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Since the beginning of the year, the second-hand housing market in many places has become hot, and the data shows that the proportion of housing transactions in Shenzhen that is more than 20 years old has risen to more than 40%, and the transaction volume of many "old and dilapidated" communities in Guangzhou, Beijing, Shanghai and Hangzhou has set a new historical record.
On May 17, 2024, the central government issued an "epic" bailout policy, with a minimum down payment of 15% and the cancellation of the lower limit of commercial loan interest rates.
Why did the "old and small" that was once regarded as poor value retention and unsellable become "fragrant and sweet"?
The hot second-hand housing market
The so-called "old and dilapidated" mostly refers to the old houses with superior location conditions, but old age, relatively dilapidated internal facilities, small construction area and poor living environment.
This kind of house is not only dilapidated on the outside, but also has a lot of problems inside, such as exposed wires, often blocked sewers, no property management, no elevator, etc., and some houses are old and can even be said to be dangerous.
For various reasons, there are fewer and fewer residents who are willing to continue to live in the "old and small", and these second-hand houses in the real estate market are regarded as poor value retention and have no future, and are disliked by the "post-90s" who are the main buyers of the real estate market, which has always been the "old difficulty" of real estate.
However, since the beginning of this year, the second-hand housing market in the "old and small" housing transactions began to become active, taking Hangzhou real estate data as an example, in March this year, the number of second-hand housing online signatures in Hangzhou reached 8,557 sets, an increase of 236%, and the number of intermediaries increased by 224% month-on-month, setting a record for the highest monthly viewing volume in the past four years.
In April, the transaction volume of second-hand houses in Hangzhou reached 8,402 units, and in just four days, after the introduction of the new real estate policy in May, the number of second-hand inquiries increased by an average of 36% year-on-year, and the number of new houses bought and sold increased by 48%.
The most sought-after is the second-hand housing in the core area. In April, among the top 20 residential areas in Hangzhou, 5 of the top 20 residential areas in terms of transaction volume are located in the core area of the city, with a transaction area of less than 60 square meters and a total price of about 1 million to 1.6 million yuan.
These "old and dilapidated" second-hand houses not only continue to increase the transaction volume, but also significantly shorten the transaction cycle, which previously took 100 days or even several years, has been shortened to a few weeks or even a few days, and the change is quite amazing.
The old and small with super cost-effective price
So what is driving the "old and small" market to be so hot? The first is the price. In the past two years, with the emergence of a large number of new houses in stock, the prices of second-hand houses have continued to adjust, and in the context of the economic downturn, the housing price bubble in first-tier cities has begun to gradually dissipate.
Taking a 37.58-square-meter unit in Pengsheng Village, Bagualing District, Futian District, Shenzhen, as an example, the transaction records of the real estate agency platform show that the total transaction price of the unit was 1.645 million yuan in February 2019, and in July 2020, the total price of the house was sold at a total price of 3.35 million yuan, doubling the total price, becoming the highest transaction record for the house.
At present, the listing price of this unit is 1.65 million yuan, which is comparable to the price level in 2019. In big cities, the decline in the price of old and small houses, coupled with the reduction of the city's down payment ratio, makes it possible for low-income groups who could not afford to buy a house before to get on the car, which is very cost-effective.
The increase in the transaction activity of "old and small" has a lot to do with the maturity of supporting facilities around the community. Most of the "old and small" are located in the core area of the city, with developed medical resources and sufficient educational resources, and the advantages are still obvious compared with new houses in the suburbs.
And in recent years, with the gradual development of the city, the optimization and improvement of the living environment of the old community has also begun to be put on a daily basis, and many old communities have begun to install elevators, and the living environment has been greatly improved, which has also enhanced its own attractiveness.
Of course, the hot market is inseparable from the adjustment of real estate policies. For example, eligible non-registered singles in Shanghai can buy second-hand houses in the inner ring, and young office workers who can only live in the suburbs before have begun to consider the "old and small" urban areas with convenient transportation, convenient commuting and complete facilities.
In addition, it is important to note that many old and dilapidated schools are also school district houses. Taking Zhejiang Province as an example, after Hangzhou lifted the restrictions on the purchase of second-hand houses in March this year, many parents in third- and fourth-tier cities in Zhejiang Province, such as Jinhua, Yiwu and Lishui, came to Hangzhou to buy school district houses.
At the same time, Hangzhou's new "first home" policy has also greatly stimulated people to buy houses.
Moreover, in recent years, local governments have also been actively renovating some old communities, which has also greatly improved the living environment of the old and dilapidated ones. On April 11, 2024, Zhejiang Province issued guidance on promoting the independent renewal of old communities, proposing "original demolition and original construction", that is, community owners can take the lead in the reconstruction of old communities, demolish old houses and rebuild new houses, and residents can move back to their original sites.
The new guidance has become a new model for the revitalization of old communities, which is different from the traditional government-led, and the owners of the new model bear most of the funds, and when and how to renovate can be collectively decided by the owners.
Even if the old dilapidated city center can not reach the quality of commercial housing after reconstruction, but it is also a new look, even if the price is not comparable to the new house, it is much higher than the previous value, at present, this model has been piloted in many cities, so many people began to see the business opportunities, and actively invest in it.
And now the bank's annual fixed interest rate is less than 2%, and the monthly rent of a house with a total price of more than 40 square meters and a total price of more than 1.4 million yuan in the city center is about 3,000 yuan, and the annual rental return will be 2.2% to 2.7%, which is stronger than general financial products.
However, the original demolition and original construction policy is still in the policy exploration stage, and the "independent renewal" model needs to be jointly decided and jointly funded by the owners, which is extremely complex and difficult in actual operation, and it will take a long time to mature and land, so it needs to be treated with caution.
Behind the hot market
The popularity of the "old and small" second-hand housing market has had a positive impact on the overall market. It promotes the diversified development of the real estate market, so that buyers at different levels can find suitable housing for themselves, the "old and small" transactions rise, and the "old and small" groups increase leverage to buy improved houses.
In this way, the transaction volume of the second-hand housing market has been driven, thereby driving the overall recovery of the property market and promoting the healthy development of the entire industry.
However, not all "old and small" are cost-effective, and we must also be soberly aware that the "old and small" second-hand housing market is not perfect, and not all old houses can be quickly destocked. Although the number of listings of old houses with remote locations, old buildings and lack of supporting facilities is increasing, there is no obvious change in transactions, and owners still don't care about them even if they continue to make large adjustments in price.
Although the transaction heat is increasing, the decline in second-hand housing prices has not improved significantly. According to the China Real Estate Index System, in May 2024, the average price of second-hand residential properties in 100 cities across the country fell by 0.7% month-on-month, and prices are still falling, and the current market has not yet stabilized.
In addition, there are still some problems and risks in second-hand housing during the transaction process. For example, property rights disputes, transaction risks, quality hazards, etc.
With the continuous changes in policies and markets, there is also some uncertainty about the future trend of these "old and small". In such an environment, both home ownership and market investment need to be more cautious.
Epilogue:
The activity of the "old and dilapidated" second-hand housing market not only attracts some buyers with limited funds, but also enables owners with improved housing needs to have the ability to change houses.
At the same time, the government is also continuing to optimize policies and take effective measures to actively build a good atmosphere for the real estate market. As consumers, we should also see the hidden problems and risks, look at real estate investment rationally, and avoid blindly following the trend.
Information sources:
CBN Daily.June 26, 2024. Edition A10. Re-examine the "old and small" second-hand property market, and it has been fragrant and sweet recently
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