With the upgrading of real estate regulation in hot cities and the more accurate grasp of market behavior by local governments, the corresponding policies and measures have become more precise. The constraints of long-term population and short-term capital are being further strengthened. Speculation in China’s real estate market has been significantly restrained. The expectation of the real estate market has also begun to diverge, and the positioning of real estate speculation continues to consolidate.
In June 2021, 70 large and medium-sized cities saw a steady or declining increase in the price of commercial housing, according to new data released by the National Bureau of Statistics. Among them, the price of new commercial residential buildings fell in 12 cities and remained unchanged in 3 cities. Second-hand home prices fell in 16 cities and remained flat in six. The differentiation of current regional housing prices is similar to that of some periods in the past, but the underlying drivers have changed fundamentally. With the establishment of the long-term operation mechanism of the real estate market, the performance of the gradual differentiation of the real estate market expectation is being further solidified. It is worth noting that the slowdown in the growth rate of investment in real estate development has accelerated significantly, real estate development enterprises have become more cautious in purchasing land, and individual investors have significantly restrained their reckless use of leverage for speculation. It should be said that the occurrence of these phenomena is not accidental, is the real estate market gradually become rational inevitable reflection.
This is bound to further consolidate China’s policy positioning of not speculation on housing, and in turn, will take a more solid step towards building a long-term mechanism for the operation of the real estate market. On the one hand, hot cities such as Beijing, Shenzhen, Guangzhou, Wuxi and Suzhou have further upgraded their real estate regulation and adopted more precise policies and measures. For example, the reform of school district housing policy in Xicheng District of Beijing has profoundly changed the deep-rooted logic of school district housing speculation and has an important impact on the direction of the city’s real estate market. On the other hand, the “five red lines” on the capital side, including real estate development enterprises and banks, continue to exert force, which also profoundly changes the natural affinity logic of real estate and finance, and has a profound impact on the transaction and holding behavior of real estate market subjects from both ends of supply and demand.
It is not difficult to find that the recent changes in the real estate credit environment in some cities in China are important catalysts for the current differentiation of property market expectations. The “five red lines” real estate financial policy, based on the concept of macroprudential, actually touches on the core logic of housing price growth. As long as the real estate finance maintains long-term steady growth, the basic support for the irrational rise of housing prices will no longer exist. In the first half of this year, the growth rate of China’s real estate loans fell, continuing to be lower than the growth rate of all loans. It is also reported that since the second quarter, mortgage interest rates in most cities have continued to rise and the time limit for approval has been extended, effectively curbing the room for irrational leverage by residents.
In fact, in the process of difficult recovery of global economic growth, the rational return of China’s real estate market has reserved a certain space for macroeconomic regulation and control policies. Although social capital is a large pool, as long as the flow of capital is under precise control, there will be no large-scale detour of capital into the real estate sector, and more of it will flow into production and consumption, and the constraint of the irrational operation of the real estate market on macro policy will be significantly reduced.
The rational and healthy operation of the real estate market is of great importance to macroeconomic and financial stability and people’s livelihood. Both real estate developers and residents should have a rational understanding of the real estate market that is undergoing chemical reactions, adhere to the principle of not speculation on housing and residential use, and act according to their ability. They should take concrete actions to promote the long-term and steady development of China’s real estate market and improve the common well-being of the whole society.
Reprint indicated source：Spark Global Limited information