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In the past three or four decades, China's economy has risen like a phoenix, achieving an astonishing rise, with the global GDP ranking jumping to second place, and family wealth has also shown a continuous growth trend. In order to more vividly reveal the growth of China's residents' wealth, we cite a recent report released by the Hurun Research Institute.
The data in the report are very clear, clearly showing the growth of China's family wealth. As of the end of November 2023, the number of households with net assets of more than 6 million yuan nationwide is as high as 5.18 million, the number of families with net assets of more than 10 million yuan is 2.11 million, and the number of families with net assets of more than 100 million yuan has reached an impressive 1380,000 households. Despite the sheer numbers, not everyone has them. In big cities, the net worth of 6 million is not very high, and it is often easy to achieve with just two properties.
These figures not only bear witness to the rapid development of China's economy, but also reveal the accumulation and growth of family wealth. However, they also reflect the existence of wealth disparities. High-net-worth families mainly rely on real estate investment and entrepreneurship to accumulate wealth, while most families may still be groping their way forward on the road to wealth accumulation, facing various challenges and opportunities.
However, one of the biggest challenges facing most household wealth today is housing prices**. As we all know, about 70% of China's household wealth is concentrated in real estate fixed assets, which is not only affected by historical, cultural and social factors, but also reflects the unique characteristics of China's economic development. The impact of housing price fluctuations on household wealth cannot be ignored, so how to maintain the steady growth of family wealth in the challenge of housing prices** has become an important issue in front of us.
Why do more than 42% of families need to be prepared? Because house prices are **
In the current real estate market environment, housing prices in many cities in China have shown a significant downward trend in the past two and a half years. According to the National Bureau of Statistics, from the high point in 2021 to 2022, the national average house price has increased by 9%, and the average decline in new homes has been as high as 12%. Since 2021, housing prices in many cities have seen varying degrees**, especially in the suburbs of medium and large cities, with some areas falling by more than 30%. Despite the launch of rescue policies in various places in 2023, the trend of housing prices** has not been effectively curbed. Entering 2024, all localities are stepping up efforts to rescue the market, but the real estate market has not yet recovered, which indicates that housing prices have entered the first channel.
For example, a house worth $1 million in 2022 may only be worth $700,000 in 2023. In addition to the sharp housing prices in the suburbs of the first and second-tier cities, the property market in the third- and fourth-tier cities with lagging economy and serious population loss is also facing the same problem. Since the second half of 2019, housing prices in most third- and fourth-tier cities across the country have been significant**. Taking a small county in central China as an example, the average house price in 2019 was seven or eight thousand yuan, and in 2023, the average house price has fallen below 4,500 yuan per square meter.
As a result, the current property has lost its investment value, and it is not only difficult to make a profit when buying a house, but also increases the risk of loss. In Zhengzhou, Qingdao, Kunming, Wuhan and Shijiazhuang, for example, buyers are facing the dilemma of losing money, especially some buyers in Qingdao, Zhengzhou, Wuhan and Kunming, who have experienced a drop in housing prices of more than 50%. Regarding the trend of housing prices, Li Ka-shing, a well-known businessman, once pointed out: "Houses are for living after all." He **, due to the long-term high domestic housing prices, in the next 5 years, the real estate market is likely to experience a major reshuffle, and property speculators should be cautious. Now it seems that Li Ka-shing's ** has been fulfilled, and the property market has indeed taken a turn, and many investors are facing losses. At present, the biggest problem facing the property market is that it is difficult to sell houses, not only for real estate companies to sell, but also for investors.
In addition, the data shows that the proportion of urban households in China with more than two properties is as high as 42%, which is a staggering figure. This means that in the real estate market, multi-family families occupy a sizable market share. Since their economic situation is more susceptible to fluctuations in housing prices, these households are more sensitive to changes in the housing market.
Therefore, the current investment environment in the real estate market has also exacerbated the concerns of improvers and investors about housing prices** to a certain extent. Over the past few years, the real estate market has experienced rapid growth, allowing improvers and investors to earn good returns on their property investments. However, as the market environment changes, the risk of housing prices** gradually increases, which makes these households more worried about housing prices**. In particular, investment households, which account for 42% of urban households, must be well prepared to deal with possible housing price risks.
1. Calculate the cost of holding real estate and realize some assets appropriately
This may sound overwhelming, but for professional investors, the assets in hand are not always the most likely to increase in value. Let's take an example of a property worth $2 million that we bought two years ago, of which $1.2 million is a loan with an annual interest rate of 45%, if it is repaid in 30 years, the total annual principal and interest will exceed 70,000. So, can the annual increase in the value of the property cover the high cost? Therefore, releasing some assets just right can not only improve liquidity, but also potentially capture more potential investment opportunities.
2. Replace high-quality real estate
In the real estate market, owning a quality property is everyone's dream, but the reality is often not as good as it could be, and we may hold properties of varying quality for various reasons. In this case, it is undoubtedly a wise decision to replace the low-quality property in your hand with a high-quality property.
So, what kind of property qualifies as a quality property? They usually have the following characteristics: excellent location, easy access, excellent surrounding facilities, solid construction quality and good maintenance of the house. Such a property not only has a huge space for value preservation and appreciation, but also brings a lot of convenience and comfort to our lives. By replacing us, we can not only increase the overall value of our portfolio, but also lay a solid foundation for future real estate investment.
In the context of the country's vigorous promotion of economic development and active expansion of domestic demand, as ordinary citizens, we shoulder the mission of responding to the call of the country. By spending wisely, we can contribute to economic growth. However, while enjoying consumption, we also need to pay attention to the financial planning of individuals and families. While ensuring the needs of life, we must avoid blind consumption and pursue a balance between rational consumption and financial stability.
The current mortgage interest rate has dropped to 3With a historic low of 7%, we should seize this opportunity to optimize our personal financial arrangements. A lower interest rate means less pressure to make monthly payments, which will save us a lot of money in the long run. This economic advantage is comparable to the benefits of housing prices**. Therefore, we should adjust our repayment plans to add flexibility to our family's finances.
Of course, responding to the country's call to expand domestic demand does not mean blind consumption. On the contrary, we should strengthen personal and family financial planning on the basis of rational consumption, so as to achieve a balance between careful budgeting and long-term development. In the face of the opportunity of lower mortgage interest rates, we should proactively adjust our strategies to the best of our ability to meet the challenges ahead.