In the first quarter of this year, Xians GDP grew by 8.6% year-on-year, up from 0.5 percentage points in the same period last year, ranking the top of the national urban growth rate list. But in the first half of this year, Xians economic growth fell to 7%, down 1.6 percentage points. If we look at the second quarter alone, the decline in growth rate will be even greater.
If we carefully analyze the data released by Xian Statistical Bureau, we can find that real estate investment plays an important role in its economic growth.
Wrestling in the Second Quarter of Xian Economy
So why did Xians economic growth momentum in the first quarter hit a new high since the first quarter of 2015, but dropped significantly in the second quarter?
By comparing the main data of the first quarter and the first half of the year in Xian, we can see that in the first quarter, the added value of industries above the scale in Xian increased by 12.0% year-on-year, and in the first half it decreased by 8.7%. In the first quarter, the fixed assets investment in Xian increased by 11.9% year-on-year, while in the first half, the fixed assets investment (excluding farmers) increased by 2.2% year-on-year, and fell by 9.7% compared One percentage point.
Although the industrial economy of Xian has fallen somewhat, it has remained strong, and the growth rate of 8.7% is still in the forefront of the country. However, as an investment-driven local economy, Xians fixed asset investment has declined sharply, which has obviously formed a great drag on its economic growth.
Further analysis of the data released by Xian Statistical Bureau shows that in the second quarter of fixed assets investment, real estate development investment appears diving. In the first quarter, the investment in real estate development in Xian increased by 15.9% year-on-year, 12.4 percentage points higher than the same period last year, while in the first half of the year, this figure fell by 1.1% year-on-year.
The Growth Trend of Sales Area of Commercial Housing in Xian in the First Half of 2018 and 2019
Meanwhile, in the first half of the year, other economic indicators in Xian were relatively stable, even growing. Generally speaking, the sharp decline of real estate development investment in Xian in the second quarter shows a positive correlation with the decline of economic growth in Xian, which can be said to be an important factor.
A Shaanxi real estate researcher told the first financial reporter that this is also related to land use indicators in Shaanxi.
On April 23, Shaanxi Provincial Natural Resources Department issued a Letter on Suspension of Reception of Construction Land Reporting, which showed that from January to April 2019, the total area of construction land reported by Shaanxi Provincial Review was 483,000 mu, of which 23,000 Mu were newly added, reaching the upper limit of 20% of the planned expenditure by 2018. Therefore, from April 23, the acceptance of construction land applications from all parts of the country has been suspended.
In addition, there are also factors to regulate and upgrade. Since the talent competition in 2017, Xian has upgraded and adjusted its household registration policy seven times, and introduced a new policy of the most relaxed household registration access in history. Accompanied by this is the continued boom in the real estate market in Xian. Data from the National Bureau of Statistics show that as of June 2019, the price of newly built commercial housing in Xian has risen for 40 consecutive months; in June, the sale price of new housing in Xian rose 25.2% year on year, ranking first in 70 cities for seven consecutive months.
Under the background of no speculation in housing, in June this year, Xian issued the Notice on Further Strengthening the Regulation and Management of Housing Market, which formally upgraded the regulation and control of real estate.
Data from Xian Statistical Bureau show that land purchases have declined significantly this year. In the first half of the year, the land purchase area of real estate development enterprises was 215,500 square meters, down 78.6% from the same period last year, and the transaction price of land was 1.355 billion yuan, down 57.2%. The decline was 33.8% and 11.0% higher than that of the same period last year, respectively.
Why does real estate development investment have a greater impact on Xians economy? From the perspective of real estate dependence, that is, the proportion of real estate development investment in urban GDP, in 2017, Xian ranked second with 31.2% of real estate dependence in major cities in the country. In 2018, Xian did not publish the total data of real estate development investment.
What other cities are highly dependent on real estate?
Among the four municipalities directly under the Central Government and 31 provincial capitals, the first financial and economic reporter counted the real estate dependence of 20 cities from the relevant data of 2018, and found that the real estate dependence of the central and western cities is relatively high.
Among them, in addition to Xian and Zhengzhou, cities with real estate dependence of more than 30%. Statistical Bulletin shows that in 2018, Zhengzhou has completed a total investment of 325.84 billion yuan in real estate development. In that year, Zhengzhous GDP was 1014.332 billion yuan, and its dependence on real estate was 32.12%.
Similar to Xian, Zhengzhous investment in real estate development is also declining. In the first half of this year, Zhengzhou completed a total investment of 144.74 billion yuan in real estate development, down 2.1% from the same period last year, and the growth rate fell by 9.2 percentage points compared with the same period last year. From January to February, investment in real estate development grew by 3.4%, the highest in the first half of the year, while the rest of the month ran in the range of 2.1%-2.1%, and continued to operate at a low level.
In the first half of this year, Zhengzhou Real Estate Development Enterprises received 161.93 billion yuan, an increase of 2.5% over the same period of last year. Among them, domestic loans amounted to 19.57 billion yuan, an increase of 15.5% over the same period last year, accounting for 12.1%, an increase of 1.4 percentage points over the same period last year; self-financing funds amounted to 77.36 billion yuan, a decrease of 16.5% over the same period last year, accounting for 47.8%, a decrease of 10.9 percentage points over the same period last year.
After Xian and Zhengzhou, Xining, Lanzhou, Urumqi and Chongqing, with real estate dependence exceeding 20%, are 22.72%, 21.46%, 20.12% and 20.86%, respectively. It can be seen that the real estate dependence of the capital cities of Northwest China is relatively high. In addition, Wuhan and Hefei are close to 20% in the central region, 18.72% and 19.52% respectively.
According to statistics of Wuhan Municipal Bureau of Statistics, in the first half of this year, Wuhan ranked first among 15 sub-provincial cities in real estate development investment, ranking the same as the same period last year, two places higher than January to May, totaling 4.664 billion yuan more than Hangzhou, and 7.268 billion yuan more than Guangzhou, the third place.
Although the dependence of real estate in some cities is relatively low, it keeps growing momentum. For example, in the first half of this year, Taiyuans real estate development investment accounted for 56.9% of the citys investment, an increase of 1.4 percentage points over the same period last year; the contribution rate to the citys investment growth was 70.1%, which stimulated the citys investment growth by 7.4 percentage points.
Recently, the Political Bureau of the CPC Central Committee held a meeting to analyze the current economic situation and deploy economic work in the second half of the year. The meeting demanded that we should adhere to the orientation that houses are used for living, not for speculation, implement the long-term management mechanism of real estate, and not use real estate as a short-term means of stimulating the economy.
Source: First Financial Responsibility Editor: Guo Chenqi_NBJ9931