After another year of housing price adjustments, we have witnessed a comprehensive shift in macro policies targeting the real estate market. So, where is the domestic real estate market in its current cycle, and how should ordinary people respond?

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Will the comprehensive shift in macro policies immediately put real estate back on an upward trajectory?

The first measure in the latest round of central bank policies is the reduction of down payments. The down payment ratio for the first home has been lowered to 15%, and for the second home to 25%. A 15% down payment is an absolute historical low; previously, in the supportive policies of 2008 and 2015, the minimum down payment for the first home was only 20%.

Secondly, the interest rate for personal housing provident fund loans for the first home has been reduced to 2.85%, and for the second home to 3.325%. The lower limit of commercial personal housing loan interest rate policies for the first and second homes has been abolished.

The reduction in mortgage interest rates directly lowers the cost for homebuyers. The abolition of the lower limit for commercial loans means that commercial banks can set their own prices and compete in the market. It is highly likely that mortgage interest rates will continue to trend downward.

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The biggest highlight in the new measures is actually the central bank's announcement to establish a 300 billion yuan re-lending facility for affordable housing, supporting local state-owned enterprises to purchase inventory commercial housing for use as affordable and low-rent housing. This indicates that the "national team" is personally entering the market to buy homes. Although the total scale of 300 billion yuan is not large, the potential for increasing efforts in the future is immense.

The comprehensive support from macro policies indicates the determination of the central bank and various departments to prop up the market. Since "do not fight against the central bank" is a common sense in investment, there is no need for those who own homes to worry about the collapse of the real estate market. The implementation of various bottoming measures requires a process from quantitative change to qualitative change.

So, should those waiting to buy a home be anxious about the possibility of housing prices soaring again?I believe there is no need for it at all!

Because the factors that have driven the continuous rise in domestic housing prices over the past twenty years, such as rapid economic growth, accelerated urbanization, strong demand for housing improvement, continuous increase in residents' income, and significant room for overall leverage, no longer exist;

Moreover, the actual objective situations such as the decline in the total population, the already high level of housing prices, the no longer bulging wallets of the people, and the optimistic prospects for residents' income are indeed present.

Therefore, it is unrealistic to expect housing prices to quickly return to the upward track, and it is even more difficult to achieve the big and explosive increases that landlords dream of.

I think that after the central bank and various departments coordinate to support the bottom line, the trend of the domestic real estate market will be similar to the trend of the domestic stock market after July 2015.

In early July 2015, after the stock market plummeted, the China Securities Regulatory Commission, the central bank and other departments closely cooperated: interest rate cuts, reserve requirement ratio cuts to release liquidity, relaxation of investor leverage restrictions, and then organized the "national team" such as the Securities Finance Corporation and the Central Huijin Investment to enter the market and buy...

The market was immediately stabilized.

However, due to the still high stock prices and leverage pressure, there were two rounds of downward movements in September 2015 and January 2016, and it was finally stabilized.

The core domestic asset index, the CSI 300, will not return to a high level until 2021. And the prices of non-core assets are getting farther and farther away from the high point, and it is a long way to return to the high point.Should I buy a house? Or not? How should we make the choice?

I believe that the decision to buy or not to buy a house should be based on which choice can better alleviate anxiety. If this is the criterion, then the choice can't be too far off the mark. For instance:

1. For those with a genuine need, only buy if you can afford it

If purchasing a house does not lead to an excessively high debt burden or affect the quality of life, then a home for personal use can be bought at any time if it's affordable. If the mortgage can be easily repaid, there's no need to worry about settling down. Who cares about the ups and downs of housing prices? A "rise" is certainly pleasing, but a "non-rise" is also taken in stride. Regardless of whether housing prices rise or fall in the future, it does not affect the intrinsic use value of the house.

What is there to be anxious about?

Moreover, for those who buy a house for personal use, the current reduction in down payment policies, entry barriers, and loan interest rates has also reduced the holding costs, which is not a bad thing.

2. For real estate investors, "cost-effectiveness" is the key principle

If one can find a property in a core city with a good location, reasonable price, and high rental yield, then investing in real estate can also be an effective part of asset allocation.

It's worth mentioning that the domestic wealthy population is currently heavily (even overly) invested in real estate. Even after the price reductions of the past two years, the rental yield of residential real estate in the country has long been generally below 2%. Therefore, it is advised to be very selective and cautious in allocation, with the following specific principles:

A. Location is crucial. Historical experience tells us that real estate investments in areas with net population inflows carry relatively lower risks and have greater long-term return potential.Taking our neighboring country Japan as an example, the housing prices in the core areas of Tokyo had been on a continuous decline for two decades since the early 1990s, but they have now recovered and reached an all-time high. In contrast, the value of houses in other areas experiencing population outflow has continued to decrease over time.

I visited Japan for research purposes before the year and interviewed local professionals. One of them provided me with a vivid example: he recalled living in the suburbs of Tokyo as a child, and in 1990, his father proudly asked him, "Guess how much our house is worth? It's equivalent to two million US dollars!" I inquired about the size of the house, and he said it was over 140 square meters based on the actual usable area. That would be considered a large flat with nearly 200 square meters of construction area by Shanghai standards.

I told him that in the suburbs of Shanghai, such a house would have been priced at around three million US dollars in equivalent RMB three years ago. He was somewhat surprised and asked if the real estate bubble in Shanghai was comparable to that of Tokyo in the past. Later, he told me that after the Japanese real estate bubble burst in 1997, his father sold the house for only 600,000 US dollars in equivalent Japanese yen. He further informed me that because the house was in the suburbs of Tokyo, not a place where people gather, if it had been held until now, it would probably be worth only 300,000 US dollars.

Fortunately, his father used the money from the house sale to buy another property in downtown Tokyo, and in this recovery, the housing price has finally surpassed the high point of thirty years ago.

B, cost-effectiveness is the hard truth. When investing in real estate, the rental yield is the true "anchor." Like stocks, the short-term price trends of real estate are determined by investor sentiment and the flow of capital. In the long run, the true value of investing in real estate lies in a stable rental return.

In summary, if you invest in real estate in the core areas of major cities, and buy at a price low enough to ensure that the rental yield is higher than the mortgage interest rate, then there is no need to worry about holding onto it for the long term.

Stepping back, even if we can't afford the home we desire for the time being, do we need to worry? Renting can also create a cozy home, so what's there to be anxious about! After all, owning a house does not necessarily mean having a "home."

If we can't find cost-effective investment properties, do we need to worry? We can optimize our stock and equity allocation, and on the premise of having sufficient cash, gradually allocate to carefully selected high-quality domestic companies in related industries at reasonable low prices, which is a good option.

Similar to the "rental yield" consideration in real estate investment strategies, I personally prefer companies that can maintain a good cash flow and pay high cash dividends over the long term. If the annual dividend return from investing in high-quality company stocks is much higher than the rental yield of a house, then obviously, holding stocks for the long term is a better option.

Of course, we can also strengthen global asset allocation, using all available legal channels and tools (such as QDII funds, the Greater Bay Area Wealth Management Connect, etc.) to allocate to overseas stocks and fixed-income assets, thereby achieving diversified asset allocation and participating in investment opportunities in different markets around the world.In summary, as long as we grasp the overall macroeconomic trends, make appropriate asset allocations, and maintain a low debt leverage, we can face the fluctuations in asset prices with equanimity, and have enough courage and confidence to achieve "no anxiety"!