Although the uptrend is blocked, the property price is hard to fall.
The Central Plains City Leading Index released last week reported 188.95 points, down 0.25% per week, interrupting the upward trend that has risen for 16 weeks. The main reason for the reversal of property prices is the delay in the negotiation of Sino-US trade negotiations and the tendency to expand into other sectors.
However, by this moment, the impact of this unfavorable factor on the property market is far less than the impact on the stock market. The Hang Seng Index fell nearly 10% in just one month, but the property price index fell less than 1%.
The property market has always been more sensitive to changes in the objective environment than the stock market. The reason is that participants in the stock market can buy and sell orders as soon as they hear the news; by pressing a few times on their own phone, the transaction can be completed. However, if you want to trade in the building market, the procedure is much more troublesome; especially in the second-hand market, the seller must first entrust the broker to release the order, and the broker can only take the video after the authorization, and put it on the Internet for promotion; After the customer, they also have to bargain and negotiate the terms of the transaction; and the buyer has to arrange financial loans with the bank before making a decision. The formalities are far more complicated than buying and selling stocks. However, this kind of complication can also give both buyers and sellers the opportunity to think carefully, and will not make a wrong judgment because of the mood swings. Judging from the situation reflected by our frontline colleagues, the impact of the deterioration of the Sino-US negotiation situation is greater for the buyer than for the seller.
The buyer became hesitant because of the uncertainty of the situation. Originally, the appointment was signed, and now many people say that they have to look at it for a while before making a decision. So since mid-May, trading has plummeted.
However, the seller is not moving. They are worried that once the building is sold, it will not be easy to have the opportunity to repay the property without loss. The reason is that the cost of property transactions has been greatly increased by the Government’s “hot tricks"; if the property was originally held by a limited company, it would be replenished for sale after being sold. That property price should be reduced by at least 35%, which can offset the loss of transaction costs.
In addition, last year, property prices rebounded rapidly after the Sino-US friction fell by about 10%. Not only did they recover lost ground, but they also broke new highs. Even those who sold the building last year did not know when they would have the opportunity to buy back the same level of buildings without loss. Therefore, although the friction between China and the United States is worse than before, the seller is very less willing to sell his own flats for this purpose.
Moreover, the US interest rate cut is imminent, the seller is worried that after the property is cashed out, the interest received in the bank will not be as good as the original rental income. Even worse, the banknotes seem to depreciate constantly, and the purchasing power of cash will become less and less. When money is placed in the bank, the value of money will continue to evaporate. For this reason, even if the objective situation is not too good, the owner’s release has not increased, and the owner’s asking price has not been lowered.
On the other hand, in the past two years (17, 18 years), the Government sold little land. The market participants expected that there would be a “fault" in the supply of buildings in the future and the supply would be very tight. Not only private buildings, but also home ownership will fall. As a result, more than 200,000 HOS flats have the opportunity to return to the private market, making the private market more in short supply.
When the supply is insufficient, the sales target of the building only needs to face a few high-income members of the society, and it is not necessary to target the general public with low income. As a result, the seller can easily sell the building without reducing the price.
The reason for this is that the recent property market is just a small transaction. The price did not fall sharply. I believe that even if the property price is slightly adjusted, the rate will not exceed 10%. The price will not fall below the beginning of the year.