Broken Windows: 80pc of Home Sales in Some Cities Driven By Demolition

iFeng: 房企利润全面爆发,三四线城市支撑力能否持续?
This is another year of financial reporting. For most real estate companies, bright results have brought good mood. From the companies that have published financial reports, the outbreak of profits has become the mainstream. For example, the net profit of Newtown Holdings has increased by nearly 100% year-on-year, and Agile's net profit has increased by more than 150%. In the view of the industry, the most direct reason for the explosion of net profit is the increase in sales. Active land reserves and rapid turnover have contributed to the increase in sales of housing enterprises.

Centaline Property Research Center statistics show that in more than 20 housing enterprises that have published annual reports, in addition to the partially transformed small and medium-sized housing enterprises, the profits of mainstream real estate companies have fully erupted, and more than 80% of firms' profits have risen significantly in 2017.
The smaller cities have driven the growth:
After experiencing the blaze in 2017, can housing enterprises maintain their momentum in 2018? In this regard, all parties have different interpretations. From the performance targets released by housing companies, they still seem to have confidence. Xuhui, for example, set itself a target of RMB 140 billion in 2018; Jianye’s goal was to rush into the RMB 100 billion camp in three years; and Sunac proposed that the target of sales revenue in 2018 be RMB 700 billion, with a growth rate of 93%.

In this regard, Yan Yuejin pointed out that the concentration of the real estate industry continues to increase, which also prompted the housing enterprises have to do their best to sprint, because once they slow down, they will be left behind by other companies, the living space will be squeezed, so for the majority In terms of housing prices, 2018 is still a hard year.

Although housing prices are full of energy, the property market environment in 2018 will also be different from 2017. Judging from the control policy, on March 19th, Minister of Housing and Urban Development Wang Menghui emphasized once again that the regulation and control targets were unwavering and that efforts were not relaxed, and expressed that it would maintain the continuity and stability of the policies, and in particular, further consolidate the main responsibilities of local governments. .

In addition, the sustainability of the support of third- and fourth-tier cities remains to be seen. The Chain Home Research Institute believes that the third- and fourth-tier cities face problems such as population outflow and aging, and the long-term power to support the real estate market is insufficient. Research shows that the wave of transactions in the third and fourth-tier property market is mainly composed of just-needed, improved and demolished real estate. Among them, some urban local relocatees accounted for more than 80% of transactions. This shows that subsequent transactions in these cities will be difficult to maintain highs. At the same time, as local pressures for destocking are reduced and support policies can continue, even if they persist, market demand will have been effectively released in the early stages, and market demand will inevitably decline.
That bold portion is talking about intracity relocation, as in 80 percent of transactions involved people moving into new homes because the government demolished their old homes.

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