A few days ago, under the guidance of China Real Estate Industry Association, the “2018 BRICS Forum Annual Summit” hosted by BRICS Media and China Real Estate Finance magazine was held in Shanghai. Ding Zuyu, CEO of Ehouse Enterprise Group, delivered a keynote speech entitled “Real Estate Industry from Rapid Growth to Quality Growth” at the conference, proposing 15 changes that must be paid attention to in the near future.

Ding Zuyu, CEO of Ehouse Enterprise Group

From Ding Zuyu's point of view, there have been obvious changes in the operation of the real estate market recently. Whether in terms of policies, enterprises, markets, land, population and so on, as well as the differentiation of cities and regions, it can be seen that the real estate industry has officially entered a period of comprehensive adjustment since September. Under such circumstances, Ding Zuyu believes that high-quality growth should be the future goal and suggests that real estate enterprises should change from high-speed growth to quality growth. For large-scale enterprises, we should maintain the main business of real estate and make real estate of high quality.

01 Enterprise Change: Moving Forward in Anxiety

Leading real estate enterprises began to slow down, reduce investment and speed up the sale of houses. For real estate enterprises, it is ok to follow the leading real estate enterprises, and there is not much need to make too many judgments on their own. Vanke, Country Garden and Evergrande sell houses, and you sell them too. They don't invest in you or you. However, each enterprise in the medium and long term should formulate its own service and future development direction according to its own characteristics.

02 Policy Change: Real Estate Tax Deferred Review

In the first half of the year, the media reported that the real estate tax was speeding up the legislative process, but in September, the review of the real estate tax was postponed. Basically, this round of macro-control policy should have ended its restrictive policy on real estate in September. (Note from Fangchan Website: On September 7, the Standing Committee of the National People's Congress held a legislative meeting to deploy the legislative planning and implementation of the 13th NPC Standing Committee. After the meeting, Xu Anbiao, deputy director of the Legal Affairs Committee of the Standing Committee of the National People's Congress, revealed in an interview that the key areas of legislation for the five-year legislative planning arrangement include: deepening the reform of the financial system and preventing financial risks, amending the securities law, the real estate tax law and other 10 separate laws.)

03 Market Change: Degeneration Rate Declines in General

From the point of view of market changes, the rate of denudation has shown a clear downward trend. Whether it is a first-tier city or a second-tier city, the current situation of de-industrialization is declining. Not only a few cities have such a situation, but many cities in China, especially after October, have such a common situation.

04 Land market changes: declining volume and price and more abortive auction

The change of the land market started earlier, with the circulation of land beginning in June. The circulation of land became more serious each month. By October, there were 156 land circulation marks, which was still under the condition of communication with development enterprises in many places. It can be said that the land market did reach a low point in the third quarter of this year and even in October. This, of course, also has something to do with the suspension of land acquisition and investment in September.

05 Industry Sales: Growth Rate Slows Clearly

The industry data for the first ten months were basically good, but the growth rate dropped from October. At present, the sales area of commercial housing increased by 2.2 % year on year from January to October, while the sales of commercial housing increased by more than 10 % year on year. However, the trend of slowing down is very obvious, and perhaps the momentum of slowing down in November will be further increased.

Externally, Ding Zuyu gave his own forecast, saying that the real estate sales area this year is about 1.7 billion square meters, basically the same as last year. The sales amount should exceed 14 trillion, a new level compared with last year.

06 Changes in house prices: depending on the market and enterprises

In September, house prices in 70 cities fell back for the first time in six months after rising month by month, and the first-line increase dropped to negative for four consecutive months. In October, the prices of new homes in the first-tier cities were flat month on month, while those in the second-tier cities kept rising but the increase narrowed, expanding by 0.2 percentage points month on month in the third and fourth tier. The real estate market is required to be stable, but in fact the price cannot be absolutely stable in the market environment. The final price depends on the market on the one hand and the enterprise on the other.

07 supply trend: month-on-month “correction", but maintained a corresponding height year on year

On the supply side, the corresponding height has been maintained in recent months. The 62 key cities monitored by CRIC system dropped by 30 % in October after the sharp increase in supply in September, but still rose year on year. In the recent period, the pressure on market sales has increased and the supply has not kept up with it. However, we should remind everyone that due to factors such as filing time, the actual sales situation in each city cannot be fully reflected. Under such circumstances, the supply decline and transaction volume are still on the rise. In fact, the market is inconsistent with the data.

08 Inventory: getting closer to reality

The low turnover and rising inventory are very important signals, and the current inventory is getting closer and closer to the real inventory. If it continues to rise for 5-6 months, it will bring great pressure to the market.

09 Secondhand Housing: Decline in Volume

At present, the second-hand house transaction data have fallen back to the level at the end of the first quarter of this year. In the second quarter of this year, the volume of second-hand housing was obviously changed, while the turnover of second-hand housing declined in July. If cities are divided, most of them are also declining. Some cities are falling fast, but they are already close to the city's low figure.

Recently, real estate enterprises and intermediary agencies have re-established the commission standard when house prices have fallen. When the price falls, the commission can indeed be raised a little, because in recent transactions, especially when the seller wants to sell the house, he is willing to pay more commission. At a time when the market is particularly hot, he wishes he didn't have to pay a commission. The current market is still difficult.

10 Performance of real estate enterprises: a great improvement over last year

The achievements of real estate enterprises are still acceptable. The top three are all around 500 billion to 600 billion. The sales of the top 24 top 100 billion, the top 41 top all reached the level of more than 50 billion, and the 100th also reached 15 billion. It should be said that there has been a great improvement over last year, but the improvement in recent months is still weak. The top three still have slow growth, and the sales of most of the remaining camp companies are declining.

From the point of view of 100 billion enterprises, all 24 companies have received 100 billion. Compared with the growth of the same period last year, some companies are still growing fast, but the growth of the top few companies is slowing down. Leading growth rate has slowed down, and the recent response of enterprises is very simple, that is, to reduce investment. Many real estate enterprises are not only reducing or even not investing today.

11 Market Structure at Various Levels: Sales of the Third and Fourth Lines rose to 69 %

From the perspective of the city, the situation in each city varies greatly. At present, the sales area of the third and fourth tier cities accounts for 69 %, and the area has been increasing in the last two years.

First-tier cities: the market prices are independent, with prices falling in Beijing and Shanghai, falling in Guangzhou and falling in Shenzhen.

Second-tier cities: the scale is relatively stable, and the monthly transaction area of commercial housing is maintained at 34 million square meters as a whole

Third-and fourth-tier cities: Since 2017, the proportion of sales in third-and fourth-tier cities has risen rapidly, with hot cities highly clustered in the Yangtze River Delta and Pearl River Delta

12 Urban Market Cycle: The next round of adjustment cycle will be lengthened

The adjustment cycle will take less than one year, with more cities on the 4th and 5th lines and cities on the 3rd and 4th lines, as in the past few years. From the industry's point of view, the short and medium term can still be kept at a high level. Judging from the data in the next three years, it can basically be maintained. From the present point of view, this number will not decrease or even increase. After all, we still hope to boost the economy through investment. Renovation of shanty towns is a very important component, but it is less than the previous number.

13 Population change: being not particularly optimistic

The last time the population peaked in 1987, it basically ended by 2020. There is also a correspondence between the previous high point and the next high point. From 1987 to 2020, the population will gradually decrease, so the pressure on the birth population will be very great in every year to come.

In addition, the number of marriage registrations and the marriage rate data are also decreasing. Last year, there were 10 million to more than 10 million couples, and we counted all divorces and remarriages, because we did not buy a house and divorce in the past. Now, if this is deducted, the number of marriages is less than 10 million couples.

Another group of figures is also under greater pressure, with the number of two children exceeding one last year and fewer and fewer. There is no impact in the short term, but it will have an impact on real estate in the long term. There are fewer children for a long time, and there will naturally be fewer buyers after 15-20 years.

14 Scale Growth: From High Speed to Steady Growth in the Future

The negative growth rate of the whole real estate enterprises and leading real estate enterprises suddenly dropped this year. In the past, the growth rate was high and everyone did it. The second is high leverage, and the past financial environment can also support high leverage. However, today's financial environment no longer supports the high leverage of real estate enterprises, and the growth rate will inevitably decline if the high leverage cannot be obtained.

15 real estate enterprises transformation: to do quality real estate

This year, the growth rate of the whole real estate enterprises, including leading real estate enterprises, has suddenly declined. In the past, the high-speed growth of the industry had great leverage factors, but the current financial environment no longer supports high leverage of real estate enterprises, and the growth rate will inevitably decline if high leverage cannot be obtained. Therefore, if real estate enterprises want to transform, they must upgrade to “quality expansion". For real estate enterprises with a certain scale of real estate development business in the industry, the transformation cannot be directly transferred to other industries, but it is still necessary to maintain the main real estate industry and make quality real estate. In addition, for most real estate enterprises, light assets such as property management still need to be done, and small and medium-sized real estate enterprises can also look for opportunities from innovative businesses.