In the past few years, many places have been shouting "save the property market", and a lot of policies have been issued.
But why do house prices keep "falling and falling"?
That's because the local ** has not found a profitable and sustainable way to save the market.
If the financial funds are invested in the property market, there is a high probability of loss, and the local government will have no motivation to save the market.
10 years ago, why was "price increase and destocking" able to successfully save the market?
Because at that time, the local ** participated in the bailout, and there was money to be made.
* Take money to the demolition households, the demolition households buy houses, promote housing prices and land prices, and the local ** sells land to return the funds - under this set of processes, the local ** is profitable.
Therefore, at that time, all localities were very active in carrying out shed renovation and demolition.
However, today, as house prices have fallen to this point, a new property market profit strategy has gradually surfaced.
Subsequently, the local ** trillions of funds are ready to end. Housing prices in many cities are about to usher in a big reversal in 2024.
First, the central bank made a big move
In December last year, the central bank made two big moves on the property market.
The first is PSL, which added 350 billion yuan in the month.
PSL, the full name of "collateral supplementary loan", is a tool for the central bank to inject funds to policy banks such as China Development Bank, and China Development Bank then lends funds to local governments.
10 years ago, it was PSL that cooperated with the local ** shantytown reform plan to bring the last round of "price increase and destocking" wave.
This time, the PSL expansion, according to the official statement, is used to cooperate with the "three major projects" of real estate, including the transformation of urban villages, the construction of affordable housing, etc.
In particular, the transformation of urban villages is currently expected by major research institutions to reach the scale of 5 trillion yuan.
However, this round of urban village transformation is different from the previous round of shed transformation.
First, the list of cities that have been transformed into urban villages is limited to 21 megacities and megacities, that is, cities with an urban population of more than 5 million people.
List of megacities, megacities.
As for other fourth- and fifth-tier cities, where there is a long-term outflow of population and an oversupply of the property market, the state believes that there is no need to transform urban villages.
The second difference is that we have learned the lessons of the last round of shantytown reform and the sharp rise in housing prices.
In this urban village transformation, the national policy has limited the scale and proportion of "monetized resettlement". In addition, it requires that the funds of the central bank and CDB cannot be used for monetization and resettlement.
In other words, local governments cannot borrow large amounts from CDB to directly compensate the demolition households, but must use their own financial funds.
At present, the financial pressure in various places is very high, and even the first-tier cities cannot come up with so much cash flow, so this naturally limits the pace of urban village transformation.
Prevent the project from rushing into the market, and a large number of demolition households will flood the market, pushing up local housing prices.
Therefore, compared with "price increase and destocking", this urban village transformation should be called "supporting the bottom to destock".
From the perspective of rhythm, this round of urban village transformation will be released from the second half of 2023.
After the preliminary project preparation and demolition, all parties currently expect that the renovation project will be gradually implemented in the second half of 2024 and enter the peak of construction in 2025.
At that time, it will have a certain impact on the local property market and housing prices.
Second, the new strategy of the property market
But does this mean that outside of these 21 megacities and megacities, there are no policy dividends elsewhere?
Here, we will talk about the second big move of the central bank - the establishment of the "rental housing loan program" tool.
This tool involves the new operation mode of China's property market in the next 5 or even 10 years.
Bai Nian explained in detail, what is the "Rental Housing Loan Program"?
Similar to PSL, the central bank also lends money to CDB, and CDB then lends money to local governments.
Among them, the central bank's interest rate to CDB is 175%, and the interest rate of CDB's loans to local governments does not exceed 3%.
Keep in mind the 3% number, we'll get to that later.
Unlike PSL, the funds from this rental loan program can be used directly to acquire houses on the market.
If the funds go directly into the market, then the rescue will be very strong.
After the acquisition of the house, the local government will transform the commercial housing into public rental housing and put it on the market. For example, renting for migrant workers in the city, collecting rent for a long time, and slowly repaying the loan.
In this way, the market inventory can be digested immediately, and the momentum of housing prices can be reversed.
However, there is a condition for the local government to bail out the market in this way - that is, the housing price should be ** a certain range until the "rent-to-sale ratio" of the house rises to more than 4%.
In this way, the interest rate on the money borrowed by the local ** is "less than 3%%. After deducting the operating cost of 1 point, the rental income of 4% will be earned after renting out the house.
This is a new way for local governments to enter the property market.
Before this round of housing prices, the rent-to-sale ratio in most cities nationwide was between 2% and 3%, which was not enough to make local ** profitable.
However, after 3 consecutive years of house prices**, according to the national second-hand housing listing price index, house prices at the end of 2023 have fallen by 15% compared with the peak in 2021.
Rates for 3 consecutive years**.
In some places, housing prices are two to three percent, or even four to fifty percent, abound.
In this way, the house has fallen out of the cost performance, and it has fallen out of the space for local ** to make profits.
Moreover, Bai Nian found a detail when inquiring about the information - that is, this time, the local ** entered the property market through the way of "transforming commercial housing into public rental housing".
This policy is not promoted from the top down, but invented by the local ** itself.
Fuzhou** is the first of its kind.
In the first half of 2023, Fuzhou** will have the idea of acquiring 7,200 houses and transforming them into public rental housing, and then report to ** to apply for funds.
* If you think it's feasible, you can pilot it nationwide.
This proves that the local ** has the drive to do this.
Why Fuzhou in the first place?
In addition to the fact that Fujian people may be more active, it is mainly because the housing prices in Fuzhou have fallen relatively large in the past two years.
In the suburbs of Fuzhou, the highest housing price in 2021 reached 150,000 flat, now it has fallen to 8,000 yuan per flat, a drop of 4%.
For a place **, housing prices have fallen so much, on the one hand, it has fallen out of cost performance.
On the other hand, when housing prices fall by about 4%, it is also the limit of what the local ** can bear.
Because ordinary people buy houses, the down payment is 3 percent, plus the loan has been repaid in the past two years, and about 1 percent has been repaid.
If housing prices fall again, people's houses will become "negative equity", which will lead to a sharp increase in loan breakdowns and defaults, resulting in financial risks, which are unbearable for local governments.
Therefore, the combination of the three, the local government has the willingness to save the market, the method of saving the market, and the funds given by the central bank to save the market, this "new rescue strategy" has become.
3. What is the potential of the bailout policy?
In the long run, the potential for local governments to use the central bank's "rental loans" to bail out the market is very large.
First of all, the coverage of this policy is very large.
For example, among the first eight pilot cities of the "rental loan plan" disclosed by the central bank, Fuzhou and Changchun are not super-large or megacities, but the central bank has provided funds.
This proves that in the future, the "rental loan program" will be extended beyond 21 megacities and megacities, and the coverage will be greater than that of urban village reconstruction.
Secondly, the potential size of rental loans is not small.
As housing prices fall more and more across the country, more and more cities will reach the threshold of 4% for rent-to-sale ratios and meet the conditions for applying for central bank funds.
Bai Nian also chatted with friends inside CDB, who predicted that the scale of the rental loan program in the future could exceed one trillion yuan or even reach the level of 10 trillion yuan.
This will be another huge real estate project.
In addition, rental loans can be combined with solving the problem of "unfinished buildings" and solving the problem of "urban investment bonds".
For example, many unfinished buildings are almost capped.
The local ** can negotiate with the real estate company, I will take the house at a discount, invest some money, build the house, and rent it out for a long time.
This not only solves the problem of unfinished buildings, resolves social public opinion, but also helps real estate companies get out of trouble.
For another example, in the past, many local urban investment platforms acquired ** land. After building a house, I found that the property market was not good and the house was not easy to sell.
Local ** can also discount these projects and turn them into public rental housing. The cash will be given to the urban investment enterprises to resolve the current urban investment debt dilemma.
In the end, it may really be as the former mayor of Chongqing, Huang Qifan, said:
In the future, at least 30% of urban residents will live in affordable housing and public rental housing. Exempt relatively low-income, newly employed young people and rural migrated urban groups from mortgage and rent pressures.
Realize that everyone has a house to live in.
But taking a step back, can all cities join this game of "commercial housing into public rental housing"?
Not. Just now, Bai Nian said that the local government needs to borrow money from the central bank and the China Development Bank to purchase commercial housing.
The local ** first needs to convince the central bank that my place has population and industrial support, and the rent is long-term**, not **.
In this way, the local government can guarantee that the 3% loan interest can be repaid on time, instead of not even being able to repay the interest, which will eventually aggravate the local debt problem.
Therefore, in addition to the 21 mega and mega cities, the cities that can really get rental loans from the central bank are at least provincial capital-level cities or strong third-tier cities with population inflow and local industrial support.
For example, in the pilot city of Changchun, the population of Changchun Municipal District will still grow in 2022 under the environment of population outflow from the entire Northeast.
For another example, in the previous article "China's Foreign Trade "Peak and Loop"", Bai Nian mentioned that on the list of China's top 30 foreign trade, the only prefecture-level city in a non-coastal province - Wuhu, Anhui Province, has many large export enterprises stationed there.
Only such cities can convince the central bank to say:
My rent is long** and I am eligible for a "rental loan".
Fourth, the urban economy continues to diverge
Therefore, on the whole, after 3 years of overall housing prices in the country, from 2024 onwards, housing prices in many cities may gradually stabilize.
Among them: 21 mega and mega cities, starting from the second half of this year, will enjoy the dividends of "urban village transformation".
Other provincial capitals and strong third-tier cities with industries can save the market through rental loans from the central bank.
If you are in these cities and are ready to buy a house in the next two years, you can pay attention to the rent-to-sale ratio.
If the rent-to-sale ratio is close to 4%, it means that the first market will enter the market and the house price will most likely bottom out.
However, for those fourth- and fifth-tier property markets with population outflow and no industrial support, there is really a lack of policy toolbox available, and the local property market is likely to decline for a long time.
Not only the property market, but also big news in the infrastructure sector in the past two days:
The state has officially issued a document to stop the infrastructure construction work in 12 high-risk debt provinces and cities.
12 provinces and cities: Tianjin, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Guangxi, Chongqing, Guizhou, Yunnan, Gansu, Qinghai, Ningxia).
The policy requires that in order to control the scale of local debt, if the construction progress of infrastructure projects is below 50%, construction should be stopped or delayed.
As a result, the infrastructure economy in the vast northeast and central and western regions will be greatly cooled down.
After the infrastructure economy cooled down, it was followed by a decline in local fiscal and tax revenues.
And because the government is not financially independent and relies on first-class funds to repay debts, the local government will also indirectly lose personnel rights, resulting in the reform and reduction of the establishment within the system.
In particular, many central and western regions and fourth- and fifth-tier cities, in addition to infrastructure economy, rely on "consumption within the system" and "economy within the system".
If there are layoffs and downsizing within the system, it will further affect the local economy, coupled with the lack of funds and maintenance of infrastructure, it will drive young people to big cities.
For specific analysis, you can pay attention to the Bo Nian, and look back at my explanation of the "special treasury bonds" in October last year, so I won't talk about it here.
Therefore, whether from the perspective of real estate or infrastructure, from 2024, China's urban economy is destined to diverge.
In the past two years, in view of the phenomenon that young people are keen to take the civil service examination in small cities, Bai Nian still wants to persuade him here.
In 2024, fiscal reform has arrived. Civil servants in fourth- and fifth-tier cities are not iron rice bowls.
Looking at the various bailout and bonus policies of the state, this year we can only "limit" them to big cities, and we know that further giving full play to the scale and competitive advantages of big cities is what the country wants.
Big cities are the future of China's economy.
Therefore, young people like Japan and South Korea end up flowing to Tokyo and Seoul. The Chinese population will eventually concentrate in 20 to 30 large cities.
In this trend, it is best for us to go with the flow, and this is the best choice that we ordinary people can make.
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