Fangchenggang, a coastal city in southern Guangxi, was once a hot spot for real estate speculators. Zhou Ming still remembers the grand occasion of Fangchenggang in 2018: At the end of April that year, Hainan issued the most stringent property market regulation policy in the country, “Global Purchase Restriction”. After that, Fangchenggang’s property market seemed to have been shot with a “cardiac”. Over the past few days, house prices have soared, from an average price of 4,000 to 5,000 yuan per square meter to 9,000 yuan per square meter.
“Shenzhen’s yesterday is Fangchenggang’s today, and Shenzhen’s today is the future of Fangchenggang.” The once slightly exaggerated marketing advertisements stimulated groups of people to snap up, reflecting Fangchenggang’s current almost halved housing prices and cliff-like style The falling sales are particularly ironic.
According to the monthly inventory report of 100 cities released by CRIC, as of May 20, the demolition cycle of commercial housing in Fangchenggang City, Guangxi was as high as 152 months. Based on this calculation, it will take 12 years and 7 months to sell the inventory without building new houses.
Fangchenggang has become the city with the longest commercial housing demolition cycle in the country.
The myth of the property market
Fangchenggang’s property market is like a roller coaster. At the beginning of the rise in housing prices, it was not purely a “mirage” without foundation.
Fangchenggang is connected to ASEAN countries by land and sea, and it is the most convenient land and sea gateway for China’s inland hinterland to enter ASEAN countries. With the acceleration of the construction of the China-ASEAN Free Trade Area, the cooperation and development of the Pan Beibu Gulf regional economy, and the opening and development of the Guangxi Beibu Gulf Economic Zone, the location advantage here has been continuously improved.
Aerial photography of Dongxing City, Fangchenggang.Figure / Figure Worm Creative
The global purchase restriction in Hainan in 2018 has brought new opportunities for development here. Overnight, a large number of real estate agencies, channel sales, and real estate speculators turned their attention to the small cities of Guangxi Beihai and Fangchenggang across the sea.
Compared with the house price of tens of thousands of square meters in Sanya at that time, Fangchenggang was only four or five thousand square meters at that time, which seems to be more able to satisfy some people’s “sea living dream”.
That year, the State Council also approved the establishment of the Guangxi Fangchenggang Border Tourism Pilot Zone.
Wu Ning, the founder of Guangxi Guitu Technology and a senior real estate researcher, told China News Weekly that, stimulated by a series of favorable factors, the Fangchenggang property market was quite hot in 2018. The land sale price and floor price broke records for many times, and the real estate market and land volume were realized. Prices go up.
Data from Guoxin Real Estate Information Network shows that in 2017, the land transfer area of Fangchenggang was 3.53 million square meters, which nearly doubled to 6.89 million square meters in 2018.
At that time, walking on the commercial street of Fangchenggang, there were more than ten real estate agency facades, and there were many shops related to the property market, such as decoration, decoration, house trusteeship, building materials, etc. A real picture of that time.
At the same time, the stories of buyers from Northeast China, Jiangsu, Zhejiang, Shanxi and other places buying one-storey shops or more than a dozen houses at one time is almost something that many Fangchenggang real estate sales staff have heard or experienced.
Such a housing boom has created the once-popular “Fangchenggang Free Day Tour” tour group. In addition to visiting the top attractions in Fangchenggang, such as Bailang Beach and Shijiao Mangrove Reserve, the tour group can also taste local specialties and sometimes even give free small gifts.
However, in the process of playing, I took a look at a few real estates by the way, and visited the model room, which has become a customary sales routine in the local real estate agency circle. Although the cost of going all the way is high, as long as one customer in a group can place an order, then basically you can make a steady profit without losing money.
At that time, there were media reports that some MLM organizations, in the name of “one-day tours for house inspections”, trumpeted the development potential of the Beibu Gulf Economic Zone and the investment potential of the Fangchenggang real estate market, enticing foreign tourists who did not have a deep understanding of the local situation to buy houses. , and enter into illegal organizations such as pyramid schemes.
Of course, pyramid schemes cannot create such a huge myth of the property market. Fangchenggang’s eye-catching hot sales data are mainly from a steady stream of foreign real estate speculators.
According to the statistics of Fangchenggang Real Estate Network, in 2018, Fangchenggang City (including the port area, Fangcheng District, and Dongxing City) sold a total of 48,486 sets of commercial housing, an increase of 85.46% compared with 2017.
Zhou Ming told China News Weekly that as long as he walked in Fangchenggang City in those years, there were real estates under development and construction everywhere, and the tall tower cranes were integrated with the city’s skyline. The scene has been replaced by a large number of unfinished buildings and vacant houses.”
heavily reliant on export
In Fangchenggang’s property market myth, the “role” of “channel sales” is indispensable.
Fangchenggang has jurisdiction over the port area, Fangcheng District, Dongxing City and Shangsi County. Among them, Fangcheng District is the old city, mostly inhabited by locals, and the port area is the new area, and the newly built buildings are mainly concentrated in this area.
Zhao Feng, the person in charge of a real estate project in Fangchenggang City, told China News Weekly that most of the buyers in the port area are from other places, and the export sales are close to 90%. point”.
Wu Ning also mentioned that among the several cities in Beibu Gulf, Fangchenggang has always given the highest commission to the channel.
Take a house of 80 square meters with a total price of 400,000 yuan as an example. If the rebate is 1,000 yuan per square meter, the cost of nearly 80,000 yuan will be paid to the channel side.
Yan Yuejin, research director of the Think Tank Center of the E-House Research Institute, told China News Weekly that although Fangchenggang has experienced a “small leap forward” in the property market due to the superposition of many favorable factors in the past few years, the shortcomings here have always been obvious.
As a small border town with a permanent population of just over 1 million, Fangchenggang has low demand for local housing purchases, and its own size is not enough to support this housing price, so it relies heavily on export sales.
The high cost of acquiring customers has also damaged the ecology of the local property market to a certain extent. “It is necessary to find a needle in a haystack to find customers from all over the country. The round-trip air tickets, accommodation and reception are not a small sum.” Yan Yuejin said.
Image source: Crane Data System
The epidemic is considered to be the “last straw” to overwhelm the Fangchenggang property market.
According to the CRIC data system, in 2019, the transaction area of commercial housing in Fangchenggang was 2,460,700 square meters, while in 2020 it was only 1,356,000 square meters, almost halving; by 2021, it will drop to 930,600 square meters, and the transaction area will further decline.
Fangchenggang is located at the most southwestern end of the mainland coastline, and Dongxing City under its jurisdiction directly borders Vietnam. This makes Fangchenggang’s border trade, fishery and tourism flourish, and it also makes the city face a severe epidemic prevention and import test.
Most of the outbreaks found in Dongxing City point to contact with foreign personnel or foreign objects.
Since late February this year, Dongxing has started a three-month epidemic containment and control management, and has attracted widespread attention because of the long-term containment and control. But when everyone thought that this round of epidemic would enter the final stage at the end of May, the epidemic made a comeback on May 31.
Zhao Feng’s guests are mainly from the northeast and northwest regions. The severe epidemic situation and the high cost of isolation have discouraged the vast majority of non-local home buyers.
Since the beginning of this year, the number of visits to their properties in Fangchenggang has dropped by 85%, the transaction volume has dropped by 70%, and the price of the properties sold has fallen below 5,000 yuan per square meter, close to the market price in 2018.
In addition, as an emerging city, Fangchenggang has not formed a relatively concentrated living area, and most of its buildings are scattered, making it difficult to form a systematic and comprehensive new ecology.
In the 2022 Fangchenggang government work report, it is mentioned that some historical problems such as the current real estate field need to be solved quickly, which is still one of the main difficulties facing Fangchenggang.
“Injury is inevitable”
According to data released by the National Bureau of Statistics on May 16, at the end of April this year, the area of commercial housing for sale in my country was 557.35 million square meters, a year-on-year increase of 8.4%. Among them, the residential area for sale increased by 14.8%. In April, my country’s real estate development prosperity index (referred to as the national housing prosperity index) was 95.89.
Under normal circumstances, the national housing climate index of 100 points is the most suitable level of prosperity, between 95 and 105 points is a moderate level of prosperity, and below 95 is a lower level of prosperity.
In such a depressed environment, coupled with the severe epidemic prevention and control situation in Fangchenggang, the pressure on local commercial housing to de-escalate can be imagined.
On March 20, Guangxi lowered the down payment ratio of housing loans in some cities. Among them, the minimum down payment ratio of commercial loans for the first purchase of ordinary commercial housing in Beihai and Fangchenggang was adjusted from 25% to 20%, which further lowered the threshold for residents to purchase houses and supported the commercial housing market to better satisfy The reasonable housing needs of home buyers.
However, judging from the transaction data, the policy has not achieved the expected effect. Wu Ning said that after the epidemic is over, the local property market will recover to some extent, but “it’s unavoidable”.
However, Wu Ning, who has been concerned about the Fangchenggang property market for a long time, believes that this data is not for reference.
“When the transaction volume is low, even if the inventory is not very high, the detoxification cycle will be very long.” Wu Ning explained. He believes that the current inventory area of 2,457,500 square meters in Fangchenggang is not much. It is only due to the cliff-like decline in transaction volume caused by the epidemic control in the first half of the year that the data based on this base will appear so exaggerated.
“After the epidemic has passed and the transaction volume has recovered, even if it is difficult to return to the heyday, the de-chemical cycle of Fangchenggang is estimated to take two or three years.” He said.
Zhao Feng believes that there was a certain bubble in Fangchenggang’s housing prices in the past, but with the gradual maturity and regulation of the market, this part of the bubble has been gradually compressed and gradually become more rational.
However, Fangchenggang has to work hard to recover its vitality. After all, the myth that the property market only rises and does not fall has long been shattered. Under the keynote of housing and housing, the decline in fertility and the slump in the consumer market have hit a certain extent. Buyers are enthusiastic.
Yan Yuejin said that Fangchenggang could further increase its publicity and vigorously develop the tourism industry. At the same time, the policy support and infrastructure construction of Fangchenggang City should be strengthened to increase the city’s attractiveness.
Fangchenggang is located on the southwestern frontier, and it is difficult to compete with first- and second-tier cities in terms of helping enterprises to bail out and optimize the business environment, Yan Yuejin said. He suggested that the local government should introduce targeted policies to support the property market.
(Original title: “The house price in this coastal city has been cut in half, and the inventory will not be sold for 12 years?”)
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