Many industry insiders pin their hopes for the foundation engineering industry to recover from its downturn on a real estate revival, but this is unnecessary and unrealistic. Data shows that the National Real Estate Climate Index, which comprehensively reflects the development of China's real estate industry, was 94.30 in November, continuing to fall by 0.46 points from the previous month and hitting a historical low. Ren Zhiqiang, former chairman of Huayuan Group, said that since the index was established, the real estate industry has experienced two troughs in 2008 and 2012, and it still has not stopped, and is continuing to decline.
Real estate investment growth has fallen to single digits for three consecutive months. With land purchases and new construction continuing to decline, the growth rate will soon drop to zero. The state has taken no monetary policy actions to support the market, and the real estate market is expected to continue to decline next year.
In the past two years, as the real estate industry, a pillar industry of the country, has continued to slump, the entire economy has slid. Just as there are bearish and bullish factions in the stock market, there are also two voices on the prospects of real estate development: bearish and bullish. The bullish faction believes that the state will not let the real estate pillar collapse and will certainly adopt corresponding stimulus policies to save the market. They cite many local governments that have canceled purchase restrictions and provided preferential measures in mortgages, among other things, to support their argument. They also emphasize that young Chinese people need to get married, and housing is a rigid demand; after a little wait-and-see, they will automatically join the ranks of home buyers. The bearish faction points out that real estate prices are high and have formed a serious bubble. If not curbed, the entire national economy will face a huge threat. On a large scale, Japan in the 1990s saw the bursting of its real estate bubble, which led to a prolonged economic slump whose effects have not yet been eliminated. On a smaller scale, the example of the "ghost city" Ordos vividly illustrates this. There, the market is depressed, the economy has regressed, resources are massively wasted, and the consequences are shocking. Looking at the problem dialectically, everything has both positive and negative sides. After more than a decade of rapid growth, real estate should indeed take a break; things reverse when they reach an extreme. Otherwise, there will be major trouble, and the central leadership will not fail to see the huge potential risks. The real estate bubble blown up by the previous two governments will not be willingly inflated further by this government and then danced upon. I believe everyone knows the dark secrets behind real estate. Why are local governments so corrupt? Why do they dare to forcibly demolish people's houses in the middle of the night? Because these local emperors are behind it, directing and backing them. These local officials collude with real estate developers to drive up land prices and housing prices, swindling and robbing the hard-earned savings of ordinary people accumulated over generations in an instant, and then they divide the spoils on the spot and make huge fortunes. Do you want this phenomenon to continue? Do you want yourself and your family to become lambs to the slaughter in their hands? Then I advise everyone not to buy a house, at least not now. The central government intends to squeeze out the bubble, including the current anti-corruption campaign, which itself has this effect. Count how many officials who have fallen were not involved in real estate corruption? Now local officials are anxious. Although they have lined their own pockets, they have burdened the government with heavy debts. According to the National Audit Office, as of the end of last year, excluding 54 county-level governments without government debt, the outstanding government debt of local governments at the provincial, municipal, and county levels totaled 10.7 trillion yuan. Among them, the government debt of financing platform companies was 4.97 trillion yuan, accounting for 46.38%. How can such a large amount of local debt be repaid? Should we ordinary people buy houses to help them repay it? Everyone will surely say: No. The central government certainly will not help them repay it, but it will not let them go bankrupt either. Recently, the central government issued a policy allowing local governments to issue bonds, which is estimated to alleviate the debt pressure on local governments to some extent.