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In the past ten years, China has implemented more than 100 property market adjustments, but house prices are still on their own terms. why?

Because the problems we have raised are always wrong, leading to failure to clearly understand the nature of the property market, the essential problems and solutions are quite different, and house prices are contrary to expectations.

This article follows “ Shenzhen, what ’s wrong? 》 Shenzhen, what to do? After that, from the perspective of land supply and demand, explore the “root problem” of Shenzhen ’s property market and cities; point out that structural imbalances in land supply are pushing Shenzhen towards a “power-law type” “Society” evolution.

01. The root problem of the property market: structural imbalance in land supply

The root problem of the Shenzhen property market is the structural imbalance in land supply.

Many people blame Shenzhen ’s high housing prices for the large number of people and the small number of people. According to public data from the National Bureau of Statistics, in 2019, Shenzhen ’s permanent population was 13.438 million (plus the floating population, the total population is expected to be 20 million), and the land area is 1996.85 square kilometers.

In 2019, the density of permanent residents in Shenzhen is 6,730 people per square kilometer, which is much larger than 1313 in Beijing, 2059 in Guangzhou, and 3830 in Shanghai.

People infer the rationality of Shenzhen’s high housing prices, and derive a solution to expand Shenzhen, and merge Huizhou or Dongguan.

This is also a correct answer, but a wrong question.

Shenzhen ’s population density is indeed much greater than that of Beishangguang, which is the basis of tight land supply and demand. But it is not the root of the problem. The fundamental problem of the contradiction between land supply and demand lies in the structural imbalance of land supply.

In other words, Shenzhen is not without land, but land is not used for housing.

Securities Times · Databao statistics show that in the past ten years, Shenzhen ’s residential land transaction area was 4.315 million square meters, ranking fourth from the bottom in 103 cities, less than one-tenth of Beijing and 5.8% of Shanghai. ^[1]

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

Shenzhen residential land accounts for only 11% of the entire city area. Compared with international metropolises, this data is surprisingly low, with residential land in London, New York, and Tokyo accounting for more than 50%. This figure is lower than that of Beishangguang and only a little higher than 8% in Hong Kong.

In the five years from 2014 to 2018, Shenzhen ’s permanent population increased by 2.25 million, and the newly added housing supply was only about 240,000 units. The supply of new housing is far behind the size of the new population, and artificially created a contradiction between supply and demand. What’s more, in the newly supplied housing, the proportion of luxury housing and talent housing increased, which exacerbated the shortage of commercial housing.

Where did the land in Shenzhen go?

In 2015, Shenzhen formulated the 13th Five-Year Plan for Urban Construction and Land Use (2016-2020):

1. By 2020, Shenzhen ’s basic ecological control line will remain unchanged, that is, no less than 974 square kilometers of undevelopable land will be allocated, accounting for about half of Shenzhen ’s 1997 square kilometers.

2. By 2020, the proportion of industrial land in the city should not be less than 30% of the construction land, and a 270-square-kilometer “industrial land red line” is delineated.

Picture: 13th Five-Year Plan for Urban Construction and Land Use, Source: Shenzhen Planning and Land Resources Commission

It can be seen from this document that Shenzhen has developed an ecological control line and a red line for industrial land, totaling 1,244 square kilometers, accounting for 62% of Shenzhen ’s land area, for ecological protection and industrial use. The remaining 750 square kilometers of land are jointly used by farmland, residence, commerce, transportation, and public service facilities.

It can be seen that Shenzhen ’s supply of land for industrial and commercial services is much more generous than residential land.

Picture: Shenzhen ’s various types of land transaction area in the past decade, source: Securities Times · Data treasure

Securities Times · Data treasure shows that in the past ten years, the turnover of Shenzhen ’s industrial land reached 11.4778 million square meters, which ranked 82nd in the country; the planned construction area was 35.86 million square meters, ranking 52nd in the country. The sales volume of commercial land reached 3.942 million square meters, ranking 67th; the planned construction area was 17.6555 million square meters, ranking 41st. ^[1]

In December 2019, in order to attract corporate headquarters to settle in, Shenzhen launched a 30-square-kilometer industrial land at one time. What is this concept? The area of ​​Shanghai is more than twice that of Shenzhen, and the newly added industrial land during the 13th Five-Year Plan period is less than 30 square kilometers.

There are many ecological and industrial land, what is the result of the scarcity of residential land?

In October 2019, the “White Paper on the Guangdong-Hong Kong-Macao Greater Bay Area Real Estate Market” released by the Shell Research Institute showed that Shenzhen ’s housing self-occupancy rate was only 23.7%, the lowest among the 11 cities in the Greater Bay Area, far below Hong Kong 49% in Guangzhou, 54.9% in Guangzhou and 73.9% nationwide. ^[2]

Picture: Owning rate of urban housing in the Greater Bay Area, source: Shell Research Institute

Recently, an article published in China Finance by the research group of the Urban Residents ’Household Assets and Liabilities Survey of the Central Bank ’s Survey and Statistics Department pointed out that China ’s urban housing ownership rate reached 96%, while Shenzhen ’s housing ownership rate was much lower than this One level.

According to GF Securities, at the end of 2016, the marketable housing area in Shenzhen was 152 million square meters, or about 1.666 million units. Of which 129 million square meters of commercial housing, 1.385 millionSets; 1200 million square meters of affordable housing, 151,000 sets; self-built houses of 110.1 million square meters, about 130,000 sets.

According to the estimated annual sales of 40,000 new houses in the past three years, the city ’s commercial housing is about 1.5 million units, covering a population of 5 million to 6 million, which is about 20 million or more of the actual managed population in Shenzhen (resident population + floating population) 25% ~ 30%. ^[1]

There are so few houses that a large number of young people can only rent in villages in the city. At present, 80% of the people renting houses in Shenzhen, about 16 million people rent, of which about 11 million people rent in urban villages (Shell Research Institute estimates that 15 million people live in urban villages).

Shenzhen ’s per capita living area is only 19.7 square meters, which is lower than Guangzhou ’s 25 square meters. There is a big gap from the levels of 32.4 square meters in Tokyo, 40 square meters in New York, and 46.5 square meters in San Francisco.

Severe imbalances in land supply have caused the real estate market to be “double-sided”:

On the one hand, there is an extreme shortage of residential land, sharp contradiction between supply and demand, and the price of commercial housing has skyrocketed. Shenzhen has become the city with the highest house prices in mainland China.

Picture: 2005-January 2020, Beishang Guangshen second-hand house sales price index, source: Gu Yu, Fang Tianxia

On the other side, there is a serious surplus of industrial land and commercial land, and the vacancy rate continues to rise.

According to the latest data from DTZ, the vacancy rate of Shenzhen ’s commercial office buildings rose to 24.6% in the first quarter of this year. The vacancy rate of office buildings in Nanshan District, the largest and most active Shenzhen economy, rose to 34.8%. The vacancy rate of Qianhai office buildings is as high as 66%. ^[3]

This year will also usher in a peak supply of Grade A office buildings. A total of 1.34 million square meters of new office space has been delivered throughout the year, and the next fiveThe annual new supply totals 5.07 million square meters.

Shenzhen office vacancy rate, vacancy rate growth rate and rental decline rate are higher than Beishangguang.

Picture: Rent and vacancy rate of North Shanghai Guangshen Office Building in the first quarter of 2020, data source: Dai Delianghang

In the first quarter of this year, the vacancy rate of Shenzhen office buildings was 24.6%, higher than Beijing ’s 13.8%, Shanghai ’s 21%, and Guangzhou ’s 5.2%; the vacancy rate growth rate in Shenzhen was 2.6%, higher than Beijing ’s 0.4% and Shanghai ’s 1.4%, Guangzhou’s -0.3%; office building rents in Shenzhen decreased by 3%, a larger decline than Beijing’s 1.3%, Shanghai and Guangzhou’s 0.6%. ^[3]

Summary from the above, it can be seen that the problem of the Shenzhen property market is basically not a shortage of land, but a serious structural imbalance caused by land supply.

Large capitals, real estate developers, and investors dare to speculate on the Shenzhen property market because of such a serious supply conflict in Shenzhen. Only under the great epidemic will Shenzhen luxury homes become the target of national capital hedging.

02. The root problem of Shenzhen cities: power-law cities with middle class collapsed

Shenzhen ’s structural imbalance in land supply is weakening the city ’s population attractiveness and is changing the city ’s industrial structure and competitiveness.

I am in Shenzhen, what should I do? In the book, the “land determinism” of classical political economist Richard Cantillon is used. He once pointed out in his famous “Introduction to the Nature of Business”: “Land owners determine the population and market price of a country.”

Shenzhen ’s land policy now determines the future of the city, and also affects the future of the city and thousands of homesCourt life.

The unbalanced supply of land is pushing Shenzhen into a power-law city-polarization of wealth, hollowing out of the middle class, aggravating class solidification, and obstruction of promotion channels.

Picture: Shenzhen ’s housing supply structure is “power-law type”, source: Zhibenshe

Shenzhen’s “more ecological land, more industrial land, less residential land” land supply, resulting in a “power-law type” housing structure: ordinary commercial housing stock, small increments, more urban villages and factory dormitory; commercial housing The rate is extremely low, and most of the rented houses, especially those in villages in the city.

According to data released by the Shenzhen Municipal Planning and Land Resources Commission, the total number of housing in Shenzhen in 2018 was 10.65 million. Based on the management population of 20 million in Shenzhen, 10 million housing units are sufficient to meet the demand. However, the structural contradictions of stock housing are outstanding.

Among these 10.65 million housing units, villages in urban areas account for 5.1 million units, industrial districts have 1.83 million dormitory units, commercial housing is only 1.81 million units, affordable housing is only 430,000 units, and units are self-built. 550,000 sets, hotels and other 930,000 sets.

Picture: Shenzhen Stock House Structure, Source: Shenzhen Planning and Land Resources Committee

Total dormitory of housing and industrial zone in urban village is 693Ten thousand sets, accounting for up to 65%, are the most important residential houses in Shenzhen. Commodity housing accounted for only 17%, becoming a scarce commodity.

Because of the insufficient land supply for ordinary residences and the low self-owning rate of housing, the residential mode in Shenzhen is mostly rental. Of these 10.65 million housing units, 7.83 million were rented, accounting for 73.5%. Of the 7.83 million rental houses, 4.9 million were rented in residential houses in the city, and 1.6 million were dormitory supporting in the industrial zone, which accounted for 83% of the total.

So, some people say that Shenzhen is a “wandering city” in a village in the city.

Houses in urban villages belong to small property rights, and the supporting dormitory in the industrial zone belongs to the nature of industrial land. Property rights are restricted and circulation is blocked, so it is impossible to supply housing to the commercial housing market. Only about 25% of the stock houses (commercial housing, self-built houses, etc.) that can be transferred into the market in Shenzhen have led to a very low circulation rate of large-scale stock houses, only about 0.6%, which is far below 4% of the international metropolis . ^[2]

Picture: Power Law City, Source: Zhiben Club

The land supply structure determines the wealth and social structure. Shenzhen’s land supply structure determines that the housing supply structure presents a “power-law type”, and the housing supply “power-law type” determines the city’s wealth and social class structure to present a “power-law type”.

The most typical phenomenon is the collapse of the middle class, falling to the lower middle income class.

Shenzhen has become the most difficult city to buy a house in the country. In April this year, the average price of second-hand housing in Shenzhen was 55,386 yuan per level, of which Nanshan reached 86 thousand per level and Futian reached 77,800 per level. According to data released by the Shenzhen Statistics Bureau, the per capita disposable income of Shenzhen in 2019 is 62,500 yuan.

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Picture: The price-income ratio of cities in the Greater Bay Area in 2018, source: Shell Research Institute

From the perspective of housing price-income ratio, Shenzhen’s housing price-income ratio is 30, which is higher than Hong Kong’s 21 and Guangzhou’s 14, which is the city in the Greater Bay Area and even the country with the most pressure on housing purchases. Most people cannot buy a one-square-meter ordinary house with a year’s income in Shenzhen. Starting in 2015, most people in Shenzhen cannot keep up with house prices. Based on the current average house price and per capita disposable income in Shenzhen, a person needs to work continuously for 100 years before he can afford an ordinary house.

Shenzhen ’s high housing prices have kept most people out of the middle class, and it has also knocked down some of the middle class to the lower middle class.

Look at the elite grassroots. Large-scale ecological land, industrial land, talent housing, and financial assets supported by high housing prices allow the wealthy and social elites to enjoy housing price appreciation, wealth inflation, and industrial investment dividends, while also enjoying forest city and garden city dividends.

High housing prices are forcing Shenzhen to evolve into a power-law society: class solidification, wealth differentiation, the collapse of the middle class, wealth expansion of the elite class, the scale of low-income grassroots, the promotion channel is gradually closed.

Why emphasize the importance of the middle class?

The rise of the middle class is a successful experience of modern world economic development and social progress, and a symbol of a country ’s political and industrial civilization.

After World War II, the global middle class exploded. Large-scale industrial workers, engineers, professional managers, and knowledge workers broke the solidification of the wealth class and were promoted to the middle class.

The proportion of the global middle class population increased from 23.5% in 1950 to 50.2% in 2006, more than half of the world ’s population. In the United States, Japan, the European Union and other countries, the middle class accounts for more than 70% of the total number of households in the whole society, and has developed into an “olive society” with the middle class as the main body.

The huge middle class is the support of social stability, the backbone of economic development and technological innovation, and the main force of market consumption and domestic demand. They have certain cultural knowledge and wealth strength,Balance social forces and promote a virtuous circle of society and economy.

The middle class is easily destroyed by the bubble crisis, especially the real estate and debt crisis.

The 2008 financial crisis caused a large number of middle-class families in Europe and America to go bankrupt. According to data from the Stanford survey, the middle class in the United States suffered heavy losses during the 2008 financial crisis, accounting for about a quarter of total property.

The real estate bubble, debt crisis, and financial crisis have led to the collapse of the middle class, “collectively sinking down”, the wealth of the rich and the rich has not increased, but the gap between the rich and the poor has diverged.

Some people say that when the middle class buys a house, doesn’t their wealth increase on a large scale?

I said in the article “Global Middle Class:” House of Cards “and” Sweeping the House “:” Houses are the wealth of the rich, but the debt of the middle class is the “House of Cards”.

The back of a middle-class property is debt. Liabilities are real, and wealth is only on paper.

According to the survey of the Urban Resident Household Asset and Liability Survey of the People’s Bank of China Survey and Statistics Department: housing loans are the basic component of household liabilities. Among the households with debts, 76.8% of the households have housing loans, and the average household housing loan balance is 389,000 yuan, accounting for 75.9% of the total household debt. ^[4]

Picture: 2019 urban second-hand housing loan transaction ratio, source: Lianjia, Shell Research Institute

Shenzhen ’s home purchase leverage ratio is higher than Beishangguang. According to the data of Lianjia transactions, the proportion of loan transactions in second-hand housing transactions in Shenzhen reached 92.4% in 2018, higher than Beijing’s 77.6% and Shanghai’s 76.3%. The monthly income ratio of Shenzhen is 90%, and the leverage ratio of residents is 82.3%, which is higher than that of Beishangguang.

The middle class almost gathers all of their lifetime wealthIn the middle to real estate, once the housing price collapses, the middle class wealth may become a negative asset. If the middle class is unemployed during the epidemic period or the real estate bubble crisis, the risk of household debt will increase substantially.

Shenzhen ’s high housing prices keep most people out of the middle class gate, knocking down some middle class people into a “high debt, low consumption, low happiness index” living environment, pushing the city to a power-law city .

03. The root problem of Shenzhen ’s transformation: a people-oriented olive society

The greatest harm of power-law society is class solidification, narrow promotion channels, a large number of people stay in the middle and low income class, and even fall into the “poverty trap”. (See “ Poverty trap: How hard is it for the poor to turn over? “)

In Shenzhen, there are two types of people:

One is the “Three Great Gods” in Longhua District (without derogation).

In Shenzhen Longhua, there are a group of temporary workers around the Sanhe talent market. These post-90s young people usually work for a day or two, paying two or three hundred wages a day, and then spending a few days in the Internet cafe, eating instant noodles, playing games, and sleeping in the Internet cafe. When the wages are spent, they “go out of the mountain” again and do a day or two of work. After receiving the wages, they will go to the Internet cafe.

Their lives are locked in a “poverty trap” in a vicious circle, and high housing prices are the heavy iron locks. The house is the uneasy complex rooted in the heart of the city, and the urge to change destiny. However, once house prices rose to a level that made them difficult to reach, they lost their fighting spirit and even the courage to live a normal life.

The second is the digital currency speculators in Nanshan District (no derogation).

In Nanshan District, Shenzhen, you may have met another group of post-90s youths. Unlike the “Three Great Gods”, they are full of passion and fighting spirit, eloquent, and occasionally change. They are a group of digital currency speculators.

High housing prices in Shenzhen have raised the standard of changing fate to a considerable height. This group of young people are reluctant to be industrial workers.

It is worth noting that many people define middle class as white-collar workers, technical engineers, and professional managers. In fact, a lot of middle class was born in the last century by industrial workers, such as the cars in the Great Lakes region of the United States in the 1950s and 1960sWorkers, industrial workers in the Wong Tai Sin Industrial Zone in Hong Kong in the 1970s and 1980s.

Hong Kong ’s middle class starts in the Wong Tai Sin Industrial Park under the Lion Rock. In the 1970s, 90,000 low-income people lived in squatter areas, most of whom were immigrants and non-original residents. The Hong Kong government implements a “resistance policy” to attract immigrants to work in the Wong Tai Sin Industrial Zone.

By the third quarter of 1980, Wong Tai Sin Industrial Zone workers opened 3,634 factories and employed 91,036 employees, most of whom were from squatter areas.

In 1972, the 1971 Hong Kong Annual Report published by the Hong Kong government showed: “Hong Kong seems to have an increasingly prosperous society, and the middle class is becoming larger and larger, and its situation is no different from other advanced countries.” ^[5]

In the wave of industrialization in Hong Kong, they firmly believed that “three days are destined, seven points depend on hard work”, hard work, hard work, improved their family, promoted to the middle class, and really worked out the indomitable Hong Kong spirit And the glory of “Oriental Pearl”. The middle class dream of this group of industrial workers has become the best footnote for the spirit of Lion Rock. (See “Hong Kong Past Events | One Person, One City” for details)

At that time, Mobil New Village in Lai Chi Kok, Kowloon, Hong Kong became the home of the first generation of middle-class people in Hong Kong. With a house, the middle class is the real owner of the city.

However, the Hong Kong people ’s middle-class dream ended in the Asian financial turmoil in 1997, and many middle-class properties have become negative assets. Today, Hong Kong’s high housing prices are blocking the advancement of Hong Kong’s social class.

Every city seems to have a “Mobil New Village” with a middle class representation. However, Shenzhen does not. The middle class in Shenzhen has not yet grown up, and a large number of industrial workers have not really known the city. The house prices in the city have risen to a level where they can hardly expect.

The behavior of these two types of youth may be extreme but representative. More people may choose to leave because of the city ’s housing prices.

I am worried that this epidemic will become the inflection point of Shenzhen’s population inflow, and may also become the inflection point of Shenzhen’s urban competitiveness. Although Shenzhen has been the most attractive city in the country for the past few years, there are signs that more and more people are fleeing Shenzhen:

In 2019, Shenzhen ’s newly increased urban population was only 410,000, a year-on-year decrease of 150,000, which is less than Guangzhou ’s 437,000.

In 2019, the number of Shenzhen mobile network users fell off a cliff, from 29.04 million in 2018 to 25.18 million, and 4.24 million users disappeared in one year.

From 2008 to 2018, the growth rate of the number of primary school students in Shenzhen reached 75.5%, much higher than that of Beishangguang. However, in 2019, the enrollment of primary school students in Shenzhen actually showed a negative growth (-1.1%), and the enrollment of kindergartens fell by 7.1%.

During this year ’s epidemic, there have been three small peaks in “escape from Shenzhen” on the WeChat index, most notably in April. A group of deep drifters are subletting and leaving rental houses to leave Shenzhen.

Picture: WeChat index of “escape from Shenzhen”, source: WeChat index, Zhiben News Agency

According to data from the Ministry of Human Resources and Social Security, as of March 19, about 25-30 million migrant workers have not returned to the city. Some studies believe that 50 million migrant workers have not returned to the city. Among them, how many are in Shenzhen? After May 1st, can you come back for a part?

The impact of this epidemic on Shenzhen may be greater than Shanghai, Guangzhou and other first-tier cities (Beijing is affected by the particularity of the isolation policy).

Under the epidemic, foreign trade was blocked, and Shenzhen ’s pillar industries ’foreign trade, export manufacturing, and international logistics suffered. The Shenzhen economy ’s foreign dependency reached 110.6%, much higher than Shanghai ’s 89.2%, Beijing ’s 81% and Guangzhou ’s 42.3%.

Foreign trade is blocked, investment is inefficient, and domestic demand seems to be the only growth driver. However, Shenzhen’s middle class is weak, middle class consumption is squeezed by housing prices, and domestic demand in the city is suppressed. The annual total consumption per capita accounts for only 27% of GDP per capita, far below 41% in Beijing, 39% in Shanghai, and 44% in Guangzhou.

The huge middle class can provide a strong domestic demand momentum, and the US consumer contribution to economic growth averages over 70%. China, especially Shenzhen, has insufficient consumption of middle class and the economic system cannot generate sustainable growth of internal circulation and endogenous power.

How to break the game?

Only put forward correctlyQuestion, we can find the answer in the right direction.

We return to the original point, starting from the land supply in Shenzhen, put forward good problems, and then solve the problems.

On April 28, the leaders of the Shenzhen Housing and Construction Bureau stated that Shenzhen has many measures to solve the problem of housing prices, such as levying high taxes on high housing prices in the transaction process and introducing real estate taxes. Price, loan limit, sale limit, and household limit) control measures and increase supply.

These are good answers, but our question is wrong. Answering the wrong question correctly will make it worse. For example, with regard to the price limit for new houses, Shenzhen’s new houses are tens of thousands lower than second-hand houses, which instead attracted funds to flood into buying without hesitation. In this way, the more regulation, the more distortion.

The root problem of Shenzhen is not high housing prices, but the structural imbalance of land supply. Starting from this correct question, the answer is nothing more than a question of ability, not a question of direction.

This article is related to “Shenzhen, what should I do?” “, There is not much change in the main body of the content, but why should it be written?

This year is the last year of the “Thirteenth Five-Year Plan”, the last year of the “Thirteenth Five-Year Plan for Urban Construction and Land Use (2016-2020)”.

Now facing the most critical situation in the past 40 years of reform and opening up, Shenzhen is formulating the “14th Five-Year Plan”. It is strongly recommended that government departments can reverse the land planning problems in the 13th Five-Year Plan:

First, re-evaluate scientifically and determine the basic ecological control line (not less than 974 square kilometers).