For example, Zhumadian, Henan Province reduced the down payment ratio, and the down payment ratio of provident fund loans dropped from 30% to 20%, which is equivalent to amplifying the leverage of buying a house by five times.
Zheshang Bank also enlarged the leverage of buying houses, and reduced the down payment ratio of the first suite in non-restricted cities from 30% to 20%.
For example, the new land regulations in Suzhou canceled the restrictions on existing home sales and capped sales, trying to promote real estate developers to "return blood" quickly.
This kind of leveraged property market easing policy was never introduced last year. After all, maintaining a high down payment ratio is a key policy for China to prevent and control risks in the real estate market.
Another example is Hengyang, Hunan, which subsidizes the property market with finance and buys new houses and existing houses. If the deed tax rate paid is 1%, the municipal finance will fully subsidize the purchaser according to the deed tax paid. If the tax rate is 1.5%, the subsidy is 2/3; If the tax rate is 2% or above, the subsidy will be 50%. In addition, if the underground parking space of the new house project is sold for the first time, the financial subsidy will be 1000 yuan/person.
In addition, Zhejiang Hangzhou grabs talents and saves the property market. A-level high-level talents can enjoy a maximum housing subsidy of 8 million yuan, while B-level, C-level and D-level talents are given housing subsidies of 2 million yuan, 6.5438+0.5 million yuan and 6.5438+0.00 million yuan respectively.
This practice of directly subsidizing the property market and subsidizing high-level talents is puzzling: where should fiscal revenue be used? Helping the poor or subsidizing the elite? Subsidize property buyers, developers, or poor people without a foothold?
For the real estate industry, the COVID-19 epidemic is a sudden cash flow "accident".
After the epidemic information was made public, real estate sales, construction, investment and land auction stopped completely, and the resilience of real estate was tested. The epidemic interrupted the high turnover of housing enterprises, the pressure on cash flow increased greatly, and the debt ratio rose.
The epidemic has little impact on the property market, and the result of high turnover is great.
In recent years, China real estate has evolved into a financial project with high turnover and high leverage.
Many people may not understand the importance of high turnover to real estate, which can be said to be the "lifeline" of big developers.
The high turnover mode limits the whole cycle time from land acquisition, construction, liquidation to capital withdrawal. At first, it was put forward by Vanke, that is, Vanke's 5986 high turnover model: five months after land acquisition, nine months after sales, 80% of sales in the first month, and 60% of products must be residential.
Later, due to concerns about construction safety and housing quality, Vanke gave up the high turnover model. However, Country Garden has inherited this model, and in recent years, it has developed to the extreme.
Country Garden's high turnover is called "456 mode" by the industry, that is, land is opened in 4 months, funds are withdrawn in 5 months, and working capital is in 6 months.
The high turnover of real estate in China started at 20 15 and 20 16. At that time, China had just started the "supply-side reform" in an all-round way, and the national real estate entered a critical stage of de-capacity, de-inventory and de-leverage. The property market has been adjusted and upgraded, and the market trend is confusing.
This policy change means to the real estate supply:
First, the supply side has overcapacity and needs to be cleared quickly.
Second, the era of real estate enterprises "like financing" is over, funds are tight and financing costs are greatly increased.
In 20 16, the supervision policies of asset management business were intensively introduced, and the tide of asset management in the past three years quickly ebbed. After the implementation of the new asset management regulations, the channels for small real estate developers to raise funds through asset management and private placement have been greatly narrowed, and the financing cost has increased.
At this point, what should real estate enterprises do?
Around 20 16, real estate enterprises are faced with the strategic choice of opening the checkpoint.
Many small real estate developers are caught in a liquidity dilemma and have to reduce their production capacity and quickly "return blood" to survive.
However, medium-sized real estate developers and some real estate giants have adopted the opposite strategy. Medium-sized real estate developers such as Zhongliang, Taihe and Sunshine City have followed Country Garden's high turnover model, increased leverage against the trend, played with high turnover, and wolfed down, trying to quickly become a large real estate echelon in China.
Why do these developers want to go against the trend?
For a time, "run in the top 30, or you will die" has become the knowledge of the industry.
Medium-sized real estate developers are facing the dilemma of "life and death";
Or gradually shrink, control costs and cash flow, and be willing to be a local small enterprise;
If we don't enlarge the leverage, we will soon be among the top 30, exceeding the 100 billion mark, and our interests will be consistent with those of commercial banks and local governments by scale.
As a result, large and medium-sized real estate developers attacked the city slightly, made a quick decision and played high turnover to the extreme.
The report "Top 500 Real Estate Development Enterprises in China" issued by China Real Estate Association and Shanghai Yiju Real Estate Research Institute shows that the inventory turnover rate of the top 500 real estate development enterprises dropped sharply from 0.35 in 20 18 to 0. 16, and then dropped to 0. 13 in 20 18.
Three years later, what did the high turnover bring to the real estate industry in China?
1. The scale of real estate in China has expanded rapidly, and housing prices in third-and fourth-tier cities have generally increased.
Real estate is a very localized industry. Real estate developers can only avoid the heavy and ignore the light, attack third-and fourth-tier cities, and use the monetization trend of shed reform to attack cities and villages in third-and fourth-tier cities, and the national housing prices will also rise.
For example, from 20 16 to 20 18, the sales scale of COFCO Holdings jumped from 100 billion to100 billion, ranking among the top 20 real estate companies.
From 20 16 to 20 18, COFCO received 63 cases,19 cases and 22 1 case respectively, of which 34 cases, 88 cases and 168 cases were located in third-and fourth-tier cities. This dark horse, with a very high turnover mode, captured the third-and fourth-tier cities and was called "the third-and fourth-tier city harvester" by the industry.
Second, the economic leverage ratio has risen rapidly, and the debt ratio of local governments, families and real estate enterprises has risen rapidly.
The high turnover of real estate is a kind of "too big to fail" business logic, which is essentially a kind of financial logic.
High turnover is equivalent to rapidly pushing real estate into the financial high-speed track, that is, maximizing the scale with the least time and the greatest leverage. In fact, this is a statement that is infinitely close to "empty gloves and white wolves".
In order to expand the scale rapidly, medium-sized developers use a lot of cooperative leverage and high-cost financing means such as asset management and trust.
The cooperative leverage ratio of large, medium and small housing enterprises is 0. 19, 0.24 and 0. 16 respectively. The cooperative leverage ratio of medium-sized housing enterprises is significantly higher than that of large-scale housing enterprises.
We also look at Zhongliang. Cofco's expansion funds mainly come from trust and asset management, a capital operation platform called Zhongxin Capital. According to the data of COFCO's prospectus last year, as of the end of 20 18, COFCO still has 109 trust or asset management plans that have not expired, with a total amount of 147 billion yuan, accounting for about 54.5% of the total loans.
Let's take a look at the debt ratio changes of this company: 20 16 years 1335%, 20 17 years 1790%, 20 18 years 339%, 20 18 years 58.
The thrilling debt ratio curve like a roller coaster shows that COFCO's high turnover is an extreme leverage model.
In recent years, high turnover has amplified the leverage of housing enterprises and aggravated the fragility of real estate. In fact, in the past two years, bank credit has tightened, the financing cost of real estate developers has increased, and the capital chain of some small and medium-sized housing enterprises has broken.
However, this debt ratio curve also shows that once housing enterprises get the "security ticket", it is easy to raise funds through traditional channels, such as bank credit and stock market, thus reducing the debt ratio.
Therefore, high turnover leads to more fragile real estate market, greater bank risk and higher dependence of finance on land. Through this round of high turnover, large-scale housing enterprises, banks and governments have formed highly related interests.
To end the high turnover, the deep pressure is on banks and governments-financial risk, government debt risk and land finance.
What is the leverage ratio of China's economy at present?
In 20 19, the leverage ratio of government departments in China was 5 1%, that of residential departments was 52%, and that of non-financial enterprises was 154.5%.
At present, China's macro leverage ratio has surpassed that of the United States and is close to the average level of developed countries. This means that China is "in debt" before it gets rich, and its economic growth is excessively dependent on debt.
Look at the degree of land finance. Cities whose financial dependence on land exceeds 100% include Guangzhou, Wuhan, Nanjing, Hangzhou, Kunming, Nanning, Taiyuan and Changchun.
Financial dependence of land in major cities, source: online public data, Zhiben Agency.
Therefore, the government's rescue of the property market, ostensibly to save developers, is actually to save banks and finance.
During the epidemic period, the local government allowed developers to postpone the payment of land transfer fees and taxes, and reduce property tax and urban land use tax; Lower the credit threshold and provide credit support for housing enterprises; Open sales offices and lower the threshold for pre-sale.
Real estate developers, like all enterprises, are unprepared for this epidemic, interrupting the high turnover of housing enterprises, which is bound to further increase financing costs and even aggravate the closure of housing enterprises.
The new land regulations in Suzhou cancel the restrictions on existing home sales and capped sales, which obviously supports high turnover and promotes the rapid "blood return" of real estate developers.
Many people will ask, developers have made so much money, can't they survive these months?
Driven by high turnover, every project is like a relay run, from land acquisition to sales, one ring after another, one project after another, and the funds roll rapidly. The company uses rapid cash flow and rapid land acquisition to obtain funds from banks and asset management channels.
This is equivalent to running across the pontoon bridge with a heavy load and can't stop. Once you stop, you will fall into the river. Once the sales are terminated or the sales drop rapidly, the financing cost of new projects is high and the pressure of interest payment is enormous.
So, must the property market be saved?
First of all, it is obvious that the government must help the economy in this epidemic.
Usually, economic fluctuations are normal, and the government does not need to rescue the market, let alone deeply intervene in the market. But this time it is different, because the sudden outbreak of the epidemic has caused confusion in the market, which is not a "normal" economic fluctuation.
At the beginning of the outbreak, the epidemic information was not circulated and the market could not receive the information, which led to the failure of the supply system. After the epidemic information was made public, the government took over and strictly controlled it, the market was forced to be interrupted, and enterprises were caught off guard, which disrupted the expectations of business owners.
The purpose of the government rescue is to repair the balance sheets of enterprises and families, help the market restore the normal supply system, and help business owners rebuild market expectations and confidence.
However, the government should not save the property market, nor should it save the auto market, let alone any industry, market or enterprise, but should "save the market" equally.
What do you mean?
Saving any industry, market and enterprise is against the rules of market competition and unfair to other enterprises, competitors and individuals.
We are used to supporting the rescue of the property market from the perspective of collective, national justice and national interests, which is equivalent to stabilizing growth, saving the economy and saving everyone.
In fact, this concept is not only wrong, but also deceptive.
Through the above analysis, we know that saving the property market is actually saving developers and banks, and has nothing to do with ordinary people.
Even if saving the property market is related to you, it is unfair to others. For example, the government subsidizes the property market or the auto market with taxes. Why not give this money to furniture, electronics, agriculture and the Internet? Why not use this money to compensate COVID-19 patients? Why not use this money to compensate business owners who went bankrupt because of the epidemic and workers who lost their jobs or reduced their wages because of the epidemic?
Adam Smith expressed a similar view in The Wealth of Nations: the so-called beneficial subsidies are harmful-especially to the poorer classes-to a greater extent than any heavy taxes imposed on the necessities of life.
Bastiat, a follower of Smith and a French economist, explained it more clearly with "visible and invisible".
He once wrote a satirical article entitled "Candle Maker's Love Letter about Banning Sunlight". This article says that after the sun shines on the earth, the work of candle workers has decreased, so candle manufacturers hope that members of Congress will stop everyone from using the sun.
Obviously, the power of Congress can prevent people from using sunlight, which can make candle sales higher and benefit candle manufacturers and workers.
However, it is hard to find that people use sunlight, so there are not many candle workers who can do other jobs. It's just specific other work, which is not very nice.
In fact, consumers can use sunshine for free, but now they have to spend money on candles, which is undoubtedly to fill the candle industry with the loss of consumers.
Bastiat believes that the state can't subsidize elegant art. His reason is that when the state subsidizes elegant art with taxpayers' money, the money can't be used elsewhere, and someone must be damaged elsewhere.
The basic principle of market competition is fair competition. Saving a wrong enterprise is actually punishing many normal decision-making enterprises. Saving an enterprise actually broke the market rules, but the price of breaking the rules was paid by all the people.
Some people say that with so much fairness, the government can only take into account the interests of the whole and the majority.
In fact, this is not a question of the interests of the minority and the interests of the majority. This contains a profound market theory, that is, private contracts.
Market competition does not support public contracts, the interests of the majority, or even democratic voting, but only the private interests of individuals.
What do you mean?
For example, through democratic voting, even if most votes agree to save the property market or save an enterprise, it is also against the economic law. Even if saving a business or market is beneficial to most people on the surface, it is not allowed. Because it harms the interests of those neglected minorities in the short term (the interests of a few people are equally important), and it is not conducive to the interests of all people in the long term (the loss of social welfare).
If free competition is the democratic rule of the resort, then it actually belongs to the tyranny of the majority. Austrian economist Hayek has a famous view that democracy is a tool to protect freedom, but it is not the rule of free competition.
Therefore, any rescue policy that is in the public interest should be vigilant.
Next, I want to say, especially not to stimulate the property market. Why?
There are three reasons:
First, stimulate the property market, encourage the property market bubble, and aggravate the fragility and risks of the economy.
Affected by the epidemic, the gate of credit funds flowing to the property market is loosening, and the opening to reduce the down payment ratio is opened. These policies are actually increasing the economic leverage ratio.
Many people think that falling house prices, shrinking property market, the collapse of housing enterprises, economic recession and government bailout will not necessarily make house prices rise, and support the maintenance of market stability, thus stabilizing growth.
This view is simple, but it doesn't understand the law of economic operation.
Stimulating the property market, even if the house price does not rise, will cause at least three bad results:
First, the debt ratio rises and the bubble risk is greater.
The epidemic situation in COVID-19 is an atypical stress test. Look at the resilience of China's economy, and see how much cash flow China enterprises and households have to support their debts.
If we continue to stimulate the real estate market, real estate will further absorb the cash flow of China families, and the debt ratio will further rise. In fact, we will cover the original bubble with a bigger bubble and try to push the risk back.
Second, the marginal rate of return on investment continued to decline.
This is an unavoidable economic law.
In recent years, the return on investment in China, especially the return on investment in fixed assets, has been declining. Since 20 14, the investment rate of central enterprises and private enterprises (listed companies) has dropped from about 40% to about 20%.
Why?
Recently, Shandong, Jiangsu, Anhui, Henan and Guizhou have pressed the "fast forward button" for infrastructure investment, involving an investment scale of over one trillion yuan, in an attempt to quickly recover the economic losses caused by the epidemic.
However, when there is no progress in technology, the marginal rate of return continues to decline due to continuous additional investment. Excess infrastructure such as high-speed and airports will bring negative benefits.
Some people say that protecting the property market means protecting confidence. Stimulate the property market to maintain growth, such as carrying firewood to put out the fire, how to maintain confidence? For people of insight, this view is to deceive oneself and others. For the ignorant, this view, such as lying about the epidemic situation, is to deceive the people.
Third, the gap between the rich and the poor has widened.
When the house is built, it is not good for someone to buy it. The property market is both a consumer market and an investment market. The boom in the real estate market may be a monetary phenomenon.
Therefore, stimulating the property market can bring scale to the economy, but the effect is not good; Bring wealth to some people, but bring losses to others.
Second, stimulating the property market has made China more passive in the trade friction and hindered the overall situation of further reform and opening up.
Over the past year or so, the main theme of China's property market regulation is to stabilize housing prices, land prices and expectations, and strictly control the flow of credit funds to the property market.
Why?
The Sino-US trade war has set a high-voltage line for the real estate market in China. As house prices continue to rise or bubbles continue to expand, the risk of exchange rate is greater and the risk of capital outflow is greater. The pressure of further opening up, especially financial opening up, is greater, Sino-US trade negotiations are more passive, and macro policies are more powerless.
On June 5438+ 10 this year, China and the United States signed the first phase of economic and trade agreement, and the two sides reached an understanding of maintaining exchange rate stability, avoiding competitive devaluation, avoiding intervention in the exchange rate and maintaining transparency in the exchange rate market.
If money is released to stimulate the property market, the bubble will increase, which will increase the pressure of asset and currency depreciation and affect the stability of the exchange rate. At this time, if the financial market is gradually opened, the risks of capital outflow and exchange rate market are unpredictable.
Some people think that the property market is actually growing steadily, and it is right to promote reform through steady growth. This view is idealistic and hinders the process of reform.
Now, as long as the money can make ends meet and stimulate the property market to maintain growth, there is no determination to start real reform, which leads to the delay in the reform.
Therefore, the theory is based on the situation, and the law is based on the problem and cannot stimulate the property market.