A stable or small decline in mainland property prices is a good thing

A stable or small decline in mainland property prices is a good thing.

The comprehensive regulation of the mainland real estate market has been more than two years since its inception, and the degree of policy severity is unprecedented. The effect of regulation and control was obvious, and the house price achieved a basically stable or small decline. The impact of price adjustment began to be transmitted to sales, capital and land markets. The cooling of the entire industrial chain means that the regulation has achieved phased results, which is of great significance.

At present, the real estate industry in the Mainland has developed to a new stage, but the problem of high housing prices is still outstanding. The price-to-income ratio of core cities has remained above 20, and some cities have exceeded 30, not only far exceeding the internationally recognized level, but even several times higher than before the bursting of the US and Japanese property market bubbles (10 to 12 in the Tokyo Metropolitan Area and the Gyeonggi Circle). , United States 4 to 5). Secondly, some people in the industry predict that the market value of real estate in the mainland will reach 65 trillion US dollars (about 450 trillion yuan), which has exceeded the total value of the property market in the three regions of the United States, Japan and the European Union.

Although real estate still has a large contribution to economic growth, the significance of consolidating the results of regulation and control is even more important. If necessary, it can accept the sacrifice of short-term part of economic growth. In fact, housing prices are stable, even if it is a small decline, it will not have a big negative impact on economic growth in the short term. By increasing supply (including rental housing) to meet the needs of just-needed groups, to a certain extent, it can also ensure the basic stability of real estate investment and sales. Based on this, while controlling the housing price, by revitalizing the real economy, the income level of residents will be continuously improved, so that the growth of future residents’ income will exceed the rise of house prices for a long time, and the ratio of house price to income will be continuously reduced. A smooth elimination of the real estate bubble will create a historical miracle.

The rise in housing prices is controlled to promote the overall cooling of the market

From the housing price index of 70 large and medium-sized cities announced by the National Bureau of Statistics, the rise in urban housing prices has been basically controlled. From the ring comparison, the sales price index of new commercial housing in the four first-tier cities turned from up to down in September and remained stable in October. The decline in the sales price index of second-hand homes increased by 0.1% month-on-month in September and rose to 0.2% in October. The increase in the sales price index of new commercial residential and second-hand residential properties in 31 second-tier cities continued to narrow, rising by 1.0% and 0.3% respectively in October, and the growth rate dropped by 0.1 and 0.5 percentage points respectively from the previous month. The sales price index of new commercial residential and second-hand residential in 35 third-tier cities also showed a steady trend. The price of new commercial housing in 35 third-tier cities rose by 1.1% in October, an increase of 0.2 percentage points over the previous month; the sales price of second-hand residential houses rose by 0.5%. The increase was 0.3 percentage points lower than the previous month.

If only house prices stabilize, we can’t judge the real estate market to cool down. Only when the volume of trading, investment development, capital and land market show signs of cooling, can we determine that regulation has achieved results. At present, the mainland has basically achieved this goal.

Small price adjustments or economic stability

In the past 20 years, an incomprehensible phenomenon in the mainland real estate market has been that house prices have only risen and fallen. This phenomenon is rare in the world. Since the real estate regulation in the Mainland has been vacillating many times, it is often loosened during the economic downturn to stimulate the economy. When the housing price rises too fast, it strengthens regulation and control to stabilize housing prices. In particular, it focuses too much on demand-side regulation such as purchase restriction and credit restriction, rather than supply regulation. The combination of demand regulation and control has resulted in the “higher regulation and control of housing prices”, which has formed the expectation that the market will “only rise and fall”, thus weakening the regulation effect and jeopardizing the health of the real estate market.

The rapid rise in housing prices has also aggravated the income distribution gap among residents. Peking University’s report on the results of the “Research on the Differences in Property Disparities and Income Distribution of Mainland Residents” held by Peking University on November 28 showed that with the help of housing prices, the value of real estate in the total assets of the residents has reached a high level in both urban and rural areas. Level, housing prices have also become an important reason to promote the appreciation of the value of residents and the widening of the gap. From 2002 to 2012, the Gini coefficient of residents’ total property distribution gap increased by 38.7%, of which 45.4% was caused by rising house prices. Especially in urban areas, the impact of rising house prices on the expansion of residents’ property gap was more significant.

The current housing prices have reached a relatively high level. If the excessively rapid increase in housing prices will increase the pressure on young people to buy houses and curb spending power, when the price and income continue to be out of line, it may lead to systemic risks such as outages.

At present, the regulation and measures for the regulation of the real estate market in the Mainland are correct. The key point of regulation and control is to control the rise of housing prices, which can effectively avoid the policy factors that induce the crisis in the property market. The ratio of house price to income is a ratio. Resolving the risk of the real estate market can not only reduce the numerator (house price), but also increase the denominator (income). At the same time of controlling housing prices, by revitalizing the real economy, we will continue to raise the income level of residents, so that the growth of future residents’ income will exceed the rise in housing prices for a long time, and the ratio of house price to income will continue to shrink. The way of “squeezing bubbles” rather than “puncturing bubbles” will be adopted. To ensure a “soft landing" in the mainland real estate market.

The rapid development of the real estate industry and the financial industry has created a large spread between the industrial sector and the capital, which has accelerated the flow of funds to the real estate industry. The new RMB loan data shows that the number of new people’s loans in the residential sector in 2009 was 2.46 trillion yuan, and increased to 7.13 trillion yuan in 2017, an increase of 190%. In the same period, new RMB loans from corporate sectors (non-financial companies and other sectors) fell from 7.14 trillion yuan to 6.71 trillion yuan, a decrease of 6%. The proportion of new RMB loans in the residential sector increased from 26% to 53%. Mortgage constitutes a major part of household loans, and it is clear that new loans are mainly flowing to the real estate industry, which has a negative impact on the financing of the physical enterprise sector. The regulation of the real estate market and the strong supervision of finance are of great significance for guiding funds back to the physical industry sector.

Adhere to real estate regulation and control must pay a price

At present, the real estate industry still plays an important role in economic growth in the Mainland. In 2017, the real estate industry added value of 5,385.07 billion yuan (RMB, the same below), and the contribution rate to GDP was 6.5%. The contribution rate is underestimated due to the impact of accounting methods and related technical indicators. If the value of self-owned housing services is reassessed according to the market rent method, the real estate industry’s contribution to GDP will reach 12%.

Real estate investment also plays an important role in economic growth. From January to September 2018, the mainland real estate market invested 8.86 trillion yuan, and real estate investment accounted for 18% of fixed assets investment. According to the contribution of capital formation to GDP growth rate of 32.1% in 2017, the contribution rate of real estate investment to GDP growth. It is about 5.8%.

We call for the allocation of resources through the market, but real estate regulation is not only related to economic development, but also closely related to the national economy and people’s livelihood, so the rational and appropriate regulation of the government is necessary. The long-term and stable elimination of the real estate bubble in the Mainland will create a historical miracle.