Why do housing prices keep falling? In short, there is an oversupply of houses in China!
The "China Housing Stock Estimation Report: 2024" shows that in 2023, the housing-to-household ratio in Chinese urban areas was 1.07, with ratios of 1.01, 1.09, and 1.12 for first-tier, second-tier, and third and fourth-tier cities, respectively.
Among major developed countries, the housing-to-household ratios in the United States and Japan are both 1.17, Germany's is 1.03, and the United Kingdom's is 1.02. We are already at a similar level.
However, new houses cannot be moved or relocated, and they are not like clothes and televisions that can be packed into containers for export and sold overseas...
Wait!
Never underestimate the amazing creativity that emerges on this magical land.
Don't think that exporting houses is a "wild fantasy"; some cities have already started doing this:
Houses can really be "exported"!Not long ago, the people of northern Myanmar welcomed a "windfall of wealth." Don't misunderstand, it's not a telecommunications fraud, but a 100% legal job: becoming a real estate agent and making money honestly.
This is because on July 9th, Dehong Prefecture in Yunnan Province issued a notice on "Optimizing and Adjusting Real Estate Market Regulation Measures." It mentions that it will focus on the goal of creating a place where people "don't want to leave once they arrive," and fully build the brand of a "tourism, residence, and health care city" to attract "outsiders" to buy houses.
Its potential customers not only include the familiar "large population export provinces" such as the three northeastern provinces, western, and northwestern cities, but also a special target: Myanmar.
Yes, you are not mistaken, the local area explicitly encourages the "export" of houses. If you buy in bulk for small apartments of less than 80 square meters, you can also enjoy tax reductions!
Interestingly, the provisions in the "Regulation Measures" regarding the rational allocation of parking space indicators and the optimization of the first set of housing recognition standards are all stipulated to be implemented until December 31, 2025. However, there is no time limit for "opening up the Myanmar foreign sales market."
After all, there are just too many houses waiting to be bought!
Data from the Dehong Prefecture Bureau of Statistics shows that in 2023, the sales area of real estate in Dehong increased by 10.9%, while the unsold area of real estate increased by 16.5%, with more and more houses being sold.
As a result, this year, the situation has become more severe. From January to May, the sales area of commercial housing in Dehong decreased by 26.3% year-on-year, while the unsold area of commercial housing increased by 52.1% year-on-year.Why can houses in Dehong be "exported"? Their uniqueness lies in the fact that they are just too "intimate" with Myanmar.
Out of the 5 counties and cities in Dehong Prefecture, except for Lianghe County, 4 counties and cities are located on the border, with 24 townships and more than 600 village groups connected to the Shan State and Kachin State of Myanmar. The border line is 503.8 kilometers long, accounting for 12.4% of the total border line of 4,060 kilometers in Yunnan Province and 22.8% of the China-Myanmar border.
Dehong, with its unique geographical advantages, has the highest comprehensive traffic volume among ports in Yunnan Province and ranks among the top in the national land ports along the border.
Official data shows that Dehong's trade volume with Myanmar has long accounted for about two-thirds of the Yunnan-Myanmar trade volume and more than a quarter of the China-Myanmar trade volume.
In the garment production workshops in Ruili, lively Burmese pop songs can be heard.
Chinese bosses say it's a common occurrence: "Burmese employees like to work while listening to music. Every afternoon, music is played in the workshop to make them feel like they are in their own country."
Some time ago, an exclusive interview with the Secretary of the Dehong Prefecture Committee in the "Yunling Window" magazine also mentioned that one of the measures of Dehong Prefecture in promoting opening up to the outside world and developing port economy this year is to unblock the difficulties for foreign personnel to come to Dehong for business, work, study, and tourism, actively promote the signing of local-level cooperation agreements with Burmese merchants, and create a standardized and orderly cross-border cooperation Dehong model.
For those who come to Dehong for business, work, study, and tourism, buying a house is just a matter of course.Yunnan's border city has just opened its arms wide, while Guangzhou, a first-tier city where the real estate market is described as "stripped down to its last pair of underpants," has long been unable to contain its excitement.
Just a few days apart, starting from July 5th, Guangzhou quietly eased restrictions on home purchases for people from Hong Kong, Macao, Taiwan, and foreign nationals. There was no official announcement; it was only after journalists inquired with relevant departments that it was revealed that "the policy has already been implemented."
Specifically, for the purchase of residential properties in Guangzhou by people from Hong Kong, Macao, Taiwan, and foreign nationals, there is a limit of one purchase for properties under 120 square meters, while there is no restriction for properties 120 square meters and above. Non-residential properties (office buildings/office spaces/shops) are not subject to any purchase restrictions.
According to the current policy, Guangzhou does not restrict the purchase of residential properties over 120 square meters, while individuals with Guangzhou household registration are limited to one purchase for properties under 120 square meters. Thus, it appears that the restrictions on home purchases by people from Hong Kong, Macao, Taiwan, and foreign nationals in Guangzhou are almost identical to those for individuals with Guangzhou household registration.
Foreign nationals who wish to buy an apartment can now do so under their personal name, and the complicated procedures are also waived; they can buy whenever they wish!
After all, despite being a first-tier city with the strongest provincial capital status, Guangzhou also has its own hardships that are hard to express. In the first half of 2024, Guangzhou only completed online contracts for about 27,000 new homes, a sequential decline of nearly 30%, marking the worst performance in the past six years.
Is it time to lie down and give up when internal purchasing power is exhausted? Of course not!
Taking a step outwards opens up a broader world.After all, Guangzhou is not only one of the cities with the highest density of foreigners but also enjoys the unbeatable benefits of being adjacent to Hong Kong and Macau.
It is estimated that there are about 80,000 foreigners living in Guangzhou. Among the expatriates in Guangzhou, there are many high-income individuals who are mostly concentrated in key business districts such as Taojin, Zhujiang New Town, Tianhe Road, and Science City for employment and living. However, they currently mainly rely on renting for housing.
From a purely theoretical perspective, after the policy is relaxed, they are fully capable of "switching from renting to buying."
The greater "potential stock" is the continuous northward flow of Hong Kong compatriots who are eager to "buy, buy, buy."
A survey conducted by Bank of China (Hong Kong) last year, targeting more than 2,700 individuals, showed that 46% of respondents were considering purchasing property in mainland cities within the Greater Bay Area for vacation or retirement purposes. Among them, the most Hong Kong people chose to buy houses in Shenzhen, followed by Guangzhou and Zhongshan.
Shenzhen, with its keen sense of smell, has been closely monitoring this wave of traffic. In September last year, Shenzhen relaxed the "restriction order" that had been in effect since 2007, announcing that non-residential shops, commercial office properties, and business apartments were open to Hong Kong and Macau residents, no longer subject to purchase restrictions.
During the early stages of reform and opening up, Hong Kong bosses came to Guangzhou to invest in factories and built the first batch of large-scale commodity housing communities in Guangzhou, even driving up housing prices.
Now, Hong Kong residents come to Guangzhou for vacations, retirement, or even long-term residence, and can own a convenient "thousand-square-foot luxury house" for less than half the price in Hong Kong.
After all, in Hong Kong, a 90-square-meter house can be considered a "thousand-square-foot luxury house."As soon as the policy was announced, several ongoing projects in Guangzhou have already heard the news of "Hong Kong house-hunting groups arriving."
Guangzhou, Shenzhen, and Dehong have set an example for the real estate inventory reduction efforts in border cities across the country.
Next,
-- Guangxi, which is also adjacent to Southeast Asia, could consider putting the export of houses to Vietnam on the agenda.
-- With the increasing prosperity of Sino-Russian trade, could the Northeast try to add houses to the list of "exports to Russia"?
-- Guangdong's Zhongshan, Zhuhai, and Jiangmen, which have always been hot spots for Hong Kong people to buy property, can the real estate market rebound from the bottom?
Everything seems possible.
China's land border is about 22,000 kilometers long, and there are no shortage of cities with "geographical advantages." With some creativity, there is still a lot of potential to be tapped.
After Guangzhou relaxed the "restrictions on foreigners," some netizens mocked, saying that the 18 million permanent residents couldn't warm up the real estate market in Guangzhou, could a few tens of thousands of foreigners do it?
This statement, is it out of jealousy or not?In my opinion, the proactive demonstration by Guangzhou and Dehong this time is not because foreigners and compatriots from Hong Kong can buy up all the houses, but because these two cities actually understand better than anyone else that:
There is no policy that can revive the real estate market overnight, but brave cities can always grab customers first.
At present, the most important task for the real estate market is still to resolve risks. Only by dismantling the "mines" from these years can the real estate industry return to a healthy development track.
Policies should be fully implemented, and potential should be fully explored. The rest can only be left to time.