A house is not just a house for Chinese people, in a sense, it is also a series of combinations of marriage, property and debt.
When the economic cycle is up, the house growth rate is also the fastest, not only to outperform the GDP growth rate of the current year, but also to outperform the ** growth.
Conversely, when the economic cycle is under pressure from slower growth, the higher the added value of a house used to be, the lower it is now, especially given that most people have a down payment in installments, and the decline in income due to slower economic growth is more likely to be reflected in the breakdown of personal cash flow.
According to the data of the China Index Research Institute, the situation is currently worsening.
According to the survey report released by the China Index Research Institute on January 22, the number of foreclosure houses in China will increase by 43% year-on-year in 2023, reaching a new high, which highlights the impact of real estate on household debt, which is intensifying.
In the past, the cold winter of the real estate crisis was more affected, and more real estate companies were affected, with consumers expecting to buy a house lower, real estate recovering funds, and cash flow disruption.
Although under this problem, real estate developers are facing a thunderstorm crisis, but its impact on the entire society and even the macroeconomy is limited.
The negative impact on the macroeconomy as a whole remains limited.
But foreclosure is different.
Foreclosure is more of a cash flow crisis faced by individuals, individuals are affected by the slowdown in macroeconomic growth, income slows down or decreases, the pressure of supply interruption is highlighted, and more and more foreclosure houses are growing, which will endanger a larger level of China's financial risks.
These are two completely different models of risk.
According to a report by the China Index Research Institute, about 38 residential houses were auctioned by the courts in China last year90,000 units, and only 9 of the foreclosure houses were sold90,000 sets, with a total value of about 150 billion RMB.
In addition, the number of listings in various types of real estate, consisting of commercial real estate, residential, industrial buildings, land, garages and parking lots, was as high as 79 last year60,000, a record high, an increase of 367%, but the volume is only 1490 thousand.
It's not just foreclosure homes that are sluggish, but also a lot of new home sales. Last year, the largest decline in new homes in China's real estate industry in nearly nine years seriously dragged down the overall recovery of the real estate industry.
Statistically, Sichuan, Guangdong, Henan, Chongqing and Jiangsu are the provinces with the largest number of foreclosure listings, while Chongqing, Chengdu, Zhengzhou, Nanning, Changsha, Guangzhou, Huizhou and Foshan are the cities with the largest number of foreclosure listings.
The China Index Research Institute further said that the number of foreclosure houses in China has been growing continuously since 2020, and the number of foreclosure houses will continue to increase after the start of 2024.
This shows that the overall risks faced by the domestic real estate industry have not been reduced.
Real estate has always firmly occupied the leading position of domestic family assets, and seventy percent of domestic family assets are composed of houses, which also means that the overall downturn in the real estate industry, the challenges and risks brought by it, will not be limited to real estate developers.
In the event of a large-scale household default, this is likely to be the primary cause of a fatal shock to the entire financial system.
On the one hand, more and more people are unable to continue to pay the mortgage due to the decrease in income, so they actively or passively make their properties become foreclosure houses.
On the other hand, many small and medium-sized enterprises are facing bankruptcy liquidation, and the real estate used as collateral or company property will also enter the bankruptcy liquidation procedure.
And a large part of these foreclosure houses are probably from individuals, not companies; According to the rules, if the homeowner is unable to continue to perform the loan contract or pay off the debt, the creditor can apply to the court to auction the real estate in his name.
Mortgage interruption is one of the situations, and the wave of mortgage interruption around 2022, after the judicial process, may enter the foreclosure market after half a year or more, promoting the growth of foreclosure**.
As a result, we may also see a further increase in the number of foreclosure properties in the coming years.
This is a beginning, not an end.
This can be regarded as a profound and even bloody lesson for those families who buy houses with high leverage.
The risk of buying a house with high leverage is actually that once the income starts to decline, it will be difficult to cover the mortgage, and the downturn in the property market also makes it more difficult to sell the house to pay off the debt.
In the long run, the sale of foreclosure houses may be far lower than at the beginning, and the characteristics of the housing debt itself have also led to many families even if they have repaid the mortgage for several years, but in the end it is only the interest, not the principal.
An industry that once skyrocketed, from the endless stream of buyers to need a lottery, but the new real estate is not interested, it may only take a few years.
In the past few years, we have witnessed the cash flow crisis of Evergrande and Country Garden, and we will also witness the supply interruption of more home buyers' families, and then the wave of foreclosure auctions.
The end of an era needs the support of a new era.
According to the data of the China Index Research Institute, in the first three quarters of 2023, the transaction rate of residential foreclosure houses nationwide recorded 257%, down 48%, although the total number of transactions is increasing, it still fails to catch up with the growth rate.
And the transaction is **small**, and the discount rate is down 1 year-on-year4%, to 819%。
In a sense, this is a two-percent discount, a tearful sale.
No one wants to end up auctioning off a house that they have worked so hard to buy with half their life savings, but the economic cycle is like this, just like ten years ago, people were full of confidence and optimism about their future income, for which many people borrowed money to buy a house, and in the end, it was just a dream, a dream.
More houses and fewer people will inevitably lead to lower utilization rates, such as higher vacancy rates and lower house prices.
In Japan, one out of every seven houses is empty. Japan's definition of vacant dwelling is that it has not been inhabited for a long time and has not used running water and electricity for five consecutive years, and the Nomura Research Institute previously said that the number of vacant dwellings in Japan will increase to about 5.03 million by 2023.
In China's first-tier cities, then in areas with high housing prices, houses are not only commodities, but also investment products, and the dual attributes of commodities and financial products have extended the impact of real estate on the economy and society from decades ago to today.
In the final analysis, it is nothing more than the supply and demand sides that affect the changes of this huge and seemingly complex industry.
In the past, China's real estate industry once occupied the pillar position of the economy, but today the real estate began to decline, subject to the exhaustion of the demographic dividend and urbanization dividend, and the real estate industry has changed from a pillar industry to a drag industry.
The cash flow crisis of real estate developers affects the upstream and downstream ** chain, and for individual families, as long as you do not buy or sell a house, the impact on you is not very great, but the growth of the number of foreclosure houses has revealed the fact that income is reduced and risks are increased.
These two factors have led to a surge in households unable to pay their mortgages, and with it, foreclosures.
The breadth and depth of this cooling wave may exceed many people's expectations. More foreclosure properties, lower future expectations, lower consumer confidence, and more uncertain expectations, the more difficult it will be for the next economic recovery.
That's why, in such an unusually cold winter, we need a dose of warm sunshine to give people confidence and certainty.
But does it come from? Income distribution, cash subsidies, or a profound innovation in employee involution?
We don't know, we just know that we need sunshine so much, we need warmth too much, we need an optimistic and confident future.