In recent years, the performance of China's real estate market has attracted a lot of attention. According to the National Bureau of Statistics, from January to December 2023, the year-on-year increase in newly built commercial residential buildings** in 70 large and medium-sized cities across the country increased by 43% to 21%；The month-on-month increase was from 04% to -01%, which clearly shows that the rate of house price growth is slowing down or even showing signs of **. Against this backdrop, some experts are pessimistic about the future of the real estate market, predicting that about 49% of Chinese households may face three major challenges from next year.
First, slowing economic growth will put pressure on households. According to the China Economic and Financial Outlook Report (2024) by the Bank of China Research Institute, China's GDP growth is expected to be about 5.5 percent in 20233%, higher than the consensus expectation of around 5%. However, the results of institutions such as the IMF and Goldman Sachs are less optimistic, and their gross domestic product (GDP) growth will slow to 4 in 20246%-4.8%, and there is even a market expectation of 45%。At the same time, Pan Gongsheng, governor of the People's Bank of China, said that China's CPI is gradually picking up, and food will not last, and CPI is expected to rise moderately in 2024. This means that inflationary pressures will rise, but economic growth will slow. This will have a huge impact on many families, including: First, employment pressures will increase, businesses may face a decline in investment and expansion, and fewer new job opportunities, especially given that more than 10 million new college graduates will graduate next year;Second, income growth has been affected, and a slowdown in economic growth may lead to a decline in corporate profits, which in turn will affect employee incomes, making real wages unable to keep up with inflation;Third, consumer confidence has declined, and economic downturn is often accompanied by uncertainty, and people may be worried about the future and unwilling to spend large amounts, which in turn will affect domestic consumption and corporate orders.
Second, some prices** also pose challenges for households. According to the report of the National Bureau of Statistics in November this year, food ** fell by 4 percent year-on-year2%, of which pork ** decreased by 318%, eggs, edible oil, beef and mutton, poultry meat and aquatic products** decreased by 11% to 105%. However, fresh vegetables** fell by 3 from the previous month8% to **06%, fresh fruit ***27%, which means that the price level has shown a downward trend in the near future. Considering that the CPI will rise moderately in 2024 and the competitive pressure in the job market will intensify, many companies are facing salary cuts or even layoffs, which will have a significant impact on ordinary households: first, real incomes will decrease, and the cost of living for households will fall due to the reduction in prices and the increase in the purchasing power of money, however, if the rate of wage growth cannot keep up with the rate of prices, the real purchasing power will decline, resulting in a decline in the quality of life;Second, social inequality has intensified, and prices may have a greater impact on low-income groups, thereby exacerbating social inequality. In addition, prices** are often accompanied by increased costs for education and health care, which can make it difficult for some households to afford the associated spending pressures.
The third challenge is the dilemma faced by real estate investment. In the past, the increase in the supply of the real estate market not only solved the housing needs of the people, but also met the investment needs of some people. Real estate is seen as a relatively stable, long-term investment that is expected to appreciate in value over time, especially in cities with better economic developments. However, in recent years, the real estate market has entered a correction cycle, and it has become very difficult to achieve a quick acceleration of wealth by buying and selling properties. This change directly affects nearly 40% of households, and according to the data, nearly 49% own two properties. These families had planned to use their second-hand properties to cope with house prices**, but the reality of the situation made them even more challenging. In the past, many investors paid off their mortgages by renting out their surplus properties for rental income, but now, with the introduction of landlord tax pilots and increased job market instability, this model has become difficult in many cities. In this case, investors may need to consider adjusting their financial planning and investment strategies to adapt to the changing market environment. On the one hand, they need to manage their loans carefully to ensure that they have enough liquidity to pay their mortgages. On the other hand, they can invest their money in different types of assets to reduce their dependence on the real estate market. In addition, they also need to pay close attention to changes in the real estate market and rental market, and make corresponding adjustments and decisions in a timely manner.
To sum up, after entering 2023, the increase in housing prices in large, medium and small cities across the country will be more variable. According to the National Bureau of Statistics, the rate of housing price growth has slowed down significantly and even trended significantly. At the same time, slowing economic growth and prices** pose a huge challenge to Chinese households. This will not only increase employment and income pressures, but may also lead to a decline in consumer confidence and increased social inequality. In addition, real estate investment faces an adjustment cycle, and investors need to adjust their investment strategies to adapt to the changing market environment. Families should pay close attention to market changes, do what they can, and plan their finances and investments reasonably to meet these challenges. These challenges can be alleviated by increasing macroeconomic control, stabilizing economic growth, controlling prices, and appropriately guiding and regulating the development of the real estate market.