In recent days, some fans have asked questions about the skyrocketing property market in Shenzhen after the Spring Festival, and some experts have come out to ** housing prices will rise this year, asking me what I think.
Shenzhen's property market did pick up after the Spring Festival, but it was not caused by the seasonal Xiaoyangchun, but by the relaxation of purchase restrictions in Shenzhen before the Spring Festival. Since there is almost no threshold for settling in Shenzhen, it is essentially equivalent to the liberalization of purchase restrictions.
As for how long the transaction of Shenzhen's property market recovery can last, I think we can refer to the trend of Hangzhou after mid-October last year. Because Hangzhou issued a similar policy in October last year.
According to Hangzhou's experience, it is about 15 2 months of transaction peaks, then return to the slump.
The release of purchase restrictions should be the last card in Shenzhen, so for students who want to sell houses in Shenzhen, it may also be the only window period this year.
Then let's talk about the bullishness of experts after the year, such as Xu Gao, chief economist of Bank of China International, who believes that housing prices are determined by the ratio of supply and demand, and now the area of new construction has dropped sharply, and if demand recovers, housing prices are likely to be **.
Xu Gao also reminded that the area of new housing starts has dropped by more than 2 3 since the introduction of the real estate financing tightening policy in 2021. He **, China is about to usher in the most serious supply contraction in the real estate market since the 90s. When the supply of the local real estate industry shrinks significantly, and when the market stabilizes and demand recovers, housing prices are a high probability event, especially in first- and second-tier cities.How do you interpret it?
As I mentioned in last week's article, what you can see is what others want you to see. It is true that house prices are determined by supply and demand, but he was wrong.
Let's first find the statistics of real estate starts and sales for the whole of last year from the Bureau of Statistics.
We can see that the biggest decline in all the data is indeed the area of new residential starts, which fell by 209%, but that's because the largest number of all data is the area of homes for sale, with 222%。
In other words, it is precisely because the area for sale is significantly ** and the inventory has increased significantly that the new construction of developers will decline. Here's my data on the area of homes for sale from pre-pandemic to the end of 2023.
The year-over-year growth data for sales may be a little clearer.
It can be seen that from 2021, the area for sale has increased significantly, and the year-on-year increase is also increasing, so judging from the normal business logic, since the area for sale continues to rise, that is, the inventory rises, then the developer will naturally reduce the area of new construction.
This is actually a very natural business logic, and the result? Xu experts pulled out the indicator of new construction starts, but did not mention the area to be sold, so as to conclude that there is an imbalance between supply and demand and housing prices will rise.
Of course, my focus here is not to point out the problem of Expert Xu. And I also believe that with the level of expert Xu, he will not make such a low-level mistake.
So, what I'm really concerned about is why he came out and made this statement, and why we can see it.
I am inconvenient to expand on this, but what I want to say is that the remarks of Expert Xu are of positive significance for the soft landing of our housing prices. The market needs to judge the divergence, and if there is a consensus on expectations, there will be a relatively high risk. Therefore, the remarks of the property market, regardless of whether the logic behind it is reliable or not, are beneficial to the current market.
Next, let's discuss the second question, that is, if many people make statements that house prices are going to rise, and further affect everyone's bullish sentiment, will the property market be boosted and turn into **?
This depends on the current downturn in the property market, what is the cause. Is it because everyone thinks that housing prices are going to fall and dare not buy, or do they really have no money to buy.
If it's the former, there's potential purchasing power, then boosting the mood can be useful, if it's the latter, it's completely ineffective.
In this regard, I made a judgment last year, and the ** in April last year was a bullish sentiment**, and it also appeared under the expectation of relaxing regulation**. For the first time in twenty years. So this time it's based on fundamentals. This is also consistent with the judgment of our senior management.
That is, the new situation in which the relationship between supply and demand in the real estate market has undergone major changes.
Based on this, I only made the conclusion in August last year that the Beijing-Shanghai Association will launch a new round of ** after the mortgage is implemented. Because emotions can't change fundamentals.
However, some fans asked me, saying that last year's residents' deposits hit a new high, and experts are also saying that they want to solve the problem that everyone has money and dare not spend. If this money enters the property market, will it promote the property market?
To this, my answer is:
When residents buy a house, the deposit will not enter the property market, and the deposit will not enter the property market, and the deposit will not be reduced, as long as there is no credit contraction, the deposit will never be extinguished.
How to understand? According to the thinking of ordinary people, residents save too much because they have reduced consumption. If residents increase their consumption, or buy a house, their savings will decrease.
But this one is completely wrong.
The reason is simple, deposits are conserved in trading.
For example, if you buy a piece of pork, your savings decrease because you buy pork, but the pork seller's deposits increase because you sell pork. That is, your deposit is transferred to the account of the pork monger. However, when it is counted as the overall statistics of residents' deposits, the deposits remain unchanged.
It's the same with buying a house, you pay 1 million to the seller, the seller delivers the house to you, and your 1 million deposit is transferred to the seller's account. Then, when it is the overall statistics of residents' deposits, the deposits remain unchanged.
That is to say, the deposit is conserved in the transaction, you buy a house**, and there is no money entering the property market**, the funds are only transferred between buyers and sellers.
So what does the deposit have to do with it, credit.
When you make a down payment of 300,000 and take out a loan of 700,000 to buy a house from the seller, you only pay 300,000, but the seller receives 1 million. Of this, 700,000 is the new currency derived by the bank based on the debt.
At this time, when the overall statistics of residents' deposits were counted, they increased by 700,000.
If the seller also has a debt of 1 million, and he returns all of your 300,000 and the loan of 700,000 to his 1 million debt, then the 1 million will disappear from the market. That is, when the overall statistics of residents' deposits were counted, they decreased by 300,000 compared with before the real estate transaction.
We can also say that the seller used your 300,000 to repay his 300,000 debts (the resident deposit decreased by 300,000), and then transferred his remaining 700,000 debts to you.
To sum up, the increase or decrease of residents' deposits has nothing to do with the transaction behavior of buying a house and consumption, but only with loan repayment.
If residents increase leverage on new loans, deposits will increase, and if residents repay loans to deleverage, deposits will decrease.
So what conclusion?
The increase in residents' deposits reflects the increasing pressure on residents' debts. And this limits the purchasing power of the population (strictly speaking, there is also a part of the ** and corporate sector liabilities that will be converted into household deposits, but this does not affect the conclusion).
Of course, when we measure the purchasing power of residents, we generally do not use deposit data, but directly use residents' liabilities data.
The logic here is only to prove that the amount of residents' savings is not positively correlated with the purchasing power of residents.
With the logic out of the way, let's take a look at the real deposit data.
As shown in the chart above, 2014 was a real estate bear market, while 2015 and 2016 were real estate bull markets, and 2017 was a real estate regulation.
It can be seen that whether it is a real estate bull market or a bear market, residents' deposits are steadily increasing. In 2016, when residents bought houses the craziest, residents' deposits not only did not decrease due to a large number of house purchases, but increased the most.
In other words, in 2016, residents increased their debt pressure due to the large increase in leverage to buy houses, but at the same time, their deposits were also increasing.
If we take it a step further, add up the deposits of residents, enterprises, and ** sectors, plus cash, it is M2.
In other words, the main component of M2 is also a liability. The chart below shows the M2 data for the past year, as well as the ratio of debt to debt.
Bloggers who are bullish on housing prices generally say that inflation, and the basis for inflation is to print money, and the basis for printing money is a sharp increase in M2.
If Expert Xu's remarks can be refuted logically, then some bloggers are actually not worth refuting at all, and they may not even understand the composition of M2. Most of the M2 is not printed by the central bank, but is created by residents and companies participating in the market who lend money according to their own needs.
And M2 is always rising in any country and region. The underlying logic is that labor productivity will always increase. The increase requires the corresponding currency to hedge. Inflation is reflected in the excess of labor productivity.
It is precisely because M2 in all countries in the world will always rise, but housing prices have rising and falling cycles, so the increase in M2 is not necessarily related to the rise and fall of housing prices.
Only the growth rate of M2 is related to the rise and fall of housing prices. And our M2 growth rate in the past year is still declining.
Therefore, from a monetary point of view, it is impossible to conclude that house prices will rise.
And the logic proposed by some people to dilute debts by printing money and releasing water is self-defeating. Because dewatering is the creation of money by adding new debt, releasing water will only make the debt ratio higher and higher.
So the truth behind this problem is that other people increase their debts and I don't increase them, so that my debts are diluted and other people's debts are aggravated.
That's what we've said in the past, expand your balance sheet before someone else expands it, and you can absorb someone else's wealth through debt.
At present, residents are stabilizing leverage and deleveraging, if you increase debt, you are helping others dilute debt by increasing your own debt, then you are a living Lei Feng. Since there are few people who are willing to be Lei Feng, everyone hopes that the state will increase the debt.
After the stagnation of our residents' leverage ratios, the sector leverage ratio is indeed increasing to stabilize the economy.
But this is only used to stabilize the economy, and it is still far from the magnitude needed to promote the property market. The overall growth rate of M2 is still declining.
Postscript: Judging from the downward trend in housing prices and the high-level approach, the high-level does not say that they want residents to increase leverage and destock, as they did in 2016. Rather, it means that the relationship between supply and demand in the real estate market has undergone major changes, and it is said that the industry should be upgraded. The purchase and loan restrictions in the first-tier cities are also slowly liberalizing the market, so we infer that the soft landing of real estate in the future should still be the main theme. In the future, the focus should still be on industrial upgrading and the new economy. I think this is also right, if we insist on industrial upgrading, it will also be beneficial to the bright prospects of China's economy.
So in the second half of this article, I originally planned to talk about industrial upgrading, but I found that there was not enough space when I wrote it, so I saved it for next time.
Finally, let's talk about the prediction of the current property market. Due to the relaxation of purchase restrictions in Shenzhen, the high trading volume should be maintained for a period of time, but the sudden opening of Hong Kong to compete for the purchasing power of the stock is indeed not expected. We hope that Shenzhen can still rise for a while to boost confidence. Because of the small spring in Beijing and Shanghai, it seems to be a little less than expected from the moment.
If Beijing and Shanghai Xiaoyangchun folds, and Shenzhen's high transaction is not strong, then it is expected that it may tilt to the downward direction again, and the tragic time is not far away. Therefore, it is also hoped that the market can make the property market more stable and smoother to achieve a soft landing.