2023-12-24 14:50:00
Three years ago, Chinese policymakers did everything they could to stem the growth ofReal estate sectorAfter real estate prices Soaring from speculative buying The government hopes to eliminate financial risks from such a bubble.
But what the Chinese government received in return is “Real Estate Collapse” That destroys household wealth in the world’s second-largest economy. Destroying the foreign currency bond market and reduce local government income.
The following diagram is information that clearly shows that the real estate sector China is in crisis
1. Sales have dropped by over a trillion dollars.
In 2021, real estate sales Across China, it peaked at 18.2 trillion yuan ($2.5 trillion). At that time, real estate It has become one of China’s largest industries. So big that the president of China Vanke Co., one of the country’s largest developers, says he can’t find another business that generates as much revenue as the real estate sector.
But bad news came the following year. Apartment and real estate sales Nationwide commercial sales fell 4.9 trillion yuan, or 27%, the biggest year-on-year (YOY) drop since 1998, after the government introduced measures to curb the sector. And Bloomberg estimates sales are likely to fall 1.8 trillion yuan this year.
In 2024, Bloomberg analysts Real estate sales are expected to shrink further and project developers are likely to face more liquidity problems.
S&P Global Ratings predicts the worst case scenario. Sales could fall to about 10 trillion yuan. That would bring the sector’s activity back to levels seen in 2015, when China’s economy was about half its current size.
2. From ‘GDP Driver’ to Derailer
The real estate sector has changed its role from “Driver of growth” go to “It’s a drag on the economy getting worse.” Data from Bloomberg showed that total revenue fell 51 billion yuan in the first three quarters after falling 340 billion yuan a year ago.
Moreover, some analysts are concerned about the consequences of the sector’s collapse. Because according to Ren Zeping, a famous macro analyst, Former Chief Economist of China Evergrande Group said:
Because the real estate sector Linking more than 60 sectors in China, the spillover’s impact ranges from upstream industries such as resources and construction materials to downstream industries such as home appliances and leasing businesses.
by Bloomberg Economics It is estimated that real estate-related activities contributed about 1.6% of China’s GDP to 7% in 2015, while last year the share was down to about 1.3%.
3. Total investment from the real estate sector shrank.
Poor sales have pushed real estate giants such as Country Garden Holdings Co. into default on debt, affecting many sectors. Specifically, real estate development investment fell by 1.47 trillion yuan in 2022, then worsened further in the first 11 months of this year.
4. Local government revenue shrinks
Data from the Ministry of Finance of China revealed that Local governments have received less income from land sales since the housing downturn. That income, which fell 23% in 2022, contracted another 18% in the first 11 months of this year from last year. same as last year Even as Beijing loosens restrictions on land sales, turmoil in the sector continues.
Since the peak in 2021, government revenue from land and property activities has decreased by 3.1 trillion yuan when property-related taxes are taken into account. Concerns aboutLocal government debtThe increase has caused the Chinese government to issue additional fiscal stimulus measures. This included an unusual budget revision and the sale of another 1 trillion yuan of government bonds.
5. Defaults among real estate developers surge
beforeDefault in payment of debt by real estate developer It is something that is difficult to overcome. It was once China’s most popular bond trade.
Before the year 2020, the Chinese government will launch the policy “Three Red Lines” or Three Red Lines to limit borrowing in the real estate sector. China’s foreign currency-rated junk bonds are mostly issued by real estate developers. Returns averaged more than 9% per year between 2012 and 2020, compared with less than 7% for comparable U.S. bonds.
Bloomberg’s analysis revealed that the real estate loan stock market Now they’re all dead. Since 2020, defaults have skyrocketed, reaching $133 billion as of Dec. 11, and foreign investors are absorbing most of the losses.
6. Real estate market value drops sharply
Chinese real estate stocks were stuck in a downtrend near 14-year lows as of mid-December. The country’s top 10 private property developers have lost a total of HK$1.1 trillion, or 84%, in market value since the beginning of January 2020.
7. Households’ spending ability plummets.
Official data shows existing house prices have fallen 8% since their peak in July. 2021 with information fromBloombergIt was pointed out that real estate prices in large cities decreased more than other cities.
A 5% price drop could lead to losses of 19 trillion yuan in housing trade and a 430 billion yuan impact on household spending ability.
8. The number of employees in the real estate sector losing their jobs soars.
The above calculation does not include the impact of job losses. This means that the real impact of the collapse of the real estate sector onHousehold spendingIt may be more serious than it seems. By the real estate development company Some of China’s largest private companies have cut jobs by nearly 80% since the state issued the “three red lines” rules.
9. The wealth of Chinese real estate billionaires plummets.
Chinese real estate moguls were once ranked among the country’s richest, with China Evergrande Group’s Hui Ka Yan rivaling Jack Mafor for the top spot. Since the end of 2019
But after all the events Wealth of real estate entrepreneurs The decline of at least $97 billion was largely due to the shrinking market capitalization of their companies.
10. More and more people are going out to protest.
Since June In 2022, more than 1,800 protests linked to the real estate sector occurred in mainland China, according to the project. Freedom House’s China Dissent Monitor About two-thirds of the cases involved homebuyers protesting issues. Such as project delays and carelessness in work.
while the rest are mostly construction workers demanding wages. 1 in 7 homebuyer protests are linked to a previous protest.local protestsIt is usually sporadic and quickly dispelled.
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