A well-known fund manager: Domestic housing prices will hit bottom.
Transcribed from a friend's oral account, the main points are as follows:
In all countries globally, housing prices have adjusted for 20 quarters, with a decline of 40%. China has now experienced 18 quarters of decline, with a drop of nearly 40%.
Even in third and fourth-tier countries like South Africa and Spain, when looking at the long-term cycle, real estate has outperformed inflation—especially in core areas.
New housing supply has decreased by 95%, while the number of second-hand homes listed continues to rise. The last wave of buyers can no longer hold on. However, a turning point has emerged, with a significant increase in second-hand home transactions, while prices have clearly decreased in volume.
The rent-to-sale ratio, when calculated based on the interest of operating loans, has already inverted. The government may directly use bank funds to buy houses for rent and rescue the market—how much further prices can drop in various regions can be referenced against the rent-to-sale ratio, similar to how prices in investments will eventually align with value. If the rent of a house is more expensive than the monthly mortgage payment, more people will choose to buy homes.
Major cities will exhibit a significant siphoning effect, especially with a general economic downturn and declining birth rates.
Population decline and economic downturn are unrelated to the trends in core area real estate. The top-tier properties are determined by 5% of the population, while quality properties in core areas are determined by 20% of the middle class.
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