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Zhao Xiao: China's real estate market is still heating up or facing big risks

Zhao Xiao: China's real estate market is still heating up or facing big risks

October 30, 2013

[China paint information] according to the data in recent months, China's overall real estate market is still heating up, but some areas have been cool. Looking forward to the future, will China's property market continue to rise or will it suddenly turn down or even collapse? From the international and domestic environment, it should be said that both possibilities exist, but I think it may be wise to consider more risks at this moment

as usual, this is the hottest season for transactions in the real estate market. But in Wenzhou, house prices are no longer as warm as the name of the city. After two years of continuous decline in house prices, many previously hyped high house prices have nearly halved. Since August, the Wenzhou market has continuously exposed a certain number of off supply commercial houses, even as many as 15000 sets. When Wenzhou people find that the market value of their houses is not equal to the debt they owe to the bank, cutting off supply is a last resort. As a result, many tenants have abandoned their houses to escape, and tens of thousands of houses may be recovered by the bank

Wenzhou local financial data also showed that the supply failure was not the main reason for the halving of house prices, and the rupture of the operator's capital chain was the fuse. It is also estimated that the non-performing housing mortgage loans formed by the rupture of the borrower's capital chain are about 2.374 billion yuan, accounting for 46.14% of the total non-performing housing loans. Wenzhou real estate crisis is not only the problem of overheated real estate investment, but also one aspect of the local private financial crisis. In addition, Wenzhou is also facing the crisis of private economy and the foam of usury. Coincidentally, Ordos is also experiencing a large area of real estate vacancy and the foam of national wealth

at present, in China's real estate price map, Wenzhou and Ordos are two points, while the real estate prices in other cities are still high. According to the latest data from the National Bureau of statistics, 69 of the 70 large and medium-sized cities saw year-on-year increases in the price of new commercial housing, while only Wenzhou saw a year-on-year decrease of 2.3%. However, the cities with higher growth are mainly first tier cities and some second and third tier cities, and the growth rate also shows a gradient decline. The price of newly-built commercial housing in the first tier cities increased by 18% - 20% year-on-year, most of the year-on-year increases in 31 second tier cities such as Tianjin were between 7% - 10%, and the average year-on-year increase in 35 third tier cities such as Tangshan was about 6%. Is China's real estate market still at ease? From the macro environment, not only is it not, but there is even the risk of the bursting of the property market foam

look at a set of data. After the second quarter, the growth rate of various important indicators of real estate has shown a downward trend month by month, which may be the characteristic of the peak of house prices. First, let's look at real estate development investment. This data actually reached the maximum growth rate of 22.8% in January and February this year. After stabilizing for a period of time, it fell below 20% in August. This shows that developers have been alert to the future, and did not climb along the pole. Therefore, this year's real estate investment is not gradually rising, but actually falling, and the psychology of developers began to weaken

recently, overseas rumors spread that the second Asian financial crisis might be coming. When the Federal Reserve discussed QE exit, emerging markets have been impacted, and capital outflows are by no means a good thing for real estate in emerging markets in Asia! A vivid example is that Li Ka Shing began to sell a large number of assets in Hong Kong and the mainland. Obviously, whether the property market continues to rise or suddenly destroys is a question. Whether the property market rises or falls is not a good thing. The dilemma will test the cards of the new Chinese government

China's economy and real estate market are currently facing three major risks: the economic cyclical risk that may be caused by the return of US dollars; The structural risks inherent in China's economy are causing a structural crisis, especially the sluggish real economy, which highlights that the traditional growth model has come to an end; Institutional risks such as social shock and capital outflow caused by the pressure of comprehensive reform. Faced with the superposition of these three risks, the second Asian financial crisis may not be groundless

the external factor is mainly the quantitative easing monetary policy of the United States. At present, it is only a matter of time for qe3 to reduce the scale of bond purchase. Qe3's reduction in the scale of debt purchase will directly lead to the rise in the yield of the U.S. financial market, which will directly lead to the amplification of MBS assets and the U.S. by the a/d converter and the rise in the yield of convertible bonds, thus indirectly pushing up the yield of other financial products. On the basis of reducing its holdings of bonds, the Federal Reserve may also raise the benchmark interest rate, which is also a matter of time

once the Federal Reserve starts a substantial reduction in bond purchases, which makes a large amount of hot money flow into the United States, emerging markets are prone to the risk of liquidity tension, especially China, which should be particularly vigilant! Recently, the US dollar has returned significantly, and asset prices and their derivatives in the United States have entered a new round of rising cycle. The return of the US dollar and the rise in the yield of financial products are inevitable events. In addition, the domestic economic structure has fallen into a deep crisis, as well as the institutional risks brought about by the comprehensive reform. At present, China's real estate, which is already at a high price, is bound to become an explosion of risks

data show that the total area of vacant housing in China is close to 6billion square meters, and the number of vacant housing reached 68million. According to incomplete estimates, the stock of urban commercial housing in China has exceeded 24billion square meters. According to this calculation, the vacancy rate of urban housing in China will reach 25%, far exceeding the internationally reasonable range of 5% to 10%. In the past, we have always emphasized that houses are consumer goods, and the state has also tried to curb the overheated investment demand of the real estate market through macro-control of the real estate market, but the results are unsatisfactory. It has the advantages of long operation time, short molding time, fast ripening, low odor, high demoulding times and so on. In fact, with the rising prices, houses, like jadeite and gold, are becoming more and more investment oriented. Property prices, like any commodity prices, cannot continue to rise unchecked. If we go beyond the current market situation and overdraw the future appreciation space of the real estate market, it will inevitably lead to the increase of the real estate market foam, or even burst

corresponding to the high vacancy rate and foam caused by over investment in housing, there has also been an outflow of real estate funds in China, and the "output effect" of overseas real estate investment. At the recent Beijing autumn real estate exhibition, there were 260 overseas exhibition projects, more than half of the total number of exhibition projects. In addition, according to the data recently released by the China overseas investment Federation, since 2012, the total scale of overseas real estate projects of mainland Chinese developers has exceeded 10 billion US dollars. In the future, Chinese individual investors are expected to invest 1.1 trillion yuan in overseas real estate

as the name suggests, the emergence of "output effect" in the real estate market can not help but remind people of the situation in Japan 20 years ago. From 1985 to 1990, Japan experienced a five-year crazy rise in house prices. By about 1991, after Japanese real estate speculators made enough money, they began to expand overseas. Coupled with the appreciation of the yen at that time, they went to the United States to buy a house, which even made Americans exclaim that the Japanese were ready to buy the whole United States. But the final result is well known that Japan's real estate foam burst and the economy experienced a long-term depression. I don't want China to become the next Japan, so I must prepare for a rainy day. Be alert to the potential second Asian financial crisis, which can only reach a certain load every time. It forces reform and starts the structural adjustment that stopped in 2008, so as to speed up the transformation of China's economy. The so-called "not breaking, not building, not plugging" is not a bad thing. We hope that after the risks, China's economy can move forward firmly

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