1. Reality

The intensive introduction of short-selling policies in the property market has brought intense turbulence to the stock market, as it has hit real estate stocks hard. Real estate and banks are originally a pair of mandarin ducks, and real estate funds basically rely on bank credit support. So the banks also suffered. When real estate and banking stocks are turbulent, the upstream and downstream sectors of real estate are also turbulent, so the market continues to plummet, and panic stocks continue to flee. Therefore, A-shares continue to plummet. Even the introduction of stock index futures and margin trading cannot change the abnormal fate of A-shares.

However, the property market control policies are so drastic, but property prices are still very strong. Although the transaction volume has shrunk suddenly, property prices can still stand, which is really strange. Many experts and market veterans believe that because of the large rigid demand and small land supply, the property market will not fall much and will only continue to rise. It is said that if developers can delay the sale, they will postpone it, and if they cannot, they will simply hold back the sale. Therefore, the public has to doubt whether the policy can have the desired effect. Many people even say that the property market is the backbone of China's economy and China cannot be stupid enough to knock down the property market like this.

2. Change

However, don’t forget that if housing prices are allowed to continue to skyrocket, the asset price bubble will eventually burst, with disastrous consequences. Putting aside the bloody history of Japan and the United States, look at Hong Kong, which is closest to the mainland property market. The deep adjustment from 1994 to 1996 and the collapse in the fourth quarter of 1997 are the best explanation for the bursting of the bubble. Once the property market collapses, it will undoubtedly be a disaster for the financial system! The central bank is now constantly withdrawing funds, and commercial banks are also constantly increasing the down payment rate in the property market, up to 50% for second homes, and suspending credit for third homes. Hasn't this been told to the public? China is now worried about its financial system! ! Under the flood of credit launched to save the economy, asset price bubbles have continued to rise, rising to a level that makes countries like China worried and scared! As the capital adequacy ratio of banks is not high, once the property market bubble bursts, the huge bad debts in the future will be chilling!

And what’s even more deadly is that in the past few years, all the people have speculated, and institutions of all sizes across the country have also speculated. How many of them are actually doing something? For a country, the whole country is speculating, either in the capital market or in real estate. How many institutions are really engaged in industry? Really down-to-earth in industry? Very rarely, they are all eager for quick success, wanting to make money quickly and make a lot of money. The people are not doing their jobs properly, and the companies, institutions, and public institutions are also not doing their jobs properly and are all speculating wildly. What prospects does a country like this have? Very deadly!

So, from the "New 10 Articles", we can see that the central government's understanding of real estate has fundamentally changed. In all past State Council policy documents on real estate regulation, most of them emphasized the role of real estate as a pillar industry in the new era in promoting the economy. The importance of economic growth in policies is far greater than people's livelihood. This time, the State Council proposed for the first time that the housing issue is related to the national economy and people's livelihood. It is not only an economic issue, but also an important people's livelihood issue that affects social stability. Here, for the first time, the central government clearly downplayed the role of real estate in driving economic growth and removed real estate from its status as a pillar industry; for the first time, it positioned housing as a people's livelihood product in a document, which was tantamount to denying its role as an investment product. Function; compared with economic growth, this new policy emphasizes more on social stability and promoting people's livelihood.

Based on the above understanding, the "New 10 Articles" emphasize that the government's responsibilities in stabilizing housing prices and housing security cannot be shied away from. This shows that the central government is determined to replace the locomotive of economic growth and return real estate from a pillar industry to its original appearance.

Three Futures

Based on the above understanding, a sharp drop in housing prices is inevitable. During the stock market crash adjustment, the stock market collapsed by 70 to 80%, so the property market will at least need to decline. Go above 50%. However, the decline in housing prices must not be regarded as a collapse, because China is still a developing country and China's economy still maintains a high growth rate. In the future, residents' income will gradually increase with economic growth. When purchasing power gradually increases, , the property market will slowly stabilize and gradually exit the downward trend.

Based on the above, we can conclude that there are two possibilities:

1. Similar to the trend of Hong Kong real estate from 1994 to January 1996, that is, house prices fell by about 30% from their highs. For 2 years, there will be another wave after that.

Reasons: (1) Interest rates are now at a low level and inflation is gradually rising, similar to Hong Kong in early 1994; (2) There is already a "bubble" in the property market, and there are Foreigners are pessimistic;

(3) The Hong Kong government before 1997 was based on cracking down on speculative demand, and all measures were targeted at real estate speculators. This is similar to the central government's current regulation.

2. Similar to the trend from 1998 to 2004, that is, house prices first cut in half, rebounded by 10%, then went sideways, then gradually fell, and then cut in half.

(Personally, I think that unless there is a black swan event like the US subprime mortgage, the probability of this is unlikely)

Reason: (1) After the establishment of the SAR government, the means of regulating housing prices and the previous Hong Kong government’s crackdown on speculative demand Different, the approach is to expand supply. The "85,000" plan directly expanded the supply of housing. A very important aspect of the central government's regulation of the property market this time is to increase the construction of affordable housing. This is different from the one in 1997. The SAR government is exactly the same;

(2) Before the government took control, the property market went extremely crazy: in 1997, housing prices in Hong Kong rose sharply by 30% to 50% in just six months. Even the average selling price of luxury homes has increased by about 30%; and the property market in the mainland is even more crazy. House prices have returned to the highs of 2007, and some are even higher than in 2007. The transaction volume and average price of luxury homes in first-tier cities such as Shanghai have both increased. There was a blowout.

To sum up, I think it is a high probability event that house prices will fall by 30% during this property market regulation. Since China is still a developing country, there is still a lot of room for economic development, so in the long run, house prices will still be will rise; and judging from the current situation, the state will not kill real estate until a pillar industry has been found to replace real estate, so a 30% drop in house prices may be a good opportunity to buy the bottom. Of course, if there is a sudden The negative factors do not rule out the second possibility, but maybe everyone does not want to see it.