Since 2023, the real estate market has been facing the dilemma of sluggish transaction volume. According to the data, in the first 10 months of this year, the sales area of commercial housing was 111,179 square meters, a year-on-year decrease of 223%。At the same time, second-hand home sales are becoming increasingly difficult, with 13 of the country's key cities seeing 1.99 million second-hand listings in early September, up 25% from January. Especially after the implementation of the policy of "recognising houses but not loans", the number of second-hand housing listings in first-tier cities has increased rapidly. At the same time, housing prices in various parts of the country are also showing a trend. According to the data, the average sales price of commercial residential buildings nationwide in October was 10,409 yuan square meters, down 2,060 yuan square meters, or 17 percent, from the peak of 12,469 square meters in April this year. In the case of irreversible real estate market, from 2024 onwards, there are likely to be three major shifts in the country.
Once the trend of real estate market adjustment cannot be reversed, China is likely to accelerate the adjustment of industrial structure. In the past, our country was overly reliant on the real estate sector to drive economic growth, which was unsustainable. Therefore, it is foreseeable that China will gradually get rid of its dependence on the real estate industry and turn to high-end manufacturing and high-tech fields to seek new breakthroughs. A similar example can be found in Japan, where in the 90s, after the bursting of the real estate bubble, Japan quickly turned to the animation industry, the new materials industry and the automobile industry, which became the pillar industries. Therefore, it is very likely that China will adjust its industrial structure in order to achieve sustainable economic development.
Recently, China's high-level announced that a new round of housing reform will be launched, focusing on accelerating the pace of affordable housing into the market. In the next five years, 6 million affordable housing units will be launched on the market and piloted in 35 cities with a population of more than 3 million. This means that wealthy people can buy commercial housing, while low- and middle-income groups can apply to buy affordable housing to meet the housing needs of different groups. In the future, the market will determine the market and will no longer intervene. It is worth mentioning that the ** of affordable housing will be much lower than that of the surrounding commercial housing, and the affordable housing shall not enter the commercial housing market for trading.
Property taxes are getting closer and closer. As early as October 2021, China's high-level officials announced that they would expand the scope of pilot cities for the introduction of property tax. Experts**, as long as the domestic economy improves slightly, the property tax reform will be accelerated. The purpose of imposing real estate tax is not only to curb the demand for investment and speculation and reduce the vacancy rate of houses, but also to open up new tax sources for local governments and increase local fiscal revenues in the case of reduced land fiscal revenues. It is expected that in the future, the cost of owning a home for households with more than two homes will increase.
To sum up, if the trend of real estate market adjustment cannot be reversed, starting from 2024, China will usher in three major changes: accelerating the adjustment of industrial structure, accelerating the pace of affordable housing entering the market, and accelerating the pace of real estate tax reform. Through these transformations, the domestic real estate industry will be able to enter the track of sustainable development.
In the coming years, the domestic real estate market is facing the challenge of continuous adjustment. It is expected that the irreversible trend of the real estate market will continue for a period of time, and the country will usher in three major changes: accelerating the adjustment of industrial structure, accelerating the pace of affordable housing entering the market and accelerating the pace of real estate tax reform.
First of all, China will speed up the adjustment of the industrial structure, reduce dependence on the real estate industry, and turn to high-end manufacturing and high-tech fields to achieve sustainable economic development. This transformation will enable China to make greater progress in technological innovation and industrial upgrading.
Second, the pace of affordable housing will be accelerated to meet the housing needs of different groups in society. Through the pilot approach, a large number of affordable housing will be launched in the next five years, so that low- and middle-income groups can purchase affordable housing and achieve a balance between housing supply and demand.
Finally, the pace of property tax reform will be accelerated to curb the demand for investment and speculation, reduce the vacancy rate of housing, and at the same time open up new tax sources for local governments and increase local fiscal revenue. The introduction of a property tax will make it more expensive for families who own multiple homes, which will reduce the enthusiasm for investment and speculation.
In view of these three major changes, we should shift away from the thinking that real estate is overly dependent on economic growth and look for new economic growth points. At the same time, we should increase support for high-end manufacturing and high-tech fields to cultivate new economic growth drivers. In addition, the supervision of the affordable housing market should also be strengthened to ensure that affordable housing is truly implemented in the hands of low- and middle-income groups. In terms of property tax reform, it is necessary to ensure the fairness and operability of tax policies and avoid excessive impact on individual markets.
In short, the adjustment of the real estate market will bring about a series of changes in the economic structure and system, which is of great significance for the long-term stable development of the domestic economy. We should actively adapt to these changes and look for opportunities to promote sustainable economic development.