Shenzhen property is no longer the “best” investment channel…

2022-04-28 0 By

Over the past 20 years, real estate has been too powerful in creating wealth.Shenzhen, in particular, has become a barometer of China’s real estate trends.The long-term rise of housing prices in Shenzhen has not only increased the assets of ordinary homeowners, but also made some professional investors full of money.It is in this historical process that real estate has become the investment target of many people and institutions.The long-term rise in house prices has had no small negative effect.So in 2016, in order to limit the trend of housing as an investment product, housing speculation began to be defined by the top as a “national policy.”And there is reason to believe that this position will hold, even if the housing market needs to recover.It is not advisable to drink poison to quench thirst.Based on this, some people began to believe at that time that the good days of buying a house to make money were over, and real estate was no longer the best investment channel.More than five years have passed since 2016.At this point in time, from an investment point of view, I agree with that judgment.For the sake of discussion, LET me first give a crude definition of “investing” : purely to make money.Under this definition, more than 90% of the buyers in Shenzhen will be excluded from the scope of discussion, because these people are the primary consideration of buying a house for their own use, and investment is only considered.This is also the vast majority of Shenzhen people’s simple view of buying a house: live in the hope that the house can appreciate, convenient for the future.For these people, even if the value of the house later sold, still have to buy back a home to live in.This is why I don’t think there are many investors in shenzhen property market in the early years, because in my opinion, most people just buy for living and appreciation, and there are not many investors who buy purely for making money.But we ignore the churning effect of a small number of investors.In fact, the number of investors does not need too much to stir up the property market. For example, in a small building of 300 households, as long as 5% of the investors, that is, 15 sets, are held by the investors, under the condition of tight supply and demand and friendly financial environment, the transactions of these people can greatly affect the price of the community.Because owner-occupied households trade less frequently, fewer transactions mean fewer price signals;But the investment guest back and forth to do more than a few times, deliberately raise the price of trade, cover their own shipment, can be this village “pricing”.Therefore, the hot area of small and medium-sized housing clusters are the most likely to be targeted by investors, because the concept of foot, small area, not long-term living, high turnover rate, low total price threshold, easy to focus on the investment of customers to control the plate, trading prices in the bull market is easy to repeatedly record highs.Baozhong Pattern year and qianhainuo international, etc., all belong to this category.Let’s get back to that.Why is real estate no longer the best investment from a pure investment point of view?First, the holding cycle is too long.Shenzhen housing has 3 years of limited sales period, and the full five only low tax, when selling the price advantage, which is about 5 years, if it is a new house, plus about 2 years of housing waiting period (individual buildings long to about 3 years, such as China Resources City), the whole cycle has almost 7 years.To be honest, this waiting time, and early equity investment cycle is about as long.People who don’t have much money can’t afford to wait, and besides, they have to pay their monthly mortgage for so long.In addition, how much do you think shenzhen housing prices will reach in 7 years?On today’s high base, even an optimistic doubling would translate to an annualised return of about 10 points.Ten points seems like a good deal, but don’t forget that the second set has very low leverage, and the interest cost and the time cost of the principal have to be deducted.A doubling in seven years is just so-so.Unless, unless, you really can buy the price limit is particularly serious new dish, such as Baozhong price limit of 86 thousand Hong Rongyuan land plot, two neighbors Xi Longwan and One Square city in the guidance price after 1 year are also basically more than 150 thousand.But then again, I don’t think it’s an investment in the strictest sense, it’s a fool’s game, it’s luck, it doesn’t require any technical judgment.Second, the capital threshold is too high.Despite the baptism of 208 second-hand housing guiding price policy, Shenzhen housing price has fallen, but after all, the original base has been quite high, after falling is not ordinary people can reach.And the down payment threshold of the guide price is higher than before.In particular, if it is not the first set of first loans, the second set of down payment proportion would have to go to 7-80%, the required down payment is higher.And general investment demand, in the background of down payment resource source and income proof need to be verified to severely crack down on entrusted holding, presumably can still buy with the first set of first loan, not many people.In addition, there is a brutal truth THAT I have said repeatedly, often the more expensive the better the building is more investment value.For example, this year before the sea and treasure in the price limit around 90 thousand new dish, certainly than those outside the original limit price of 40-50 thousand real estate more investment value.However, the total price of a set of three houses in qianhaibao is about 10 million yuan, and the down payment may be seven or eight million yuan, which is beyond the threshold of ordinary families.Years ago, one of my classmates from Shunde came to Shenzhen to chat with me.He is already a middle-level employee of a local agricultural commercial bank with a good income. He owns two ordinary three houses under his name. In addition to some financial product allocation, he also invests in some small businesses such as catering (he does not participate in the operation himself).I asked him why he didn’t invest any more real estate. He said that all the good real estate projects in Foshan required at least one million down payment and would take a long time, so he didn’t feel very interesting.That’s it.Third, liquidity is too poor.Success also liquidity, failure also liquidity.Illiquidity is an important reason why so many people can make money by buying houses.If houses could be traded at the flick of a finger like stocks, there would be more than 90% fewer people who could make money buying them.But from another point of view, the poor liquidity of assets is not a good thing for investment, indicating that it is very troublesome to liquidate.Shenzhen in particular after the implementation of the guidance price policy, the liquidity of second-hand housing further hit.To put it bluntly, shenzhen’s secondary housing market is now a backwater, liquidity in a state close to exhaustion.Most of the owners who want to sell their houses can’t sell without giving in.Owner of emergency money, a little hurt.This is what happens when you almost lose liquidity.While this is by no means the norm, as long as the guide price is in place, it will be difficult for the subsequent market to return to its previous normal level unless the vast majority of listings in the city actually close to the guide price, which is almost impossible in some of the most valuable areas in the Midwest.You can hardly expect all the apartments in Shenzhen Bay Xiangmihu Oct to close at the top guide price of 132,000 yuan per square meter.Said so much, it seems that the Shenzhen real estate said very useless.In fact, not so much. The above explanation is an answer to “why is real estate not the best investment channel from a pure investment point of view”.The qualifier is “the best.” In other words, I think the financial market is a better investment for a lot of people than real estate, whether it’s stocks, funds, insurance, whatever, depending on the person.But shenzhen property still has its value.In the long term, the fundamentals of more people and less housing in Shenzhen will not change, the asset is stable enough, strong support, small volatility (the guidance price is so hard, the city’s average also fell 10-20% or so, far from plummeting).For those who have more disposable funds, they have abundant financial instruments available. Shenzhen real estate may not be the best investment channel, but as a long-term (such as more than 10 years) asset allocation of one of the varieties (especially luxury homes), it is absolutely appropriate to resist the erosion of inflation, more than enough.So, what about our ordinary needs and improvements?That’s even easier.As mentioned above, we ordinary people are not qualified for “pure investment”. Buying a house is first to meet the needs of self-living, and then to take into account the investment appreciation.Based on the long-term, good shenzhen real estate will not live up to you, so the first suite is still very important.I just want to remind you that even if you limit the financial properties of a house, you can’t completely remove that property, so buying a house won’t be pure consumption.If thoroughly bearish Shenzhen house prices, then rent it, rent is pure consumption, their future consequences are.For ordinary families who still plan to buy a house, they should combine their own actual situation (work and commute, children in school, family population, etc.) to find the real estate with better value-added potential and make a good overall consideration.