Since the bell rang in 2020, the winds in the real estate market seem to have changed subtly. What was once a hot investment hotspot is now a bit deserted. The boom in property speculation has gradually subsided, and some homeowners have even chosen to abandon their mortgages and ignore their properties.
The reasons behind this are complex. The tension between China and the United States, coupled with the sudden new crown epidemic, is like two powerful storms that have swept people's wallets. Declining incomes and job uncertainty have left many people feeling unprecedented pressure. In particular, those professionals who are over 35 years old are facing age discrimination in the Internet industry, and their employment situation is precarious.
The shadow of the epidemic has been hanging for three years, and the cold winter of real estate has also continued. Off-the-plan projects have stagnated, and the number of transactions for new and second-hand homes has also fallen sharply. The capital chain of real estate enterprises is tight, and the tightening of bank loans is even worse. Vanke, Wanda, Country Garden, Evergrande and other well-known real estate companies are facing the test of cash flow and have to focus on the construction of guaranteed delivery buildings.
The development of commercial real estate has also pressed the pause button, and some real estate companies have even begun to divest non-real estate businesses in search of new outlets. Some high-level people in the industry are also considering leaving this uncertain industry and taking their shares.
Since the real estate market entered the market economy, it has been a shining pearl of China's economy. However, the downturn in the past few years has made people worry about whether the real estate bubble is quietly inflating and will eventually burst, bringing shocks to the country's economy as a whole. After all, the lessons of American history are just around the corner.
China has a large population base, and if there is a problem in the real estate market, it will have a huge impact on social stability. Unemployment and the housing crisis are things that everyone doesn't want to see.
In this context, the state has taken a series of measures in a timely manner to stabilize the real estate market. First of all, it lowers the loan interest rate for home buyers, reducing the burden of borrowing to buy a house. Whether it's a CPF loan or a personal mortgage, there is less interest that homebuyers will have to pay during the repayment period.
In addition, the down payment ratio for the first and second homes has also been adjusted, with a minimum of 20% for the first home and 30% for the second home. This means that homebuyers will need to make a higher down payment, but they will pay less interest in the long run.
Third, the state supports banks to provide loan support to real estate enterprises within their capabilities. This measure aims to help real estate companies complete the construction of guaranteed delivery buildings, avoid off-plan properties becoming unfinished buildings, and ensure that the purchased land is not abandoned.
This is undoubtedly good news for those who are strapped for cash, so many people are starting to actively buy homes to prevent future home prices from being ** again.
The introduction of this series of policies has caused real estate agents and sales offices in major cities to surge, and some real estate sales offices have even lined up in long queues. The real estate market seems to have been stimulated by these measures, and there is a hint of life.
However, despite these policies, the uncertainty of the external environment, especially the tension of the international environment, still makes people worry about China's economic prospects. Many people choose to keep their money in the bank instead of spending or investing, which affects the liquidity of their money and the activity of the real estate market.
In order to solve this problem, the state has introduced a policy of reducing the interest rate on deposits. In the case of lower interest on bank deposits, ** does not perform well and the investment risk is greater, which makes real estate a relatively safe choice for funds.
It is still difficult to conclude whether the implementation of these policies can restore the vitality of major real estate companies. After all, these companies are under enormous loan pressure and heavy interest payments. While the housing market has picked up recently, more needs to be done to return to the pre-2019 boom.
Most people are not financially well-off and have poor job stability. Poor business performance, stagnant wage growth, and even the risk of layoffs can affect the motivation of home buyers. The price increase behavior of some developers may further inhibit the willingness to buy houses and affect the effect of national policies.
Nowadays, it is mainly buyers who just need to buy houses, rather than speculators. The state's positioning of housing has always been "living" rather than "speculation". For developers, it is time to exchange the house in their hands for cash flow as soon as possible, rather than continuing to rely on bank loans for real estate development.
The cautious approach of banks in lending also reflects banks' concerns about their ability to absorb deposits. Under the influence of interest rates, banks need to control the risk of bad debts to ensure their own stable operations.
For real estate companies to survive in the long run, they must build a stable cash flow and reduce their dependence on bank loans.
What are your thoughts on these policies and market changes?Feel free to share your views in the comments section!
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