Local governments in China have repeatedly had to introduce consumer stimulus measures to the real estate market, showing that this is a formidable time bomb for the second-largest economy in the world.
Tangshan City, Hebei province, became a hot news spot. On the evening of the 5th, the government introduced a new policy of “one person buys a house, the whole family helps,” causing lively discussions.
In addition, Zhongshan City, Guangdong province, recently issued a “reduction limit order” for the housing market. Over the past two months, local governments have eased restrictions and introduced many stimulus policies, but the real estate market has not recovered quickly.
Tangshan city’s housing prices fell to the bottom, controversial new lending policy
Tangshan is a city attracting attention because of many recent violent incidents. The city’s name continued to become a hot topic when the searching hashtag “Tangshan housing prices fell to the bottom” appeared on Weibo’s hot search area on July 5. According to Chinese media reports, many Tangshan investors are selling their properties, and the number of secondhand houses for sale is gradually increasing. However, affected by the gloomy downturn of the new housing market, the secondhand housing market also had lower price tags, and even some luxury homes were sold at a loss.
Chinese media Sina Finance reported on the 5th that earlier this year, Tangshan issued a package of policies to stimulate the real estate market, including canceling restrictions on commercial housing sales, adjusting the commercial lending policy to buy a house, and adjusting the reserve fund lending policy.
According to the article, Dong Wang Li, a real estate expert in Tangshan, said the number of old houses he has handled had increased significantly recently, mainly due to his experience in years of real estate transactions. He indicated that some investors are withdrawing cash. Many house owners fall into the situation of selling at a loss, some losing a little or others losing a lot.
In addition, the official WeChat account of the Tangshan Housing Provider Fund Management Center issued a notice on the 5th stating that starting from July 15, the new policy on home buying and debt repayment will be implemented: “One person buys a house, the whole family helps.” This news immediately sparked heated discussions among netizens.
The regulations say: In Tangshan, if a single person buys a house with a loan, their parents can help pay off the loan as a co-payer; if a married person buys a home with a loan, both parents (wife and husband) can help pay off the loan as a co-payer. Parents taking out a home loan, single children, or married children with their child’s spouse can help pay off the loan as a co-payer.
According to incomplete statistics, AI Express said on May 6 that Tangshan is the 14th city to introduce a similar policy this year.
Epoch Times has compiled the comments of Chinese netizens as follows:
Netizens with the account name “Leaves falling in the rain” said: “This is not cutting chives anymore, but pulling them all out” (Chinese society has a way of saying “cut chives” because chives, when cut, must be cut to the root, so the symbolic meaning is to make the most of it, or the blood-sucking policy will steal money from a certain class or a lower class).
An internet user named “Professional Shovel 0325” said: “This is called: one person buys a house, the whole family is in debt.”
Netizen “Bill Lao niu,” said: “Don’t panic, if parents don’t help co-pay the debt, they can let their children continue to pay the debt, so that parents + homebuyers + children continue to pay the debt. After three generations in debt, we can finally buy a house.”
Netizens “luosi2007,” said that: “Only selling houses is not enough, other supporting facilities such as roads, schools, heating systems, gas pipes… cannot keep up, these are the most common problems in Tangshan. After buying a house, you have to protect your interests. It does not mean the more stimulus policies, the more it will save the market.”
Sina Finance reported that, in May this year, the average transaction price of secondhand housing was 11.027 yuan per square meter or more than $1,600 per square meter, down 0.84% month on month and down 6,65% over the same period last year.
The article also said that netizens lamented that “most cities in the country are not much different.”
Zhongshan City issues a “reduction limit order” to limit house prices to 5% each time
A few days ago, Zhongshan city, Guangdong province, issued a “reduction limit order” for the housing market.
According to Sohu, Zhongshan City Housing and Urban-Rural Development Bureau and the Department of Reform and Development jointly issued a “Notice on further optimization of the selling price of newly built commercial housing” on the 4th.
The notice states that new commercial housing prices must be declared to the Zhongshan city government. There are two forms of declaration: “first declaration” and “price adjustment.” When applying for a permit to sell or register real estate for the first time, the constructor must declare the “first sale price” if he wants to adjust the price in the future, he must declare the price adjustment through the trading platform.
The notice clearly states that, after declaring the selling price of a commercial house, the time for each adjustment is not less than three months; the reduction is not more than 5% of the previous selling price. The fluctuation range of the actual selling price is not more than 15% compared with the declared price.
In a Weibo post, Deng Haozhi, a mainland real estate economist, said that “Zhongshan’s new regulations open a channel for further discounts. Judging from the current situation, house prices in Zhongshan will still fall further, but the new Zhongshan policies were relatively strong in the past, so it is expected that in the future, the decline may not be much.”
However, some netizens disagreed with his view, saying, “Similar to the circuit breaker in 2015, it will decrease faster.”
The CCP’s strong stimulus has not improved the market; it is difficult for real estate to be the economy’s foundation
According to the Epoch Times, over the past 20 years, real estate stimulus seems to be the CCP’s experimental means of solving economic problems. Authorities said in late April that they “support local governments to improve real estate policies based on local conditions.” Local governments have loosened restrictions and introduced various stimulus policies.
China’s Securities Times reported on April 21 of this year that a report by the Shanghai E-House Research Institute showed that poor trading in March led to a persistent prolongation of the real estate inventory cycle in urban areas, skyrocketing from 19.49 months at the end of February 2022 to 22.7 months. In which cities of grades 3 and 4 reached 25.83 months, surpassing the high of the epidemic period (25.18 months) and setting a new record. China’s real estate inventory cycle indicates the correlation between supply and demand. The short inventory cycle suggests a more dynamic market; the long inventory cycle indicates a gloomy atmosphere with more supply than demand.
According to Beijing Business Daily, on April 29, the meeting of the Politburo of the Central Committee of the Communist Party of China emphasized at the meeting that day that to effectively manage and control risks, localities must improve real estate policies and promote stable and healthy development of the real estate market.
However, two months later, the real estate market did not recover as quickly as anticipated.
The Shanghai E-House Research Institute calculated that the overall price of new commercial housing in 70 cities fell 0.2% month-on-month in May; secondhand house prices fell even more.
Sina Finance on July 5 reported that Yu Liang, chairman of the board of directors of Vanke, said at the June 28 shareholder meeting that in the first quarter of 2022, home sales in the first and second quarters in first-tier cities fell by 36% year-on-year. In April, the situation was even worse. Unfortunately, the annual drop in commercial housing sales in first and second-tier cities has increased to 59%, and “the market has touched bottom.”
Hu Rong, assistant professor of real estate and finance at the University of Hong Kong Business School, told BBC Chinese that the current policy context is: on the one hand, general consumer demand is sluggish, and real estate sales are feeble, thus dragging down overall economic growth; on the other hand, various restrictions on buying and lending previously introduced to limit real estate speculation are still in effect.
She said that the real estate prices are still relatively high. At the same time, China’s overall economic growth has slowed, and the epidemic has led to a tightening of the job market. Wages or investment income has been negatively affected to some extent. People’s confidence in real estate investment decreased, pressure increased, and the effect of this stimulus is not yet apparent.