Comment: is real estate investment still a good business

category:Finance
 Comment: is real estate investment still a good business


There is no doubt that the investment behavior of real estate enterprises also exists regional differentiation, so the national real estate enterprises will emphasize the importance of regional layout. There has always been structural differentiation between metropolitan areas and between cities. The biggest investment mistake of real estate enterprises is to choose the wrong city and buy the wrong land at the wrong time. If you had invested heavily in Ordos in those years, you might not have slowed down.

It is more complicated for residents to invest in housing. Mainly, in the first and second tier cities and hot third tier cities, the purchase restriction is generally implemented. According to the law, the current restrictions are quite strict, but there are still gaps to be found. For example, divorce to obtain eligibility, in the name of parents or children to buy a house. If it is more than the normal demand (including the improvement of demand) to buy a house, can be said to be investment.

Guo Shuqing, Secretary of the Party committee of the central bank and chairman of the China Banking and Insurance Regulatory Commission, said in a recent signed article improving the modern financial supervision system, that the income is always proportional to the risk. At all times and in all over the world, there are always people who hope to obtain higher returns with lower risks, but the law can not be broken. Commitment to low risk and high yield is fraud, and financial regulation should always fight against this kind of behavior.

It seems to be in line with the views of this article. According to the China housing big data analysis report (2020) released by the housing big data project team of the Institute of financial strategy, Chinese Academy of Social Sciences, on December 1, house prices in nine cities have fallen more than 15% from the peak, and the prices in some cities have fallen by more than 15%, but the prices in some cities may exceed those in January 2018 High point.

According to the report, prices in Langfang fell 46.9% compared with the peak in April 2017, while prices in Beijing fell 15.8%. For example, if you invest in a flat in Yanjiao or Guan at that time point, the asset value may be nearly halved. Such investment undoubtedly constitutes a high risk.

However, it is still possible to obtain higher returns by investing in houses in other cities. For example, Shenzhen and Hangzhou. I think they should belong to the cities mentioned in the previous report that house prices are higher than the highs since January 2018. In the first half of this year, it is said that some luxury housing estates in Hangzhou are waiting for the market because an elephant is going to be listed. Although the elephant listing has been suspended, the housing price pressure in Hangzhou is still very high.

In addition to Hangzhous business environment, which has always been praised by enterprises, there is also an important driving force from the net increase in population. By the end of 2019, the permanent resident population of Hangzhou exceeded 10 million, reaching 10.36 million, a net increase of 554000 over the end of 2018. Although there is no evidence to show that there is a positive one-to-one relationship between the net increase in population and the composition of housing prices, it is also a visible fact that the huge net increase in population has brought pressure on the real estate market over the past years.

The real estate market is also under the pressure of net population growth, with a net increase of 401500 and 412200 people in Guangzhou and Shenzhen last year respectively. New houses in central urban areas are often inversely linked with second-hand houses due to price limit, so there will be queuing up to buy; as new permanent residents obtain the purchase qualification, second-hand houses will also have upward pressure.

Among them, the particularity of Shenzhen is that its land space is very limited, and the effective land supply and commercial housing supply are far from meeting the new demand. The local government has tried many ways, but I have said many times that the only way to fundamentally solve the problem of Shenzhens real estate market is to expand its land development space. Otherwise, the phenomenon in the first half of this year will come again later.

There are also several central cities, and the pressure is quite big. In 2019, there will be a net increase of 198800 permanent residents in Xian, 131000 in Wuhan and 251000 in Chengdu. However, their land depth is much larger than that of Shenzhen, and there is more room for land supply. As long as the purchase restriction and stable supply are adhered to, the house price pressure is controllable.

By the way, Shenyangs property market has recovered. In the past two years, it has been the best performance among several big cities in Northeast China, and its population is also net inflow, even if only slightly increased. The population control in Beijing and Shanghai has been quite strict, especially in Beijing, where the permanent resident population has declined in recent two years. It is not surprising that house prices have fallen. Some friends may think that it is an old topic to observe house prices from the perspective of net population inflow. I admit that the reason for the repetition of the old saying has something to do with the recent heated discussion of delayed retirement. Delaying retirement is generally considered to be the choice under the pressure of social security. Behind it is the accelerated arrival of Chinas aging population. Is the aging of population related to real estate and housing prices? Im afraid there are, and it has a lot to do with it. Japan is the reference. I cant discuss it because of the space limit, but I would like to remind my friends who invest in buying a house that we must consider the influence of age structure on the real estate market, including the generation after 95 entering the society and the generation after 60 starting to retire. Source: 21st century economic report author: Li Yige, editor in charge: Wang Xiaowu_ NF

By the way, Shenyangs property market has recovered. In the past two years, it has been the best performance among several big cities in Northeast China, and its population is also net inflow, even if only slightly increased. The population control in Beijing and Shanghai has been quite strict, especially in Beijing, where the permanent resident population has declined in recent two years. It is not surprising that house prices have fallen.

Is the aging of population related to real estate and housing prices? Im afraid there are, and it has a lot to do with it. Japan is the reference. I cant discuss it because of the space limit, but I would like to remind my friends who invest in buying a house that we must consider the influence of age structure on the real estate market, including the generation after 95 entering the society and the generation after 60 starting to retire.