The truth about Chinese real estate

"House prices are not determined by the average income of the Bureau of Statistics. It's the average income of the elite.

For the sake of analysis, we strip away the social attributes of commercial housing (note: only commercial housing, not housing) and first treat it as a commodity. Commodities have their own internal laws.

What determines the price, the value of a commodity? I'm sorry. I can only say that you are stupid at school.

It's supply and demand, only supply and demand.

We judge that the commercial housing in the urban area of a core city has enough scarcity.

If you work in Beijing's Haidian district, even if you own a 1,000 square meter apartment in Shanhaiguan, it will not replace your desire to live in the suburbs of Beijing. Regardless of whether you rent, distribute or buy a house, as long as you still work in Haidian District, you must live within the suburbs of Beijing.

Let's say you don't make enough money and you need to rent a house to get to work. The distance to work and the quality of your living depend on the rent you are willing to pay.

Assuming you have enough money to buy a house, I believe you would prefer to buy a house because you can have the equity in the house and the income from the appreciation of the property. The size, quality, and proximity of the house you buy depends on the money you have and your expectations of future income.

The problem of buying a house is much like the problem of going to school in China, and it is almost the same.

If there is a key high school near your home, the teaching quality is very good, and the probability of getting into college is very high, and the other schools are not ideal, you must want your children to attend this key high school anyway.

Why go to a key middle school? If we simply strip away the influence of other social factors, we can think that if we want to go to key middle schools, we must rely on good grades, and children can go to key middle schools if they try to get in the top number.

This is the same as trying to make money to buy a house, rich people can pay a high price to buy a good location and environment of the house.

We then add the influence of social factors, for example, a big man saw that the middle school was very popular and could earn a lot of money, so he designed extra points, who gave himself more money, he gave extra points, so children to key middle schools not only to get high scores, but also to send money extra points.

Similarly, when the commodity housing in a good location becomes a scarce resource, the emergence of various types of tenants is inevitable.

If the behavior of churning out tenants and adding high prices to the final tenants will create a bubble, then should the high school selection fees of key primary schools and public kindergartens also be called a bubble?

Although it is sad that real estate speculation and price increases in public kindergartens have become common social phenomena, they exist independently of the will of the needy and have nothing to do with bubbles.

The two things most commonly mentioned in relation to bubbles are:

First, the housing price in China is even higher than that in some developed countries.

In fact, as we all know: not only the housing price is higher than some developed countries, oil, high-speed, education, health care, taxes and other expenses are much higher than some developed countries.

In addition, although the proportion of the elite population in China is not large, the absolute number is large enough, and the average income of the elite is even much higher than that of some developed countries.

In the next 10 years, it will rise, from the first 10 years to the next 10 years, according to the speed of economic and technological development. The rise may be steeper than before.

Second, the ratio of rent to sales

There is no need to overexplain the problem. The only way to make the ratio more reasonable is not to lower house prices. There is a more reliable way: a sharp rise in rents. And it's already happening. It is as impossible for rents to stay low for long as it was for Hetian jade to stay low for long before 1990.

3. Rising house prices cause rising prices and make people's lives difficult.

In fact, this issue does not need to be explained much, and those who understand economics will naturally understand it, and will not be easily fooled, and those who do not understand will not understand it for a long time.

To put it simply, rising prices are the result of an overheated economy printing too much money. Real estate, because of its scarcity and easy preservation, attracts more money, so it absorbs a lot of money, so that everyone only sees the skyrocketing real estate.

In fact, if the transaction volume of real estate declines and it no longer has the function of attracting money, then necessities such as agricultural products and housing rents will rise sharply. That's because the extra money had to go somewhere, and if it wasn't absorbed by real estate, it was absorbed by the rise in garlic, mung beans, ginger, and all the necessities of life

And so it turned out. After the real estate regulation in 2010, the momentum of price rise is very fast.

So is there no real estate bubble?

No one knows this question, because the government has not yet produced an authoritative figure to show whether the real estate bubble or not.

However, when housing prices are high, there are risks, and the government has a clear understanding of this from an emotional perspective.

Mind you, we've been talking a lot before, and we're only starting to get closer to the truth.