Summary:
The data in April shows that the contradiction between insufficient demand and excess supply has not been alleviated and is still intensifying. The domestic consumption demand and the investment demand of residents have dropped significantly, and they also show strong performance in financial data. In order to stimulate the macro-economy, the relevant departments suddenly enlarged the call to rescue the real estate. In today's economic situation, should we save consumption or real estate first?
1、 The data in April shows that the contradiction between insufficient demand and excess supply has not been alleviated and is still intensifying.
The economic data for April released by the National Bureau of Statistics on Friday showed growth and decline. From the perspective of economics, supply continues to grow, demand, including consumption demand and investment demand, continues to fall, and the contradiction between insufficient demand and excess supply has not been alleviated, but continues to intensify.
From the perspective of supply, in April, the national fixed asset investment (excluding farmers) totaled 14340.1 billion yuan, an increase of 4.2% year on year, of which 5084.7 billion yuan in January and February, an increase of 4.2%, 4919.6 billion yuan in March, an increase of 4.8%, and 4335.9 billion yuan in April, an increase of 3.5%.
The real estate investment in fixed asset investment was 3092.8 billion yuan, down 9.8% year on year, accounting for 21.6% of fixed asset investment. Among them, RMB 1184.2 billion in January and February, a year-on-year decrease of 9%, RMB 1024 billion in March, a year-on-year decrease of 2.7%, and RMB 884.6 billion in April, a year-on-year decrease of 17.2%.
From January to April, the industrial added value increased by 6.3% year on year (comparable price), including 7% from January to February, 4.5% in March and 6.7% in April.
In terms of demand, consumer demand has increased, but the growth rate has decreased month by month. After shrinking from the second half of 2021, the investment demand (commercial housing sales) continues to decline significantly this year.
From January to April, the total retail sales of social goods reached 15602.6 billion yuan, up 4.1% year on year. Consumer demand was lower than the growth rate of fixed asset investment and industrial added value. Among them, 8130.7 billion yuan in January and February, up 5.5% year on year, 390.2 billion yuan in March, up 3.1% year on year, and 3569.9 billion yuan in April, up 2.3% year on year.
From January to April, the sales of commercial housing reached 2806.7 billion yuan, down 28.3% year on year, including 1056.6 billion yuan from January to February, down 29.3% year on year, 1078.9 billion yuan in March, down 32.2%, and 671.2 billion yuan in April, down 19.5%.
Investment demand, that is, the decline in sales of commercial housing is greater than the decline in real estate investment in each month. Accumulated from January to April, the decline of real estate investment was 19 percentage points less than that of commercial housing sales.
2、 Domestic consumption demand and residents' investment demand have dropped significantly, and they also show strong performance in financial data.
Since the beginning of this year, the willingness of residents to deposit and loan has declined, and the balance sheet of the residential sector has continued to shrink, especially in April.
After the deposit and loan interest rates were lowered for many times, from January to April, the household sector added 828.3 billion yuan of new loans, a year-on-year decrease of 64%. Among them, the new loans of the household sector in April decreased by 516.6 billion yuan, 241.1 billion yuan more than the same period, an increase of 114%. This is the third net decrease in household loans in April since 2022. In addition, the reduced amount has been enlarged year by year, with a decrease of 217 billion yuan in April 2022 and 241.1 billion yuan in April 2023.
At the same time, deposits in the household sector have also decreased significantly. In April, the net decrease was 1875.5 billion yuan, a year-on-year increase of 1.73 trillion yuan. From January to April, deposits in the household sector decreased by 1.8 trillion yuan, compared with a net increase of 2.9 trillion yuan in the same period last year.
The reason for this trend is that both deposits and loans in the household sector are decreasing,
First, residents are very cautious about new housing investment and bulk commodity consumption, which has led to the continuous contraction of real estate sales, a significant drop in the growth of consumer demand, a decrease in demand, and a contraction in resident loans.
Second, the debt burden at the peak triggered the household sector's risk awareness, leading the household sector to actively repair the balance sheet, resulting in both deposits and loans shrinking. In 2023, the total disposable income of China's household sector will be about 55.28 trillion, but the loan balance of the household sector in the central bank's financial data will reach 79.26 trillion, and the debt income ratio of residents will reach 143.4%. This is 33 percentage points higher than the 110% in the United States.
According to the estimation based on the average interest rate of existing resident loans in 2023, the interest income ratio of resident loans in 2023 is about 6.9%, which exceeds the growth rate of 6.3% of per capita disposable income of residents in that year, and is 60% higher than the interest income ratio of American household loans of 4.2%.
The huge debt risk and loan burden not only suppress the residents' consumption ability, but also increase the residents' psychological burden. As a result, in order to reduce the debt risk and debt burden, the household sector took the initiative to repay loans in advance and repair the balance sheet.
3、 In order to stimulate the macro-economy, the relevant departments suddenly enlarged the call to rescue the real estate.
On Friday, the relevant departments released four real estate market moves endorsed by the Central Bank:
First, the central bank will set up 300 billion yuan of affordable housing refinancing, encourage and guide financial institutions to follow the principles of marketization and rule of law, and support local state-owned enterprises to purchase commercial houses that have been built but not sold at a reasonable price and use them as affordable housing for rationing or leasing. This is the government's purchase and storage of commercial housing measures that Sanlang focused on in his article "Government's purchase and storage of commercial housing is not a good solution to the real estate crisis, which may cause serious consequences" yesterday, but only magnified the original pilot program's annual amount of 100 billion to 300 billion.
The second is to reduce the minimum down payment ratio of individual housing loans at the national level. From 20% to 15%! To put it bluntly, it means buying a house, paying less down payment and more monthly mortgage.
Third, the interest rate of housing provident fund loans of various maturity categories was lowered by 0.25 percentage points. More than 200 million employees in private enterprises and self-employed households who have not paid housing provident fund, as well as more than 200 million flexible employees, naturally most of them have not paid housing provident fund, and naturally cannot enjoy low interest rates.
Fourth, the lower limit of individual housing loan interest rate policy was abolished nationwide. No lower limit of housing loan interest rate policy will be set to realize the marketization of housing loan interest rate. To put it bluntly, the restrictions on commercial loans should be lifted, and the interest rate should be determined by the local authorities. Well, today, when the deposit loan interest margin of commercial banks has dropped to 1 word, whether commercial banks have the incentive to sacrifice their deposit loan interest margin to reduce the housing loan interest rate, if Sanlang is the president, he will certainly not.
These four positive measures suddenly appeared in the real estate market, and many people have satisfied their hunger with pie in the sky. Some people call it Wang Pao, and some people say that the turning point of the industry is coming. Their logic is:
First, real estate is the mother of the cycle. Real estate stability leads to economic stability, employment stability and financial stability.
Second, they believe that nothing the country wants to do is impossible.
Sanlang has always been calm in his analysis of economic problems. Sanlang is not as well educated as Ren Zeping, so I don't know which Nobel Prize winner said that "real estate is the mother of cycle", and I don't remember any classic economics book saying that. But Sanlang knows that there was no real estate in China 30 years ago, but there was also an economic cycle; The monetary policy of the Federal Reserve to regulate the economic cycle only looks at inflation and unemployment rate, and never looks at the face of real estate. Not only the Federal Reserve, but also the European Central Bank and the Bank of England.
As for the statement that "nothing the country wants to do can't be done", I think it's only half right. The country can probably do what it wants to do. It can probably do what goes against the economic law. At least today's weak economic situation is definitely not the intention of the country. Therefore, this statement is illogical.
4、 In today's economic situation, should we save consumption or real estate first?
Sanlang believes that to push China's economy out of the downturn and to achieve sustainable development, we should not resort to opportunism, repeatedly bake sesame seed cakes, and cure headaches and foot pains. It is still necessary to grasp the main contradiction, devote to reforming the distribution system and social insurance system, and repair the demand, improve the demand and stimulate the demand by improving the income level of residents and social security level. The surplus supply is digested by improving demand, and investment and supply are guided by demand signals, so as to achieve sustainable economic development.
This is because:
First, the real estate market cannot be activated without improving demand.
You should be able to see clearly that none of the four measures to stimulate real estate on Friday improved demand. Sanlang analyzed yesterday that the government's purchase and storage was just to transfer the inventory of commercial housing from developers to the government, improving the liquidity of developers, but did not improve the final housing demand. This will send the wrong market signal to the local and developers. On the premise that the real estate demand has not been improved, it will stimulate the local to increase land investment and developers to increase real estate investment, thus exacerbating the contradiction between excess supply and insufficient demand in the real estate market, and further brewing a bigger real estate crisis.
Second, the use of public resources to subsidize developers is detrimental to the use of public funds and the principle of social fairness.
In any country, since the enterprise has enjoyed the investment income, it must bear the investment loss. It has been criticized that we subsidize loss making state-owned enterprises with public funds. Now, when the big economic environment is not as expected, it is extremely unreasonable and unfair to require local governments to use public funds to take over the inventory of some real estate developers. The funds obtained by local governments through loans from investment and financing platforms are also public funds.
Why are we willing to subsidize enterprises rather than workers? Why are we committed to supply rather than demand? This is a big question worth pondering.
Third, under the current national income distribution system and the environment of residents' debt burden, the real estate cannot be revived and start an upward cycle.
The three fundamentals of shrinking population, excess housing stock and high household debt income rate have determined that the real estate market will not repeat an upward cycle.
The fund of 300 billion yuan can only be equivalent to 3.5% of the annual sales of commercial housing from January to April, and the area that can be collected and stored is only equivalent to 5% of the commercial housing available for sale at the end of April, and 0.5% of the area of commercial housing available for sale and construction. The impact on the commercial housing market is nothing more than a small wave caused by throwing a stone at Dongting Lake.
The only thing that needs to be done to stabilize the real estate market is to liberalize the control of house prices, so that the market can naturally form a reasonable purchasing power in supply and demand that can attract the purchasing power that could not be formed because of the high price. Then stabilize on a new, low demand platform.
Fourth, it is the income and debt income rate of residents that ultimately determine consumption demand and real estate demand.
If we are determined to repair demand and continue to raise the income level of workers, we will not only shorten the repair time of the balance sheet, but also stimulate consumption and housing demand with the encouragement of the new income level and debt income rate. This is the only way to repair China's economy. In addition, there is no shortcut.
[Author: Xu Sanlang]
