Has China's property market bubble burst?
The last forum in Boao every year is reserved for the most popular event of the past year. Last year was "Boao's Debate: Who is the culprit of the stock market?" This year's topic is naturally housing prices.
In the spring and summer of 2016, the nationwide housing price rise led by first-tier cities was somewhat curbed after the 930 New Deal. However, the dark waves surging under the calm surface finally erupted after the 2017 Chinese New Year. The short interval between the two rounds of skyrocketing and the violent momentum have doubled the despair of a large number of people in need of buying houses. Beijing introduced nine new policies on March 10, which will indeed cool the market, but at the same time it also shrinks the room for ordinary people to buy houses, and even pushes many people who have already stepped into the door of "homes." Those who have signed a contract but have not completed the online signing process, or who have had a hard time getting enough down payment to book a house, are stuck.
The prediction of the bursting of China's real estate bubble began 10 years ago. But until today, housing prices are still rising, but the bubble burst has not come. There is no market that only rises or falls, and there is no bubble that can only blow. The memory of the subprime mortgage crisis in the United States and the collapse of the Japanese property market is as fresh as yesterday. Will China be an exception? The following is a partial record of the speeches of the forum, trying to fully present the collision of views, and hope to provide a reference for our own judgment.
Wu Xiaoqiu (Vice President of Renmin University of China): Only by drastically lowering the leverage of private sector housing purchases can the bubble not burst
No matter from which point of view, through the theoretical analysis of economics, we cannot come to the conclusion that property prices are so high. The price of real estate in a country has a certain relationship with the level of economic development and marketization of the country, especially the level of personal income. Of course, we will find from some other data that there is also some logic for such an increase in property market prices.
In 2013, I already felt that Beijing housing prices were very outrageous. I made a bet with Ren Zhiqiang at that time. He called on everyone to buy houses every day, but I hope everyone buys stocks, because in my concept, if the main part of a country’s resident assets is a house, the country is very abnormal and normal. In many countries, the main part of residents’ assets should be securitized financial assets, especially stocks and funds. So I bet that the house price in Beijing is now 70,000 yuan per level, and it is impossible to rise any more. It will see who can win in five years. At first, I was ambitious because China could not violate such a law, but now I found that the probability of me losing was higher.
Later, I thought about why the rise is inevitable, and the reason lies in M2, which is broad money. Since the 2008 financial crisis, China's M2 growth rate has been too fast, an average of five to six percentage points higher than the GDP growth rate. Up to now, China's M2 has reached more than 160 trillion yuan, and its GDP is more than 70 trillion yuan, which is about 2.1 times. This huge stock of M2 is for the purchase of assets, it will not appear in a cash state, a small amount will be stored in the bank, and more will be chasing assets that can bring profits. However, the assets provided by the Chinese financial system are very limited, stocks are afraid to buy, and there are not many bonds, so everyone has started to buy houses. Such a large stock of M2 will obviously lead to such an increase in real estate prices.
But the bursting of the bubble will not bring a financial crisis to China. This is different from the full-scale financial crisis caused by the US subprime mortgage crisis in 2008. The reason is that the proportion of securitized products made by these houses in China is very small, almost none. Not terrible.
Li Xunlei (Chief Economist of Qilu Asset Management): Housing prices across the country will generally fall around 2020, and those that should rise will return
There are two streams that determine housing prices, one is the population flow and the other is the currency flow. At present, the number of floating population in China is decreasing. According to national statistics, the floating population decreased by 5 million in 2015 and about 2 million in 2016. In addition, migrant workers only increased by 500,000 last year. This reflects the weakening of population mobility, indicating that the economic trend is going down and the process of urbanization is also slowing down. Housing prices are first reflected in the population phenomenon. Population can explain the increase in housing prices in many cities. For example, the two largest cities in the world last year, one was Hefei and the other was Xiamen. The population inflows of these two cities ranked first in the country. Two people. It can also be explained why, when real estate was so hot in Dalian in 2016, housing prices fell because of the net decrease in population. Therefore, if the inflow of population decreases, the support for housing prices will also decrease.
The second point is currency, which is the flow of funds. The increase in housing prices in Beijing, Shanghai, Guangzhou and Shenzhen is still a kind of agglomeration of funds, because Shanghai is not the Shanghai of Shanghai natives, but the Shanghai of the whole country. The house prices in New York are generally higher than Shanghai, because New York is the New York of the world, not the United States. New York, so the concentration of funds will definitely have an impact on housing prices.
I think house prices may fall across the board around 2020, because firstly the population flow is not supported, and the currency growth rate will also decline with the decline in economic growth. Of course, because any bubble burst is irrational, it will cause a panic drop, so if it falls, it will fall together.
After the decline, what should rise will still rise back, because after all, China’s economy still has its momentum. Beijing, Shanghai, Guangzhou and Shenzhen have become a global metropolis, and it will also become an international metropolis. The current supply of residential land in the city is still Insufficient, the gap in housing prices has not widened. Manhattan is much more expensive than the neighboring New Jersey, but the gap between downtown Shanghai and the suburbs is not much, which is very abnormal. The national structural adjustment will certainly continue, and housing prices in central cities and metropolitan areas will continue to rise. In the future, China's population will be concentrated in four places, the Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin-Hebei region, plus central cities such as Wuhan and Changsha. This is a process of population optimization in the future. Due to such a flow of population, housing prices in these cities are supported.
Jia Kang (former director of the Institute of Fiscal Science of the Ministry of Finance, chief economist of China New Supply Economics Research Institute): The average price of first-tier cities will not go down in fifteen years
The basic pattern of China's current property market is twofold. If it is because the money supply is too large, why is it not reflected on the ice side, but only on the fire side? Whether China's broad money supply M2 is too high is still controversial.
The problem of China's real estate market is mainly caused by structural problems in the process of real estate prices in the central area showing an upward curve with the advancement of urbanization. Ice and fire are two heavens, the fire is uncomfortable, and the ice is also uncomfortable. The structural problem is the most important substantive problem. It does not deny that there is a bubble on the fire side, but it is not a bubble that brings systemic risks. The ice side is not a bubble problem, but a problem of destocking.
In academic discussions, everyone recognizes the existence of bubbles. However, different people have different opinions on the identification of bubbles. Generally, after the bubble has burst, everyone will know what is above the value of the bubble. In Japan in the early 1990s, during the entire economic stagnation process, it was obvious that there was a substantial correction in real estate prices. However, at that time, the urbanization level in Japan was 77%. The current urbanization level in China is not the official resident population of 57%, but the urbanization rate of the registered population in the latest National Bureau of Statistics data. In 2016 It was 41%, an increase of 1.3% over the previous year. According to international experience, it will only turn into a low-level development stage after almost 30 points of upside. In the past few decades, almost 400 million people in China have moved from rural to urban areas to become citizens. Only when the urbanization rate of the registered population reaches a high of 70%, will there be a phase change. Now we can say that the increase in the average transaction price of housing driven by the first-tier cities is in line with the analysis of economics. The general trend of the expansion of built-up areas is the increase in transaction prices caused by short supply. In terms of average price performance, it must be an upward curve. This is a regular development process, but it has caused many misunderstandings in real life. I think that in the foreseeable fifteen years or so, in large cities like Beijing, Shanghai, and Shenzhen, there is no possibility that the average price upward curve will turn into a downward curve. The central government must pay attention to the construction of basic systems to make the curve rise, but not so steep, especially to contain the ups and downs caused by unscrupulous in the process of rising. This is a bad factor that causes social unrest and is a real problem in China.
Since the performance of China's real estate market is unhealthy, the central government proposes to promote its healthy development, and then corresponds to the concept of long-term mechanism. The latest guidance is that long-term mechanism must rely on the construction of basic systems. As 400 million people migrate from rural areas to urban agglomerations in the next few decades, and their incomes move from the middle-income stage to the high-income stage, their purchasing power must correspond to the basic system of effective supply. The system is divided into the following four aspects .
First of all, the land must adapt to the flexibility in the development process under the overall and reasonable land development plan led by the government to form a reasonable and calm sustainable supply. The experience that should continue to be explored is Chongqing’s land ticket system. Under the premise of the balance of basic farmland, people far away from the urban-rural fringe can share the results of reform and opening up, while calmly and orderly sustainable land supply can solve the expansion of the central area. The question of built-up areas and the provision of land for residential construction. It is a pity that only one trial was allowed in Chongqing for more than eight years. This is not in line with Deng Xiaoping's principle of bold reform and opening up, and he must have pioneering reform wisdom.
The second basic system is the dual-track housing planning. The government should take the lead in providing orderly supply and place the low-income class on the platform of public rental housing and public property housing, so that they can live and live without having to flood into the low-end market of commercial housing. Participate in the competition, especially the sandwich layer. The dual-track coordination of the housing system cannot be changed in the foreseeable future. It must be a reasonable and overall coordination between the social housing and the market.
Third, under the concept of PPP, China has made a lot of efforts to mobilize funds outside the government to provide housing together and provide the infrastructure required for the construction of a livable city. The government should mobilize the entire social capital to form a supply that may correspond to the needs for the elderly in this regard, and balance supply and demand as much as possible.
Fourth, it is very offensive to the public. China must actively learn from the United States, Europe, Japan, and many other developing countries to form real estate taxes, property taxes, or real estate taxes from scratch in the housing tenure link. The establishment of this tax system has long been required by the central government, but so far it has not seen any acceleration. After the real estate tax was hotly discussed this year, the National People's Congress announced that it would not consider submitting it to the legislative process this year. This is a major regret.
At least these four aspects of basic system construction must form a supporting reform plan and unswervingly advance, otherwise China's current real estate regulation and control by means of purchase restrictions, loan restrictions or even price restrictions will not cure the symptoms. It is constantly in a state of play. At any stage, the people are dissatisfied and the government is anxious, and they cannot solve the problem of healthy development. Therefore, we must find a solution to both the symptoms and the root cause, and the root cause is the way out.