a large amount of international hot money entered the Japanese real estate industry, and house prices rose. 2. The emergence of the real estate bubble: The Japanese government has proposed a policy of domestic demand to lead economic growth. It has cut interest rates five times in a row and relaxed domestic financial regulation. Industries with slower industrial structure growth cannot absorb huge money supply, and large amounts of funds flow to real estate and stock markets. Soaring. Affected by the sudden rise in housing prices, a large number of Japanese have speculative speculation, and a huge real estate bubble has emerged. 3. Unprecedented real estate bubble: Land prices have soared vertically. In 1990, only the land price in Tokyo was equivalent to the total land price in the United States. 4. The bubble burst quickly: interest rates increased. After 1991, international capital was profited and then withdrawn. The Japanese real estate bubble, driven by foreign capital, quickly burst, and real estate prices plummeted. By 1993, the Japanese real estate industry had collapsed, individuals had gone bankrupt, and companies had closed down. The legacy of bad debts was as high as $600 billion.

  In terms of the consequences, this real estate bubble not only hit the real estate industry in Japan, but also directly triggered a serious financial crisis. Affected by this, Japan ushered in the longest recession in history and fell into a depression and downturn for 15 years. People often call this real estate bubble “a further defeat in Japan after World War II” and regard the 1990s as Japan’s “lost decade.”

  The enthusiasm of “Dwelling House” reflects the public’s dissatisfaction with the soaring housing prices but no help. According to the 2010 Economic Blue Book published by the Chinese Academy of Social Sciences in December 2009, 85% of households in China are unable to buy a house. For some ordinary residents in large and medium-sized cities, the crazy high housing prices not only deprived the contemporary people of housing welfare, but also kidnapped the happy life of the three generations. Generally, young and middle-aged families buy houses, not only to take out all their savings, but also to expect parents of both sides to “support” the pensions that have been saved, and “old” has become a common phenomenon.

  Although the space for central government policy adjustment is very limited, it is necessary to quickly and steadily adjust the industry structure, establish a real estate development model combining marketization and non-marketization, and clarify the overall planning and coordination mechanism from the central departments to local governments, and improve the land. The reform of the supply system to the financial system, reform of the tax distribution system, and the liberation of local governments from the “land financial dependence.” Otherwise, China’s housing prices will not be able to get out of the “higher and higher” circle.