The state has taken action again to forcibly create demand for housing purchases, will the property market be good in 2024?

In the previous article, we talked about the government's big hands to stimulate consumer demand through tourism, and the successive explosions in Zibo and Harbin are the best examples. Today we are going to talk about the creation of demand for home purchases.

Stimulating consumption and stimulating the purchase of houses, the logic is the same, the essence is that after everyone tightens their wallets and does not spend money, the macro level focuses on the overall situation of economic development, forcibly takes action, and creates demand.

To put it bluntly, if you like to save money, I will lower the deposit interest rate, make your money hairy, and force you to spend money. If you don't like to buy a house, then I will relax the regulation in various ways, lower the entry threshold, and encourage you to increase leverage.

Putting aside the efficacy of the policy, the main focus now is "acting quickly".

During this time, real estate-related news emerged in an endless stream, and I personally felt that there were three important pieces of information.

Only by understanding these three pieces of information can we understand the upgrading of local dependence on real estate, and only then can we understand the core of large-scale real estate rescue in 2024.

First, on January 9, Haikou issued six real estate optimization policies to support the reasonable housing needs of residents. Household registration in other provinces, only 2 years of social security/individual income tax can be used to buy a house in a non-restricted area. In addition, new regulations have been added such as companies can purchase residential buildings, divorce is calculated according to the current family, and the number of years of commercial housing sales restrictions has also been changed from five to two.

Why is it important for Haikou to optimize its real estate policy? Because Hainan once boasted about Haikou, it has always adhered to the main tone of "housing for living, not speculation" and "global purchase restrictions", and got rid of real estate dependence with the determination of a strong man.

Now it seems that Haikou is also bowing to reality, and the relaxation of purchase restrictions is essentially dependent on real estate. Especially in the past two years, in the context of the sharp decline in real estate tax revenues from the sale of houses, land and real estate, Haikou urgently needs to complete the real estate breakthrough, because this is an irreplaceable antidote to local finance.

If you pour cold water, I won't say it, I just want to remind you that you are wary of a large number of cases.

Recently, Nanjing lowered the interest rate of the first home loan, and Chongqing District 11 issued a housing purchase subsidy policy: involving deed tax subsidies, consumption subsidies, talent housing subsidies, etc., in fact, the same as Haikou's practice, are to forcibly create demand in the absence of demand.

In fact, this is just the beginning, and there will be actions in Wuhan, Chengdu and other places next, based on the fact that new houses in these places cannot be sold, such as Wuhan, the sales of new houses in 2023 will decline, all supported by the rise of about 40% in second-hand houses.

Second, Guangzhou's "room ticket placement" policy was officially implemented.

To put it simply, demolition and relocation will no longer issue resettlement houses or cash payments, but house tickets, which are a kind of settlement vouchers, which will indicate the type of house tickets, the address of the house purchased, the face value, the amount of policy incentives, the validity period of one year, and other information, and the "designated" new commercial houses can be purchased by the person or his immediate family members. After the implementation of housing ticket resettlement, in principle, no new resettlement houses will be built in urban village reconstruction projects.

After the implementation of house ticket resettlement in Guangzhou, the past model of "demolishing houses and making up for houses" may be completely ended. However, if after the expiration of one year, the relocated household still does not choose the house of its choice among the "designated" commercial houses, it can also claim monetary compensation.

It is worth mentioning that after Guangzhou became the first first-tier city to implement the resettlement of room tickets, Jiaxing, Zhejiang and Foshan, Guangdong have also successively launched the housing ticket resettlement policy.

Jiaxing's room ticket policy is different, valid for 2 years, but if you do not buy a house within the validity period, you are not allowed to exchange currency within the validity period of the room ticket.

As for why so many cities are keen on housing ticket resettlement instead of monetized resettlement, I think there are two reasons: one is that the cost of monetized resettlement is too high, and the other is that the housing ticket resettlement is more operable, and can only buy the city's designated real estate.

Third, the central bank issued 350 billion yuan of collateral supplementary loans (PSL) to the three major policy banks of the China Development Bank, the Export-Import Bank of China and the Agricultural Development Bank of China, mainly for three major projects, such as affordable housing and urban village renovation.

PSL is actually a low-interest loan, and those who are familiar with the 2015-2019 monetization resettlement policy are no strangers to it. To put it bluntly, the central bank prints money through the three major policy banks and distributes it to the relocated households in the form of shantytowns, and these people get the money and then buy commercial housing in the market.

This time, unlike before, it only targets 21 first- and second-tier key cities across the country. Clear-eyed people should be able to see that this is a typical "big and small", the underlying logic is actually a large number of third, fourth and fifth-tier cities in the country can no longer be demolished, and the root cause is that the demand has been exhausted.

Whether it is the reconstruction of urban villages, the resettlement of housing tickets, or the low-interest loans of PSL, they all essentially point to the same goal: demolishing your old house, giving you housing tickets, giving you currency, allowing you to buy designated commercial housing, forcibly creating housing demand, increasing market transactions, and revitalizing the property market.

Further understanding, this is actually to de-inventory for developers: real estate companies can unload the inventory burden on their shoulders, and with sales proceeds, they can save themselves by turning their debts into debt, and can they go to the land market to get land, and then create financial revenue for the local government.

Some people say that they can't understand the various policies in the market, but in fact, we just need to understand one thing: the economic growth model we envision is based on local finance, so saving real estate enterprises and encouraging residents to increase leverage, in the final analysis, is to maintain local fiscal revenue, which is the underlying logic that has not changed for decades.

Real estate is a typical game of "beating the drum and passing the flowers", and the core of keeping it running is to keep rising and someone will always take over. In the past, real estate companies frantically increased leverage and expanded, essentially stepping on the demographic dividend cycle, that is, desperately borrowing money in the so-called positive cycle, and the stall was spread very large, and as a result, the cycle collapsed instantly as soon as it contracted.

In "Flowers", my uncle told Po: The Empire State Building in New York, it takes an hour to run from the bottom to the roof, and it only takes 8.8 seconds to jump from the roof. The description in the TV series is very similar to the ups and downs of our real estate in the past 20 years.

The positive cycle is not only for real estate companies to make money, but also for localities, financial institutions, and even various wealth management companies and trust institutions relying on real estate. From last year to the present, many cities have exposed the problem of insufficient finance, even if it is as strong as Shanghai, it has also shown financial worries, and has begun to take precautions by raising the price of tap water.

Some people say, "Why don't local governments increase their efforts to sell land when they are short of money?" This is to mention the "triangle of contradictions" in real estate: It is necessary to strictly control the supply of new houses, to maintain the stability of land finances and to prevent local debts from getting out of control, and to stabilize growth and ensure that the total debt is within a reasonable range.

Understanding this, we also understand the cleverness of the combination of "urban village renovation + housing ticket resettlement + PSL" at the macro level during this time, in the case of not being able to desperately build a new house, in the case of increasing the supply in the old mode, the purchasing power is distributed to the demolished households through the way of housing ticket + PSL, and there is no demand, so as to create demand.

This wave of offensive is obvious, theoretically "killing three birds with one stone": increasing purchasing power, creating new demand, and completing the task of destocking for developers.

However, one thing must be clear, that is, Guangzhou has always followed the "original site relocation" in terms of urban renewal, and now it is suddenly implementing the resettlement of housing tickets, that is, the sale of clean land, there is no doubt that there is no small resistance. To put it bluntly, the citizens are not stupid, and they can still figure out which way is beneficial to them.

Of course, this is the normal feedback at the beginning of the policy, I believe that since the above intends to save the market, there must be a whole set of plays, such as discounting or invalidating the house ticket after expiration, such as completely blocking the road of demolition and relocation money, etc., the core purpose is only one: to maintain the stability of local finances, and to drive the over-issued currency into the property market.

Many people ask me whether the real estate market will be good in 2024, that is, will the property market usher in big changes in 2024?

This question is actually easy to answer, and whether it is good or not depends on whether you have faith or not.

Looking back at the past few rounds of real estate bull markets, without exception are the times when the confidence of the residential sector is bursting, the four trillion water release in 2009, the monetization and resettlement of shantytowns in 2016, and the era of insufficient housing supply, and desperately printing money to send to the people, the confidence to buy a house is naturally there.

The most typical example is the first quarter of last year, when the epidemic was released and Yangkang was released, everyone was gearing up, fantasizing about doing a big job in the new year, and vowing to regain the lost three years. As a result, after three months of hard work, I found that the more I tossed, the more I couldn't make money, and the harder I worked, the more I had no business, so I began to compromise with reality. In particular, it took only one or two months for private investment to go from a burst of confidence to a loss of confidence.

Speaking of the current real estate industry, I don't see enough signals for people to run into the market to buy houses in 2024, to put it bluntly, the confidence in the growth of wage income has not appeared, and the confidence in the growth of wealth has not appeared. The former determines the consumption behavior of the majority, and the latter determines the investment logic of the wealthy few, neither of which has fundamentally changed.

Where does faith come from? This sense of security includes not only the stability of the policy, but also the fact that enterprises have orders. The former is the guarantee for the operation of the enterprise, the latter is the source of the enterprise's profits, and of course it is also the source of the wage income of the employed, which is the source of purchasing power.

It's very easy for me to put it into words, but it's not so easy to do.

To be sure, it will be difficult for real estate to support the growth of China's economy in the future, just as even if we want to boost the fertility rate and encourage young people to have children, we will not be able to change the situation of negative population growth. This is determined by the whole fundamentals, and it is not subject to the subjective will of people.

Magnifying to the overall situation, the problems encountered in real estate are closely related to the aging and declining birthrate, the widening gap between the rich and the poor, and the sharp decline in demand. To put it bluntly, it is still a problem of supply and demand, so it is actually unsolvable. If we only look at the birth rate, the long-term population pressure in the future is enormous.

Of course, we cannot ignore that major events such as the decoupling of China and the United States, Japan's high inflation and interest rate hikes, and the Russia-Ukraine conflict have also had an impact on the domestic investment logic - affected by the macro recession, domestic assets have been in a depreciation channel in the past two years, and domestic funds are accelerating the withdrawal from real estate stocks and seeking refuge overseas.

In other words, we must not only face changes in the new situation such as domestic population and housing, but also be vigilant about the implication of the global situation on the logic of domestic investment. Therefore, at present, the rescue of the market must not be delayed, but should be in one go, increase the supply of currency, and give full play to the multiplier effect of the currency.

The good news is that there are rumors of a rate cut next Monday. Beijing, Shanghai and other first-tier cities have introduced real estate policies that have not been effective, especially the traditional Spring Festival holiday, according to the custom, the market will further cool, and considering the pressure on the property market in third- and fourth-tier cities, it is likely that the loan interest rate will be lowered in the near future.

Yes, this is again the news of export to domestic sales. But I personally feel that the credibility is very high, on the one hand, commercial banks have collectively lowered deposit rates three weeks ago, and are fully prepared, on the other hand, from the perspective of boosting housing stocks and stimulating consumption, the expectation of interest rate cuts has been agreed.