This paper will give a very interesting perspective: the ratio of the annual surplus of income and expenditure of urban residents to their average local house prices.
Ladies and gentlemen, the surplus of income and expenditure of urban residents, that is, the surplus of disposable income after deducting the necessary consumption expenditure, is the source of funds that residents can use to buy a house. The higher the ratio of the surplus of income and expenditure relative to the house price, the less difficult it is for the residents to purchase a house, and the annual surplus can purchase a larger house, then the higher the security of the house price in the city.
Even for those cities where investment or even speculation is the main purpose of Home purchase, measuring the ratio between the surplus of income and expenditure and the house price is still very important for reference. This is because investors or speculators, they eventually have to sell their houses to local permanent residents. If the house price security index is too low, it means that in the short term they can’t sell their houses at all, which is of course a very dangerous thing. Once the risk of a break in the capital chain of this group of speculators arises, then such cities that depend on speculation will plunge into a plummeting situation overnight.
In the following elaboration, I will distinguish between first-, second- and third-tier cities to talk about them separately. These different levels of cities have completely different residents’ income and expenditures, and their tolerance level for housing prices is completely different, so they cannot be put together for comparison.
One
First of all, the situation of 8 first-tier and quasi-first-tier cities is given, and note the interval given by the bold red line below, which is the median house price safety index of quasi-first-tier cities: 0.7. Here I also need to emphasize that the median safety index is not an absolute safety concept, it is only a relative concept. China’s current housing prices are not safe on the whole, and the correct understanding of this median should be: the dividing line between unsafe and even less safe.
House price safety index for 2019 in first-tier and quasi-first-tier cities
Quasi-Tier 1 cities above the median house price safety line of 0.7 include Suzhou, Nanjing, Guangzhou and Hangzhou. Note that these four cities are also among the quasi-first-tier cities and above that can still achieve second CDs, which have been bursting with news of thousands of people grabbing houses from Time to time in the past two years. As for Beijing, Shanghai and Tianjin, the real estate market has been in a cold state for a long time, Beijing and Tianjin’s housing prices have fallen for three years in a row. These seven cities are not controversial. Incidentally, Tianjin’s urban surplus level is only 11,000, which is ridiculously low, equivalent to a third-tier city and not at all comparable to other true quasi-first-tier cities. Tianjin has no decent industry after the complete withdrawal of Samsung, so its residents can’t earn money and certainly can’t afford the housing prices. This can’t be helped.
The only controversial is Shenzhen. Shenzhen’s house prices do not exceed those of Guangzhou, even Shanghai and Beijing, but Shenzhen in the surplus of income and expenditure data can not see where to go, only 19,400, in the eight quasi-first-tier cities ranked second to last. This situation has led to a ridiculously low house price security index of 0.36, yet Shenzhen’s real estate market performance is different from that of Beijing, Shanghai and Tianjin, which are also in the lower half of the security index. It is true that those properties in northern Shenzhen that rely on local consumption power for their immediate needs have lost their gains in the last two years, but their luxury properties with sea views in the central city have seen a continuous surge in prices in the last two years. For this situation, the only explanation is that the luxury property market in Shenzhen has seen a massive replenishment of foreign funds. Combined with the actual situation, in recent years, Shenzhen luxury residential market sources of funds are the following three categories: 1, next door Chaoshan area smugglers have no place to spend their money, can only buy luxury homes in Shenzhen; 2, the mainland and Hong Kong relations after the fallout, some Hong Kong drifters returned to Shenzhen to buy luxury homes to settle; 3, speculation party to take business loans to follow the wind speculation. These three situations are unlikely to last, and once these three elements disappear, to the extent that the danger of Shenzhen house prices, the probability will usher in a wave of bloodshed.
Two
After looking at the situation above the quasi-first-tier, the next is the situation of 21 second-tier cities (second-tier cities are defined as the capital cities of the central and western provinces as well as the economically developed cities in the east), which is also the most representative situation. The number of second-tier cities is too large, so I will pick four representative cities above and below the median line respectively to come out as examples to illustrate.
House price safety index for second-tier cities in 2019
The median house price security index for second-tier cities is 1.25. Among the cities above the median line, Changzhou, Quanzhou and Ningbo, which I often spare no effort to praise, have a developed private economy and good house price control, so the house price security index is relatively very high. Especially Changzhou and Ningbo, urban residents’ surplus income and expenditure levels exceed 26,000, which has fully reached the level of first-tier cities, leaving other second-tier cities far behind. Changsha’s play is a brutal house price control, which directly stipulates the selling price of the whole property when the land is granted, a planned economy-style management model that simply ignores the so-called own market rules. In this case, the city’s average price in Changsha is less than 9,000 yuan, which is considered the lowest price among almost all provincial capital cities in China. Combined, Changzhou, Quanzhou, Changsha and Ningbo are also considered relatively safer cities in terms of house prices among second-tier cities.
As for the four negative examples, Fujian has Fuzhou and Xiamen, Hainan’s Haikou, plus Guangdong’s Zhuhai. These four typical have actually been nationally known. Fuzhou and Xiamen do not know how many real estate developers have pitted, the entire real estate industry in Fujian can not earn money, only the problem of losing more or less. Min real estate developers have always had problems in the past two years, struggling on the edge of bankruptcy, which is not unconnected with the overall flutter of the real estate market in these two cities. The real estate market in Hainan is speculated to the sky by the northeast revitalization funds as a whole, which does not need much explanation. The good thing is that the northeasterners do not particularly like Haikou because it is actually quite cold in winter, so the price of Haikou is also far from the income level of its local residents, but it is not as outrageous as Sanya, which will be talked about in the next section. In the case of Zhuhai, it is the result of the combined efforts of new immigrants from the northwest + northeast to speculate. Note that these new immigrants are different from the wintering pensioners who go to Hainan, they will really move their families to Zhuhai and settle there permanently. Zhuhai’s sea is actually gray and dark, and the blue sky and blue sea have nothing to do with the winter is also cold, I do not know what the big brothers in Zhuhai to buy a sea view house is a figure. In order to be able to go near to Macau to play a baccarat? Well, I personally really can’t understand the mentality of these northerners, so let’s do it.
three
Next is the situation in the 13 third-tier and below cities. The median index of house price security in cities below the third tier is 1.42.
No more examples of cities below the third tier, so let’s say one end and one tail. At the top of the list is Guilin, the most famous tourist city in the country, no one. 2019 Guilin received 138 million domestic and foreign tourists, while Hainan province only had 83.14 million, which is only 60% of the size of Guilin’s visitors in one city. Guilin’s housing prices have not gone up much decently for many years, and the long term is 8,000 to the dollar. Guilin Zheng never encouraged foreigners to buy houses, the city center also does not encourage the demolition, but also do not build high-rise buildings (old city height limit of 24 meters, the new city height limit of 65 meters), this thing is really no place to say reason. As a result of this, Guilin is the third-tier city I know, the highest level of comfort in Life, no one. No high prices to raise the city’s operating costs, so the people of Guilin can enjoy the extremely low cost of living so far – in the local eat a bowl of Guilin rice noodles, six dollars on the meat and vegetables and eggs, simply so foreign tourists can not understand.
Last in line is Sanya, the city with the largest housing price bubble in the country, there is no one. Northeast revitalization, Sanya house prices to rise once; Hainan revitalization, Sanya house prices also want to rise once, up and up, up to the sky. The only market value point of this city is for the northeastern rich class to retire, but Sanya’s basic support is actually poor as hell. According to Sanya’s statistical yearbook, as of the end of 2019, there were only 2,409 doctors and 5,159 hospital beds in the city. What is the concept of such data?In 2019 Guilin has 12,600 doctors and 24,600 hospital beds. I don’t even bother to count how many times Guilin’s infrastructure support is better than Sanya’s. So I personally really can’t understand, northeasterners go to Sanya retirement in the end what is the figure? The blue sky and blue sea are really there, but nothing else, and within the life expectancy of this generation of elderly people, any support is unlikely to be perfect.
At the end of this article, I must issue a solemn statement to you: this article does not constitute any investment advice. Although this article does screen out some cities where prices are not really speculated, but – please note the but – these cities are not speculated for a variety of reasons, such as strong government intervention, such as urban planning control, such as the development of the private economy so that capital has a go. For example, the private economy is well developed so there is a place for the money to go, and so on and so forth. These reasons have curbed the rise in prices in the cities before, and if nothing else, will continue to take effect afterwards. Under these reasons, the only benefit, of course, is the local residents.
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