2019 shed reform halved: third and fourth line house prices are over

SMM5 5: prior to this, the Ministry of Finance issued a notice on the release of the central government budget for urban guaranteed housing projects in 2019, which mentioned that the number of urban shed units in 2019 was 2.8529 million, a decrease of nearly 51 per cent from 5.88 million last year.

In the previous document issued by the Central Committee, it was clearly stated that "by 2020, the transformation of existing urban shantytowns, urban villages and dilapidated houses will be basically completed," that is to say, it was originally expected that there would be a bonus period of more than one year for housing prices in cities of the third and fourth tier and below. But now, with the number of shed reform plans shrinking ahead of time, housing prices in cities on the third and fourth lines and below may usher in an inflection point ahead of time.

It is not surprising that the booming real estate market has been driving China's economy at a high speed for more than a decade, and it is time to take a break. During this period, every time the market expects house prices to fall, house prices can always use rising prices to prove that they are iron bubbles, and the surge in house prices has made countless people enjoy the joy of rolling in wealth. Virtually, it has also widened the gap between the rich and the poor in China. It is the real estate that supports the local finance and the Chinese economy, and it is also the real estate that makes the development of China's economy narrower and narrower. Up to now, the development of real estate has successfully tied up China's economy and put economic development in a dilemma. Obviously, it is impossible to develop real estate again at this time, and it is not just that the shed has been changed almost. The house is almost built, and the whole real estate market is quite frothy in terms of both rent-to-sale ratio and house price-to-income ratio.

From the point of view of the past few years, the monetization shed reform has ignited the fire of housing prices in third-and fourth-tier cities. The monetized resettlement has led to the hoarding of a large amount of money in the hands of demolition households, and it is this money that has contributed to the surge in housing prices in third-and fourth-tier cities. Upset the original balance of the real estate market. As the housing reform plan comes to an end, we can see that housing prices in third-and fourth-tier cities will be lacklustre in the future, and the top will gradually show up. Even if it does not fall sharply, I am afraid it will be a long-term price without a market or a fall in both volume and price. The change of the city is doomed that the population will only concentrate more and more to the big cities, which is also in line with the rational assumption that people go up, and this is also doomed that the future of housing prices in third-and fourth-tier cities will fall into a long-term malaise.