[Recommended reading] Investor: I believe in the real estate market more than the stock market at this time point

330 New Deal Full Moon Property Market Differentiates Seriously; Transaction in Third and Fourth tier Cities Does Not Rise, Instead It Falls

　　 From historical data, China's housing price growth is not unreasonable

Wang Danyang

China's real estate market is currently in a clear adjustment period. In the latest China Economic Observation report (hereinafter referred to as "the report") of Peterson Institute for International Economics, China's current economic situation will be placed in the history, and the current housing bubble and trend will be analyzed.

The report analyzes the data of 23 countries (mostly developing countries) in the past 40 years, including housing prices, household credit, output and disposable income. On this basis, it analyzes several common fundamentals under the crisis. The report found that when the household income and expenditure statement is undergoing rapid structural changes, the decline of real estate will bring more serious consequences. One perspective that can be cut in is the change of housing price income ratio. In some countries, such as the Nordic countries in the 1980s, Japan in the late 1980s, and the United States and Europe today, when the ratio of house price to income rises rapidly, the economy enters a downward period, and the cycle of deleveraging will lengthen.

What caused the above situation? First, look at the family sector. In 1988, Italy experienced the process of deregulation. In the following five years, house prices soared by 60%, but in the same period, household disposable income only increased by 10%. When the European Exchange Rate Mechanism (ERM) crisis came in 1992, the Italian economy suffered a short recession in 1994, when the lira depreciated rapidly.

In the United States, the housing price experienced a 36% growth in five years in 2006, while the income growth was only 8%, and household savings was at the lowest level in history. Most importantly, housing leverage has intensified, accounting for almost half of income.

Many studies have shown that it is difficult to summarize some of the relevant factors of the economic crisis, but what remains unchanged is that the report found that when the price of real estate rises faster than disposable income, and the rise in credit brings about an increase in demand, the collapse of the real estate market always follows the rapid decline of the economy, or it enters a standstill period. At this time, household savings are often reduced. In addition, a large part of household income and expenditure at this time will be real estate.

The report turns to China. According to the report, it is generally difficult to put China's housing market in a longer historical context, partly because China only carried out housing privatization reform in 1998; In addition, the price index of China's real estate has always been problematic, which is reflected in the new urban housing for the longest time. Statistics show that in the sample of 70 cities in China, the overall economic index and the property price index tend to be consistent. More importantly, the construction volume of new houses and the overall sales area are at a high level, and the repeat sales rate is very low. However, due to the lack of hedonic indicators oriented by quality improvement and location considerations, it is difficult to measure some properties with similar values for a long time.

　　 According to the report, from the overall economic index of 70 cities, China's real estate prices jumped 21 percentage points from 2005 to 2010. From 2005 to 2010, China's household disposable income grew by 99.7% in real terms. Relatively speaking, the growth of housing prices is not very outrageous. The data also shows that although China's household savings rate has tended to be stable in recent years, it has always developed to a higher level in the rapid development of real estate, accounting for almost 40% of disposable income in 2012. In addition, although China's household debt has increased in the past five years, it is still quite low in the context of the global economic downturn.

In the end, the report concludes that it is not easy to compare these two groups of housing holders in China and before the Western crisis. Although the current house purchase policy tends to be loose, the traditional restrictions are still very strict. With the recent new real estate policy, the down payment of traditional first home buyers has dropped to 20%, and in some sections, the down payment is still about 35%. This is totally in contrast to the loose environment in the United States at the beginning of the 21st century. In some places, buying a house is even zero down payment.

On the whole, there are still a lot of negative factors in China's real estate market, and the consequences of the adjustment of real estate policies are likely to end up in the increased leverage of the real estate sector. However, China's household balance sheet is still stable. More importantly, driven by China's domestic service consumption, marginal demand and employment rate have been rising. In this case, the recession caused by the loss of labor force in coastal industries will not really pull the economy onto a downward trajectory. Supported by some structural factors, combined with continuous reform and looser monetary policy, the report believes that China's real estate market is not facing the so-called collapse, but will continue to adjust for a period of time. Xinhua News Agency