More than 30 cities second-hand housing prices "fall", Qingdao fell 20.31% in a year

Recently, many cities have ushered in the snow days, the winter chill is intensifying. The weather changes are synchronized with the performance of the second-hand housing market in many cities across the country.

On December 16, the National Bureau of Statistics released "Changes in Sales Prices of Commodity Housing in 70 Large and Medium-sized Cities in November 2019" and "National Real Estate Development Investment and Sales Situation from January to November 2019", which showed that the prices of second-hand houses in 33 cities fell in November compared with the previous month. This is the second consecutive month in which prices of second-hand homes fell in more than 30 cities, compared with 35 cities in October.

It is well known that since the 2016 regulation, each place has offered the policy of limiting prices, and the newly built commercial housing is firmly pressed, with minimal fluctuations. In this context, the trend of second-hand housing prices better reflect the real situation of the market. Now, the second-hand houses "fall endlessly", many people are a little worried about this.

In fact, the decline in prices of second-hand housing seems to be sudden, but it is a process of warm water boiling frogs. As early as 2018, the prices of second-hand houses in many cities have begun to fall, only to continue to the present, the rate of decline has become larger, and began to attract widespread attention from the media and the public.

Why are used house prices continuing to fall? Where will the real estate market go? Uncle Ku will analyze it today.

The decline in second-hand home prices has been known for a long time

Recently, such a picture has been circulating on the Internet, and the chart shows that in November 2019, among the average listing prices of second-hand homes in 25 key cities, 20 of them fell, and Qingdao, the one that fell the most, saw a drop of as much as 20.31%!

There are various costs associated with acquiring a home (interest, various taxes, maintenance funds, etc.), which means that if a Qingdaoite bought a home in November 2018, even if he or she is able to sell it at the listed price (not taking into account the fact that value-added tax will be paid for less than 2 years), he or she would still lose a quarter of the price. And in reality, in such a dismal market, the real transaction price is likely to be a bit lower than the listing price, and the loss is going to continue to grow.

It's not just Qingdao, but the north and south of the country that are not immune to the decline.

Anjuke data show that in November 2019, the average listing price of second-hand houses in Beijing fell by about 1% from October, which is the fifth consecutive month of decline in second-hand houses in Beijing - according to the National Bureau of Statistics, the sales price of second-hand commercial houses in Beijing fell by 0.3% from the previous month in July, 0.4% from the previous month in August, and 0.5% from the previous month in September. month, 0.5 percent in August, 0.4 percent in September, and 0.6 percent in October.

The property market is like the stock market in that people tend to buy up rather than down.

According to statistics from Centaline Real Estate, from January to September 2019, Beijing's second-hand residential net signings were 109,700 units, down 10% year-on-year, with an average price of 64,000 yuan per square meter, the lowest turnover in the same period since 2015. This is the biggest adjustment in Beijing's second-hand housing market since 2008.

Statistics from the Beijing Municipal Commission of Housing and Construction show that in October 2019, Beijing's second-hand residential **** counted 8,844 online signings, a decrease of 3,475 sets compared with 12,319 sets in September, down 28.2 percent year-on-year; and a decrease of 35 sets compared with 8,879 sets in October 2018, down 0.4 percent year-on-year.

Taken together, Beijing's second-hand residential net signings in the first 10 months of 2019 amounted to 118,558 units, a decrease of 12,106 units, or 9.3 percent, compared with 130,664 units in the first 10 months of 2018!

Shanghai and Guangzhou, also traditional first-tier cities, are in a similar situation to Beijing.

Due to the strong wait-and-see sentiment in the market and the prolonged transaction cycle (e.g., the transaction cycle in Guangzhou's citywide second-hand residential market was prolonged from about 3 months from January-October 2018 to about 4 months from January-October 2019), owners who put up their properties for sale had to adjust their prices downward several times in order to finalize a deal.

Data from Hopeful Properties showed that the percentage of significant price cuts in transaction cases with price reductions of more than 5% reached the highest level of the year, with close to 30% of the final transaction prices being cut by more than 5% from the initial release price. Almost all real estate agents displaying listings in their circle of friends will thoughtfully include the note: "Prices are negotiable".

It can be seen that the fall in prices of second-hand houses, which seems to be sudden, is actually a process of warm water boiling the frog. As early as February 2019, data from the National Bureau of Statistics (NBS) showed that the listing price of second-hand residential properties fell for three consecutive months, with three or four tier cities falling the most, followed by first and second tier cities.

Since then, the entire second-hand housing market has shown a state of "price but no market". Recently, it has suddenly attracted a great deal of attention, mainly because it has fallen for too long, and the rate of decline has been relatively large.

For a long time, we've heard too many stories about people getting rich after buying a house and seeing prices soar. Now, the news of falling prices of second-hand houses continues to be exposed, which seems to have overturned this perception, and many people have become worried.

Market expectations have quietly shifted

Why are second-hand home prices continuing to fall?

Undoubtedly, the policy level occupies a place among the influencing factors.

The meeting of the Central Political Bureau held on December 6, 2019, did not mention real estate in a single word. This was immediately regarded as a heavenly good by developers, speculators, and even many people who had already purchased housing, believing that housing prices were going up. After all, since the 930 regulation in 2016, the policy has been tightened around the world.

However, the Central Economic Work Conference, which was then held in Beijing from Dec. 10 to 12, reiterated the need to adhere to the positioning that houses are for housing, not for speculation ......

Such a drama has been staged countless times over the past few years.

There was also no mention of real estate at the December 2018 Central Economic Work Conference. However, since 2019, the relevant departments first repeatedly reiterated the "housing without speculation", to the July 30 meeting of the Central *** Central Politburo, but also emphasized that "real estate will not be used as a short-term means to stimulate the economy", for the second half of the real estate market set the The tone of the real estate market for the second half of the year. Since then, the trend of the whole industry is indeed as expected by the policy.

Just held on December 23, the national housing and urban-rural construction work conference, and once again emphasized: long-term adhere to the house is used to live, not used to speculate on the positioning of the real estate as a short-term stimulus to stimulate the economy, continue to steadily implement the long-lasting mechanism of the stable and healthy development of the real estate market program, and strive to establish and improve the real estate regulation and control of the institutional mechanism.

All of this reflects a clear signal that the central government insists on unswerving real estate regulation and control.

Since this round of control, the most powerful and let real estate enterprises screaming policy seems to be the price limit.

For example, on December 11, 2019, the Changsha Municipal Development and Reform Commission issued the Notice on Matters Relating to the Composition of Commodity Housing Prices in the City's Cost Method of Supervision, pointing out that, in order to implement the policy of "housing without speculation" and the provincial and municipal real estate control policies, and to further strengthen the management of commodity housing prices, Changsha Municipality has further clarified that The price of commodity housing is composed of cost + profit + tax, of which the average profit rate is stipulated between 6% and 8%. A moment triggered heated debate in the industry.

In fact, this document is a continuation of the relevant documents in 2017, as early as November 30, 2017, Changsha Municipal Development and Reform Commission has issued the Interim Measures for Changsha City Price Restricted Commodity Housing Prices Management, which put forward the price of price-restricted commodity housing price consists of the cost plus profit, plus taxes, with an average profit rate of 6% to 8%.

Changsha is just a microcosm, in fact, there are more than Changsha price limit "hard" cities, such as Chengdu.

The result of the price limit is a serious inversion of the price of first- and second-hand housing, coupled with a survey that showed that 89% of the population of China has a "new house" complex, we have to go after the new house.

Looking, the second-hand market will inevitably be cold, but, after all, the new house is limited, can be shaken to the number of a few. Seeing that the market is frenzied, the fresh demand, investors and speculators who can't buy new homes will naturally set their sights on the standard second-hand homes, betting that the second-hand prices will continue to surge upwards once the regulation is eased. This is the same as the developers in the market frenzy high price land, floor price is more expensive than the neighboring prices is a reason, betting on the expectations.

But most people didn't expect the central government to be so determined to regulate. Now, three years on, there is still no sign of widespread relaxation. The price of new homes is still strictly limited, and the price of second-hand homes, which is already higher than that of new homes, has no room to rise.

For investors, one day the price of housing does not rise, to bear the loss of one day. So, the expectations of the fresh demand group quietly changed, from the previous anxiety to calm, the market from the previous seller's market to a buyer's market.

So, the price limit is only a superficial factor, the shift in expectations is the key to the market turn.

The truth behind the "downward spiral"

Normal market, in other conditions are equal, the second-hand homes will be cheaper than new homes by two to three percent. But in the context of price restrictions, second-hand homes are more expensive than a continuous supply of new homes, so buying a second-hand home, whether for self-occupation or investment, has become less cost-effective, and the supply in the market has naturally increased.

In this way, second-hand homes that were originally purchased at a high price will naturally have to be sold at a reduced price. Even if it is a sub-new home, the price will likewise not be high. This is because under the price limit conditions, developers' profit margins are compressed, and some companies with sloppy management may face unprofitable or even loss-making situations. In order to control costs, all sorts of magical things happen frequently: cardboard doors, bamboo instead of steel, only six trees in a neighborhood green, plastic artificial lakes and so on.

Pictured in Changsha, Hunan, a neighborhood with blue plastic "painting" an artificial lake

In 2018, Typhoon Mangosteen struck Shenzhen, some of the newly built mansions in front of the typhoon, surprisingly, is no match for many of the "old raggedy small" and even the village of the city. The fact that the new houses are not as good as the old ones is a stark reflection of the situation.

Such a sub-new house put out for sale, naturally low price ......

There are also some second-hand houses, although not built under the price restriction policy, but because of poor property management, the whole neighborhood appears "bruised". The first and second tier cities have entered or are about to enter the inventory era, the property is good or bad to a large extent affects the neighborhood's second-hand prices and the future of the premium space. What you see in the second-hand house is what you get, and such a house, naturally, is difficult to sell at a good price.

New home promotions are also a catalyst for the decline in used home prices. Since the CBRC issued "No. 23" in May 2019, real estate financing channels have been tightened step by step, and new regulatory policies such as trusts, overseas bonds, bank loans, development loans and ABS have been frequently issued. Many real estate enterprises are in crisis, the only way to rely on self-supporting renewal of cash flow - in the case of the year-on-year increase in housing prices continue to slow down, home buyers strong wait-and-see mood, through the promotion of slow-selling disk, the end of the disk, "price for volume" back to the cash flow.

For example, in August 2019, China Evergrande launched a "full marketing" harvest plan, which was implemented from August 20 to October 8, with up to 60% discounts under five preferences. The plan includes 27 regions, with a focus on Sichuan, Chongqing and the Central Plains, and *** involves 505 projects, including 493 residential and commercial projects, and 12 projects of tourism group companies.

While the promotion made Evergrande's average sales price in September hit a record low in recent years, sales did achieve a significant increase, with Evergrande realizing contracted sales of about 83.11 billion yuan in September, an increase of about 73.8% from August and about 31.9% from the same period of 2018, setting a new record for the group's single-month sales.

Evergrande's rush to collect revenue has played a great demonstration role, and other leading real estate companies are also scrambling to cut prices and promote. Small and medium-sized real estate enterprises can only be forced to follow, but your brand is not big enough, the products are not necessarily as good as those of the big real estate enterprises, and the price is still more expensive than that of the big real estate enterprises, then the probability is that you will be left behind ......

The large-scale promotions of new homes have greatly increased the supply of the market, which has made the purchase of new homes easier than before and made the second-hand home market naturally even more unattended that has accelerated the decline in their prices.

Another reason that cannot be ignored is the slowdown in economic growth.

It is well known that rental yields in China have been at very low levels. As of mid-2019, the country's housing rental yield was around 1.8 percent, according to Numbeo, a global database website. However, some investors who buy some old and dilapidated flats and then slightly refurbish them and then rent them out may be able to achieve a rental rate of around 4%, which can even cover their mortgage payments. In such cases, investors can hold on for a long time.

But with the decline in economic growth, the demand for rental housing and the impetus for rent increases have weakened, and investors' holdings have become heavier, which has also affected the second-hand housing market.

Will the real estate market be affected?

The continued decline in prices of second-hand housing is due to both policy and market reasons, so how long will this situation last and will it affect the entire real estate market and trigger a price drop?

At the moment, it seems not.

First of all, new homes and second-hand homes have an impact on each other, but under the conditions of new home price restrictions, the second-hand home market has a very weak impact on the new home market. Although the prices of second-hand houses have fallen one after another across the country since 2018, the average sales price of new commercial houses from January to October 2019 rose by 7.3%.

Secondly, the central economic work conference reiterated the "housing without speculation", also does not mean negative, because there is also a "comprehensive implementation of city-based policy, stable land prices, stable housing prices, stable expectations of the long-term management of the control mechanism, to promote the stable and healthy development of the real estate market. "The expression can be seen," stable "is still the main tone of the real estate industry in 2020.

It is worth noting that in the meeting circular, the word "stable" was mentioned 29 times, which indicates that "stable" is also the center of gravity of the economic work in 2020, as the national economy and economy of the first large industry of the real estate industry must be stable.

Lastly, as introduced above, the previous second-hand housing market is slightly deformed, since 2018 prices have been falling, is the return of normal value, and will not fall endlessly.

In fact, like the new housing market, the second-hand housing market is also showing the same qualities of differentiation. Although prices have not rebounded in some cities, the volume of transactions has begun to pick up.

For example, according to the Guangzhou Real Estate Agents Association, in November 2019, the number of all second-hand residential net signings in the city, including self-transactions, rebounded sharply by 14.00% from October. The rebound was even stronger in Beijing, where 12,296 second-hand residential units were sold in November, up a whopping 39.03 percent from a year earlier and a modest 9.76 percent from a year earlier.

Why?

It's because big cities like Beijing and Guangzhou have long entered the era of inventory, with second-hand home transactions dominating. For example, in Beijing, as of October 2019, Beijing's combined supply of 78,000 new residential units, of which 47,600 are restricted housing, accounting for 61%, during the same period, Beijing's new pure commercial residential transactions increased by 95.4% year-on-year, while the city's online signatures of second-hand housing fell by 9.3% year-on-year. But that still doesn't fundamentally change the dominance of second-hand housing, even more so when location and school districts are taken into account.

Note: Competitively priced houses are commercial properties produced through the land sale method of "limiting the price of the house and bidding for the price of the land". The following conditions need to be met in order to purchase a competitively priced home: Beijing household units can purchase 2 units, non-Beijing households can only purchase 1 unit, and need to have 60 consecutive months of social security or tax in Beijing, the work of the work residence permit to purchase a home in the same as the Beijing hukou.

The first-tier cities, represented by Beijing, were the first to initiate this round of regulation and control, and the first to see results. The average price of second-hand houses in Beijing has been falling since March 2017 - from April 2017 to February 2018, the average price fell by a cumulative 13.5%.

However, since the Spring Festival of 2018, the average price of second-hand houses in Beijing has experienced two seasonal rises and two sustained falls, with monthly average price changes of around 2% year-on-year.

The transaction price of second-hand houses in Beijing is still still slightly down in November 2019, but the rebound rise in the volume of transactions can show that the market has begun to enter the channel of repair.

Because, at present, Beijing's second-hand housing market is at a mid-to-low level since the regulation, and according to past experience, the market may see a seasonal recovery after the Spring Festival. Such logic is also suitable for many other first- and second-tier cities.

But I'm afraid second-hand home prices in many third-, fourth- and fifth-tier cities will continue to dip. In the previous two years, benefited from the de-inventory and shanty reform monetization pull, three, four and five line city property market ushered in a round of wildly popular market. However, the vast majority of the three, four and five tier cities of the new housing turnover is much larger than the second-hand housing, compared to the "no choice" of the first and second-tier city residents, their willingness to buy second-hand housing is even weaker. Moreover, a large part of the three, four and five line cities are in the net outflow of population, have a thick industry is also less, and so in 2020 after the closing of the shed reform, these cities will be a large area of the main force to buy houses will be reduced, it is difficult to find buyers of second-hand houses.

At present, some cities began to rely on policy to "stabilize". For example, on November 29, 2019, the Guangdong Foshan Municipal Bureau of Human Resources and Social Security jointly with the Housing and Construction Bureau issued the "Supplementary Notice on Further Improving Talent Housing Policies", and the biggest highlight of the notice is that talents working in Foshan, with undergraduate education or above, or intermediate level work or above professional qualifications, are not subject to the restriction of household registration and tax and social security deposits for the first set of home purchases; and soon after on December 13, the People's Government of Nansha District, Guangzhou, issued the On further facilitating talents and Hong Kong and Macao people to buy homes. issued a "notice on further facilitating the purchase of commercial housing for talents and Hong Kong and Macao residents", the notice shows that the bachelor's degree or above, etc., the purchase of the first set of commercial housing within the scope of Nansha District is not subject to restrictions on household registration, social security, personal tax.

In the context of the competition for talent, the three, four or five tier cities second-hand housing market outlook is worrisome.

Overall, the decline in the price of second-hand housing across the country is a sign that the frenzy of the property market has returned to calm, a reasonable return of value, and a reflection of the central government's determination to regulate. Although the word "stability" at the head of the 2020 will have some of the cities in accordance with the policy of governance in accordance with the moderate relaxation of regulation, but "housing without speculation" policy can not be broken, the second-hand home prices fell is the result of the policy regulation and control hope to see.

Compared with the new housing market, the second-hand housing market is faced with a more market-oriented challenges, the place will continue to fall, should not fall, down will rise again.