Shenzhen's economic growth is declining, why are house prices rising again?

2019-12-18 | Zhibensha original |

2019 is about to pass. Looking back on this year, Shenzhen performed a song "Ice and Fire" :

In the past there were national strategic deployments and the hopes of economist Zhang Wuchang as the "Economic Center of the Earth." Later there were doubts about the discomfort of a sudden "stall" economy and "industrial hollowing out."Yuehai Sub-district Office, and later Huawei, who was caught in the whirlpool of public opinion and became the target of criticism.

Picture: Shenzhen GDP red line and national GDP growth rate blue line from 2010 to the first three quarters of 2019, source: Zhibensha

A closer look, but Shenzhen's economy has a "ice and fire dual sky" scene :

On the one hand, the decline in economic growth is too fast, and on the other hand, housing prices are leading the way;

On the one hand is the rapid growth of state-owned investment, and on the other hand, private investment has fallen sharply;

On the one hand, the economy of Longhua District has fallen into low growth, rents have risen, factories have moved outside, and on the other hand, Nanshan continues to maintain high growth, and the Bay Area plate is hot;

On the one hand, luxury homes and new disks have provoked the purchase of thousands of people, the sales scene is hot, and the price is tens of thousands of flats. On the other hand, the vacancy rate of office buildings continues to rise, and the trend of business closures, closures, and rent-outs has not decreased.

Shenzhen, what happened?

Irish economist Richard Cantillon once pointed out in his famous "Introduction to the Nature of Business": "The landowner determines the population and market price of a country."

In fact, Shenzhen, which has a lot of land and money, can roughly predict or perceive the city's future from its land policy and real estate market. This article looks at the problems and future of Shenzhen's economy from a real estate perspective.

Shenzhen past

Housing, or Manufacturing?

Everything has to start with the price.

Since 2015, Shenzhen has led a new round of general housing price increases. In 2015, the average price of the Shenzhen property market rose from 23,900 in the previous year to 33,400; in 2016, it continued to rise to 53,400.

Regulation began at the end of 2016. Since then, for more than two years, house prices in Shenzhen have been in a sideways state, and new house transactions have rapidly contracted.

In two years, Shenzhen's housing price doubled, the average price rose by 30,000 yuan a square meter, the market was surprised, many people were puzzled.

In the beginning, the reasonable explanation for the surge in housing prices in Shenzhen was a serious imbalance between supply and demand, that is, the amount of land available for development in Shenzhen was too small.

Shenzhen covers an area of ​​1997 square kilometers, only 12% of Beijing. Shenzhen has a resident population of 13.02 million, plus a floating population of about 20 million. Shenzhen's population density is greater than Beijing, Shanghai and Guangzhou.

In 2005, Shenzhen issued the “Shenzhen Basic Ecological Control Line Management Regulations”, which designated 974 square kilometers as unexploitable, occupying almost half of the area. This means that Shenzhen has only 1,223 square kilometers of land available for development.Based on this calculation, the actual population density of Shenzhen may reach 20,000 per square kilometer, which is already one of the largest population densities in the world.

Of these 1023 square kilometers, the area already completed in 2016 reached 923.25 square kilometers. In other words, starting from 2016, if the old reform is not considered, the new land area that Shenzhen can use does not exceed 100 square kilometers.

In the completed urban area of ​​Shenzhen, the 2014 data show that industrial logistics land accounts for 34%, residential land accounts for 24%, transportation facilities land accounts for 20%, commercial services land accounts for 5%, and public service facilities land accounts for 6%, The other 11%.

It can be seen that Shenzhen's residential land only accounts for 11% of the entire urban area. Compared with international metropolises, this figure is surprisingly low. London, New York, and Tokyo's residential land accounts for more than 50%. This data is onlyHong Kong 8% is a bit higher.

However, Shenzhen ’s land and land conflict has a long history, so why did house prices double in a short time in 2015?

It was not until November 2017 that Shenzhen announced the "Thirteenth Five-Year Plan for Urban Construction and Land Use in Shenzhen 2016-2020," and people suddenly realized.

The "Thirteenth Five-Year Plan" should have been formulated in 2015 and started to be implemented in 2016, but it has not been announced to the public. This time point is in line with the surge in housing prices in Shenzhen.

This document states :

I. The basic ecological control line of Shenzhen will remain unchanged by 2020, that is, not less than 974 square kilometers.

II. By 2020, the total scale of construction land in Shenzhen will be controlled at 1004 square kilometers on the basis of 1023 square kilometers, 20 square kilometers of basic farmland will be allocated.

Third, by 2020, the proportion of industrial land in the construction land should not be less than 30%, and the "Industrial Land Red Line" of 270 square kilometers is delimited.

This means that by 2020, 50% of the land in Shenzhen will not be exploitable, 30% of the land will be allocated to industry, and the remaining 20% ​​will be used by residential, commercial, transportation, and public service facilities.

IV. Various methods will be used to release 253 square kilometers of land supply by 2020.

Including 87 square kilometers of newly-built construction land, 58 square kilometers of retired construction land, 30 square kilometers of urban renewal land 12.5 square kilometers of demolition and reconstruction, 50 square kilometers of land preparation land, and 12 surrounding seas for farming 28.2Square kilometers.

This shows that there is basically no land for development in Shenzhen. Of the 253 square kilometers of land, 166 square kilometers come from old reforms, reclamation, etc.

Photo: Shenzhen developable land, source: Intellectual Property Office

Calculated at 253 square kilometers, excluding 30% of industrial land, Shenzhen has only 177 square kilometers of land available.

According to the "Thirteenth Five-Year Plan", the land for comprehensive transportation is not less than 20.78 million square meters, the land for municipal facilities is not less than 2.25 million square meters, the land for ecological protection is not less than 560,000 square meters, and the new land for medical treatment is not less than680,000 square meters, no less than 2.5 million square meters of educational land, no less than 820,000 square meters of cultural and sports facilities, and only 310,000 square meters of land for social housing.

177 square kilometers of land minus the total size of the above land, only 149 square kilometers remain. How much of this is residential construction land, this plan does not clearly indicate.

Photo: Shenzhen residential land, source: Zhibensha

However, during the “Thirteenth Five-Year Plan” period, the document plans to achieve an effective supply of 650,000 new housing units in the city; of which 300,000 new commercial housings are approved for pre-sale and current sale, and 350,000 housings are guaranteed and affordable.

There are two issues worth paying attention to here :

One is that a lot of new land comes from demolishing old and building new ones, and the supply of real dwellings will not be too much.

Second, medical, education, and sports are all shortcomings in Shenzhen. In recent years, a large number of hospitals and schools have to be built, especially high schools, high-level universities, and high-quality hospitals. Therefore, the land for medical, education, and sports is definitely crowded out of houses.Land supply is still not optimistic.

The above is just a plan, we look at the actual data :

From 2012 to 2017, in Shenzhen, more than 7 million square meters of new commercial and residential industrial land supply, only 8% of residential land.

Before August 2017, Beijing and Shanghai respectively supplied 3.59 and 3.22 million square meters of residential land, Guangzhou launched 1.64 million square meters, and Shenzhen had zero supply of pure residential land throughout the year.Do not sell "residential plot, only 20,000 square meters.

Shenzhen's residential land supply including talent room was only 158,000 square meters in 2018; in the first half of 2019, Shenzhen's residential land supply was also zero supply. Until June, Shenzhen launched 5 residential land with a total land area of ​​170,000 square meters..The five plots of land are only talented houses with a three-year sale limit. The land is located in Baoan Xixiang, Longhua Minzhi, Guangming District and Pingshan District.

Compared with the "poor" residential land, Shenzhen's "big hand" launched industrial land. In November this year, Shenzhen launched a 30 square kilometer industrial land at a time. What is this concept? The area of ​​Shanghai is more than double that of Shenzhen. The wholeThe industrial land newly added during the 13th Five-Year Plan period is less than 30 square kilometers.

The extremely insufficient supply of residential land is the root cause of the persistently high housing prices in Shenzhen.

Let's look at the demand again.

Compared to other cities in the country, Shenzhen is special because it is an immigration city, which is quite attractive to young people in various provinces across the country.

Figure: The growth rate of Shenzhen's resident population from 2012 to 2018, source: Zhibensha

From the data point of view, the number of newly-added population in Shenzhen has grown explosively in recent years, ranking first in major cities across the country. In 2012, Shenzhen's permanent population was 10.55 million, in 2013 it was 80,000, and in 2014 it was 15Million, adding 600,000 in 2015, 530,000 in 2016, 550,000 in 2017, and 560,000 in 2018.

Shenzhen's large-scale new population every year is an expanding rigid demand market. In 2015 and 2016, the new urban population suddenly surged, which is highly consistent with the rapid rise in housing prices.

Shenzhen is the city with the lowest purchase restriction level in Beijing, Shanghai, Guangzhou, Shenzhen, and Shenzhen. This is mainly because Shenzhen has the lowest household registration threshold of these four cities. As long as it has a full-time bachelor's degree and purchases social security in Shenzhen, it can be directly entered.Introduced the "second approval" policy, which can be completed within 20 working days. In order to attract talents, the Shenzhen Municipal Government also subsidized 15,000 yuan; at the same time, the Longgang District and Baoan District Governments added an additional 15,000 yuan subsidy.A total of 30,000 yuan.

This open hukou policy is equivalent to opening a huge mouth for Shenzhen's home purchase demand and funding sources.

Most of the 500,000 new population each year are mostly young people, and many are college graduates. If there are 8,000 of them, they come to Shenzhen to buy a house with their parents' money including loans.A crazy amount of money. For the 8,000 suites just needed, if the total price of a suite is 8 million, the total is 640 billion. You know, the new house sales in Shenzhen in the first half of this year were only 17,000.

It can be seen that house prices in Shenzhen are held by young people across the country carrying their parents' down payment and their own monthly entrustment.

Picture: Number of students in Kitakami-Guangshen Elementary School in 2008 and 2018, Source: Zhibensha

In addition, young people in Shenzhen are at the peak of marriage and childbearing. From 2008 to 2018, the number of primary school students in Beijing increased by 38.3%, Shanghai increased by 35.5%, Guangzhou increased by 22.7%, and Shenzhen increased by 75.5%.

In 2018, the number of primary school students in Shenzhen reached 1.02 million, surpassing Shanghai and Beijing, and only less than 30,000 in Guangzhou. Shenzhen's primary and secondary students and children in the park exceeded 2 million, ranking first among the four major cities. Shenzhen's rapidly increasing numberThe number of students is the main driving force for the rapid growth of degree rooms.

Actually, free household registration, free house purchase, and education are the rights of all people. A large number of young people from all over the country have flowed into Shenzhen, indicating that the city has enough attractiveness; a large number of new and born people are the future of the city.Hope. The problem is not in strong demand, but in extremely short supply.

So many people come to Shenzhen and there are so few listings. A large number of young people can only live in urban villages. Of the 10.71 million units of existing housing in Shenzhen, 73.5% of the houses are for rent, and 62% of them are for rent in urban villages.. 80% of the renters in Shenzhen now, about 16 million people rent, of which 11 million people live in urban villages.

So, the objective shortage of land and the huge supply-demand gap caused by man-made causes led to a sharp rise in Shenzhen's housing prices in 2015 and high housing prices.

Shenzhen ’s land is scarce, but why is it so “big deal” for industrial land, but how is it “challenging” for residential land?

Why is Shenzhen so harsh on the drifters?

Shenzhen now

asset, or growth?

Why doesn't Shenzhen increase the supply of residential land?

This is really puzzling. Compared with most cities, Shenzhen's land financial reliance is not high, local taxation and fiscal surplus are considerable, what is the driving force for house prices to rise?

One is the need of financial cities bigger assets;

Second is the pressure of strategic deployment maintain growth;

The third is the needs of industrial cities part three analysis.

Let's take a look at the needs of financial cities first. I once pointed out in "Deep Real Estate | How the Real Estate Market Doesn't Go Really?": "Shenzhen and Shanghai are not highly dependent on land finance, but in order to maintainFinancial assets and status, neither city can tolerate falling house prices. This is determined by the credit source of finance. "

Real estate and land are the pillars of the financial system and the most important collateral for financing. The world ’s largest financial assets are built on the cornerstone of real estate, and are formed through layers of leverage and securitization. Valuation of real estate, Determines the starting line of financial cities. World financial cities such as New York, London, Tokyo, Hong Kong, and Singapore are all cities with high housing prices.

For example, 5 million bought a house in Shenzhen, rose to 10 million two years later, then mortgaged it to get 6 million loans, and then invested 6 million into the financial market or industrial investment.

We usually say, "Do not use real estate as a means to stimulate the economy in the short term". What is even more terrible than using real estate as a means to stimulate the economy in the short term is to use real estate as a tool to enlarge financial assets in the long term. Thus, the financial city'sHouse prices will continue to remain high.

Under normal circumstances, the tree will not rise to the sky. The real estate market has obvious cyclicality, and house prices will fall to a certain extent. However, if human intervention, such as strict control of land supply and monetary stimulus, is likely to lead to real estateThe market has been distorted for a long time, and house prices have continued to rise.

The United States has done this before. During the Great Depression of the 1930s, the federal government for the purpose of saving the market, in the form of overdraft national credit loans to low-income people to buy a house. This move has led to a low down payment ratio, installment payment model.

By the end of the 1960s, the Federal National Mortgage Association, which was originally used to rescue the city, turned into the famous Fannie Mae. With the rise of investment banks, real estate has gradually evolved into a long-term tool for growing financial assets, and since thenThe road to securitization.

The first mortgage-backed securities MBS was born in the United States in 1968. In the first quarter of 1970, the size of mortgage securitization in the United States was $ 46 billion. By the third quarter of 1974, this number had exceeded 100 billion.

Since the 1980s, Reagan, President Clinton, and Fed Chairman Greenspan worked hard to promote the financial mix. Since then, the US real estate and financial markets have ushered in an epic bull market that lasted for more than 20 years. Before the crisis broke out, the institution MBSHas reached nearly $ 8 trillion, and US home prices, stock market value, and financial derivatives have reached historical peaks.

After the financial crisis broke out, the U.S. Federal Treasury and the Federal Reserve also actively rescued the market and took over the "two houses" to rescue giants such as Bear Stearns and American International Group. The Federal Reserve even bought mortgage securities directly in the market and accumulated up to trillions of dollars.These rescue measures have helped the U.S. stock market rise against the trend and U.S. real estate began to rebound in 2012. Today, the U.S. stock market and housing prices are at historic highs.

At this time, real estate was reduced to a short-term economic stimulus tool during the Great Depression.

From the Great Depression to the present, the United States has worked out a set of real estate financial gameplay: short-term growth growth and long-term growth of financial assets alternately. When real estate is used for long-term growth of financial assets collapse, it is also used as a short-term stimulus economy, securityThe means of growth are re-used. Such repeated and repeated use lasts for nearly a century. For details, see "How is this world kidnapped by real estate?"

The reason: artificially use the market to create bubbles, and then blame the market.

We return to the situation in Shenzhen. Since 2010, China's economic growth has entered an inflection point. As a whole, Shenzhen's economic growth has declined, which is consistent with the downward shift of the national economy, but the Shenzhen economy has obvious volatility.Higher than the whole country.

China ’s GDP growth rate exceeded 10 in 2011, directly exceeded 8 in 2012, and exceeded 7 in 2015. In the first three quarters of this year, the economic growth rate was 6.2% year-on-year; in the third quarter, the growth rate was 6%. Market forecasts for the fourth quarterNational GDP is likely to break 6.

Shenzhen ’s GDP growth rate also entered an inflection point in 2010. In 2010, the GDP growth rate was still 12%, it fell directly to 10% in 2011, and it broke through 9 in 2014. But in the four years from 2014 to 2017, Shenzhen ’s GDP growth rateSpeed ​​maintained above 8%, which is stronger than the national growth rate. Why is this?

In the past four years, Shenzhen's housing prices have doubled. In addition to the leverage effect, Shenzhen's financial assets have been enlarged several times. The doubling of Shenzhen's real estate and financial assets has provided financial convenience for physical investment, trade financing, and technology venture capital.

However, with the continued decline of the national economy and the deepening of the Sino-US trade war, the Shenzhen-based method of expanding financial assets through real estate has immediate side effects, and the economic growth rate has dropped significantly.

Shenzhen's GDP growth rate broke through 8 in 2018, broke through 7 in the first half of 2019, and the growth rate in the first three quarters of 2019 was 6.6%. At present, Shenzhen has not released economic data for the third quarter. Although Shenzhen's GDP growth rate in the first three quartersIt is still higher than the national average growth rate of 6.2% and also higher than the Guangdong province average growth rate of 6.4%, but the decline rate is too fast. Moreover, this decline rate cannot be explained by periodicity and trade wars.

Bigging up financial assets is essentially a debt-based economy. But when the economy declines cyclically, the debt-based economy will accelerate its decline.

Shenzhen's leverage ratio is significantly higher than Beishangguang. Shenzhen has more loans than deposits, household deposits are 1.381 trillion yuan, and loans are nearly 2 trillion yuan. According to the 13.02 million permanent population, the per capita debt is 150,000 yuan; if the factor of deposits is taken into account,Net debt is 44,000 yuan.

The situation in Shanghai is the opposite of Shenzhen. Shanghai households have more deposits than loans. Shanghai households have deposits of 2.857 trillion and household loans of 2.22 trillion.

Among them, Shenzhen's housing loans accounted for the majority, and Shenzhen household loans accounted for about 99.7% of loans. Shanghai announced 1.33 trillion housing loans, and the proportion of housing loans in loans was much lower than Shenzhen, only 60%.

The squeeze out effect of housing loans on consumption is also very obvious. 30% of Shenzhen's income is used for housing loans and renting houses. In 2018, Shenzhen ’s total retail sales were 616.8 billion, which is quite different from Guangzhou ’s 925.6 billion retail sales. The reason isOn the one hand, Guangzhou ’s wholesale market is huge, increasing its total retail sales. On the other hand, the proportion of Shenzhen ’s residential spending is too high, which weakens consumer spending. In 2015, Shenzhen ’s housing prices rose sharply, and the total retail sales of consumer goods fell sharply to 2%.

Figure: The total retail sales and growth rate of social consumer goods in Shenzhen, 2014-2018, source: Intellectual Property Agency

When the economy stalls, Shenzhen real estate switches from long-term growth of financial assets to short-term growth protection, real estate rising momentum is released, and the long-term supply imbalance in the market has triggered a "burst-filling" Song Ding drama.

Beginning in the first half of this year, the transaction volume of new and second-hand housing has started to rise. Although the supply of new properties in Shenzhen this year has increased significantly compared with the past two years, it is far from meeting market demand.

In addition, many of the real estate opened this year are large-scale luxury homes, which just do not match the market demand. In the first half of this year, new luxury homes such as the Shenzhen Industrial City, OCT Neuschwanstein Castle, and China Resources Vientiane Mansion were snapped up for one person, and one roomDifficult to find, the price is more than 100,000 yuan per square meter, and there are even billion-dollar luxury homes.

Suddenly, new homes in Shenzhen have become investment products, and only a few players. The rare and popular first-hand housing market has pushed most of the purchase demand to the second-hand housing market, which has caused the volume and price of second-hand housing to rise.

In April 2019, Shenzhen second-hand housing transactions returned to over 7,000 units, an increase of 37.7% year-on-year, and reached a new high in 16 months; May new house transactions reached 4,605 ​​units, a new high since 2016 regulation. Starting in September, Shenzhen second-hand housingReal estate prices rose for the third consecutive time. Data from November showed that second-hand residential sales prices in Shenzhen rose by 1.4% month-on-month, while Shanghai remained flat, while Beijing and Guangzhou fell by 0.4% and 0.2%, respectively.

January-November 2019, Beijing-Guangzhou-Shenzhen second-hand housing price increase, source: Zhibensha

What ignited the heat in Shenzhen's property market is the concept of the Greater Bay Area, the demonstration area, and a series of policies that are better than the property market. The Greater Bay Area and the demonstration area have attracted national funds to favor the Shenzhen property market. Starting in the second half of the year, Shenzhen appeared"Epic-level soil auctions" have made land auction revenue hit a record high. Some owners and intermediaries have used the WeChat cluster to control the disk to drive up the price.

With the rapid decline in economic growth, the pressure on Shenzhen to maintain growth this year has increased significantly. Especially after the strategic deployment of the pioneering socialist demonstration zone with Chinese characteristics was released, Shenzhen has successively introduced a series of measures that are good for the property market :

Adjustment of the luxury house tax collection standard directly led to a sharp rise in second-hand housing transactions; the cancellation of the “rent-not-sell” policy for commercial apartments greatly activated the commercial apartment market; and the thawing of the commercial housing market in the Shenzhen-Shanshan New District raised the market ’s expectations of rising house prices.

Ensuring growth in real estate is not enough. It also includes state-owned investment, especially infrastructure. The average investment growth rate in Shenzhen in the first three quarters of 2019 was 17.9%, of which state-owned investment growth was above 40%, while private investment growth was only 3%.

Shenzhen is a typical private capital economy. Nowadays, the growth rate of private investment is so low, and the growth rate of state-owned investment is extremely high. Many of them come from infrastructure investment. In the first half of this year, Shenzhen ’s infrastructure investment surged 48%.

This year, Shenzhen ’s road digging has reached a new height. Citizens are repeatedly digging no matter where they drive or walk. The “Shenzhen Road Digging” web search index has risen sharply.

Under the model of long-term growth of financial assets + short-term insurance growth, the economic stall is still obvious, private investment has shrunk sharply, residential land has been severely in short supply, new housing has become an investment product, and second-hand housing and degree housing prices have remained high.What's the future?

Wen | Zhibensha

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