Li Yige'S Column Real Estate Is Still A Reliable Force For Stable Growth

The main economic data in the first half of the year show that China's economy is going out of the bottom. Among them, the contribution of investment promotion is indispensable.

Although the national fixed assets investment decreased by 3.1% from January to June, the decline rate was 3.2 percentage points narrower than that of January to May. The month on month growth in June was 5.91%, and experts estimated that the year-on-year growth in June was 5.4% (May was 3.9%).

As I said before, real estate is one of the industries that are less affected by the epidemic. Real estate investment in June was a small bright spot. From January to June, the investment in real estate development in China has turned positive, with a year-on-year increase of 1.9%, and a decrease of 0.3% from January to May.

Although the sales area of commercial housing decreased by 8.4% from January to June, the decline rate was 3.9 percentage points lower than that of January may; the sales volume of commercial housing also decreased by 5.4%, but the decline rate was 5.2 percentage points lower than that of January may.

The contribution of real estate to the economy driven by the investment in fixed assets was clearly reflected in June. In addition to driving the industrial chain, it also directly drives. In June, the output of excavators, cement, steel and trucks increased by 62.9%, 8.4%, 7.5% and 20.4% respectively over the same period of the same period last year, which is attributed to the real estate investment. In addition, the promotion of residential sales to consumption can not be ignored.

The fiscal revenue from January to June may be announced in a day or two. According to the Ministry of finance, from January to may, the revenue from the transfer of state-owned land use rights reached 2109.1 billion yuan, up 0.9% year-on-year. It is estimated that the national land transfer income will maintain a positive growth from January to June. According to institutional monitoring, the land transfer amount of 300 cities nationwide in the first half of 2020 is 23716 billion yuan, an increase of 3% over the same period of last year. Under the background that the income of main taxes is declining, the contribution of land transfer income to local income is self-evident.

The central government proposes to do a solid job in "six stabilities" this year, and "stable investment" should include stabilizing real estate investment. I personally believe that to stabilize real estate investment, we need to stabilize the real estate regulation policy, the real estate market, especially the house price and land price. The expectation of stable housing price should also be included in the "stable expectation".

How to look at Shenzhen recently upgraded real estate control?

Several people in the real estate industry were asked. They were not surprised by the upgrading of regulation and control in Shenzhen. Although the rise of housing prices in Shenzhen has its specific urban background, the demand is too strong, and the new supply is insufficient, but in the case of the stability of major cities in China, the fluctuation of the property market in Shenzhen in the first half of this year appears to be too abrupt. Some experts feel that the "severity" of Shenzhen's regulation of the increase in the regulation is beyond expectations, but careful analysis shows that some provisions do not exceed the regulation level of Beijing and Shanghai.

On the whole, Shenzhen's current regulation and control upgrade is still the proper meaning of the city government's implementation of urban policies under the principle of housing speculation and asset bubble prevention.

In the second half of the year, will there be additional regulation in other cities? The Enlightenment of Shenzhen is that as long as the real estate market in any city fluctuates too much, especially if the house price shows signs of rapid rise, the competent authorities will issue an early warning signal, and will not rule out the possibility of adding weight to one or several regulatory provisions, just like Suzhou in July 2019. But at present, no other major cities in China have reached the level of Shenzhen.

If you agree that the real estate market in 2019 can be called "stable" or "basically stable", then the same is true for the second half of 2020 and the whole year of 2020. The problem is that, even if the national market as a whole presents such a situation, the feelings of various market entities are different, and the differentiation is still the same.

As you know, housing demand has only been delayed and has not disappeared under the epidemic situation. This has been confirmed by the recovery of property transactions since the sales offices opened in late March. However, the transaction data from late March to April can not be used as the basis for judging the whole year. It's going to be longer and more intense. The situation in June will continue to July to August.

The division of regions and cities will not change easily. Personally, I am most optimistic about the property market in the Yangtze River Delta, followed by the Pearl River Delta. The activity of trading in Southwest China is less active. As for cities, the housing price data released by the National Bureau of statistics on the 16th showed that the sales prices of newly built commercial residential buildings and second-hand residential buildings in first tier cities fell down month on month, while those in second and third tier cities increased slightly. However, we can't think that the opportunity of third tier cities is coming again.

I have always told friends in the real estate industry that the real estate industry still has a long development period in terms of the base number of rigid demand and improving demand in China. In this volatile market environment, is it possible for real estate companies to find opportunities to play super normal or overtake on the curve as expected by a few real estate enterprises? To be honest, it's hard.

In the past, under the market operation curve with an upward trend of 45 degrees, some real estate enterprises were able to achieve a growth rate far higher than the average level of the industry, in the final analysis, because they had high risk preference and dared to increase leverage. Today, although there is plenty of liquidity, the risk factor of leverage is several times that of the past. At this stage, there are extraordinary requirements for those real estate enterprises seeking high growth in the aspects of city selection, land acquisition opportunity judgment, product creation ability and resource aggregation ability. Once you get the wrong land, and then you are going to slow down, you are not going to surpass, but falling behind.

In most cases, the real estate market is not allowed to go down. A higher record price is certainly conducive to the improvement of profit margin, but effective transaction and payment collection are the basis of good cash flow. In the Yangtze River Delta and the Pearl River Delta, the performance of real estate enterprises with higher sales value will be better than their counterparts, but the central and western regions are the decisive places for their products.

As for individual purchasers, I have insisted since 2017 that the good time for investment property purchase is over. For the need of asset allocation, it is understandable for high net worth people to do some real estate portfolio on the premise of meeting the policy requirements. However, generally speaking, it is not appropriate to pursue the high premium return of real estate.

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