The release of the 14th Five-Year Plan has completely changed the positioning of real estate. In all previous five-year plans, real estate content was always found in the chapter on “Economic Development” as a definite engine for economic growth. This time, however, the content related to real estate has been directly moved to the chapter on “Ensuring and Improving People’s Livelihoods” alongside elderly care, healthcare, and education.This signifies the complete end of the housing speculation era.
Although the era of housing speculation has left us, it has left behind the problem of “structural imbalance” in society.
PART 01
Urbanization and population growth are the two main engines driving the rapid increase in housing demand.After the housing reform in 1998, the era of commercial housing officially began, and houses gained financial attributes, allowing them to be bought, sold, and invested in. Since then, housing prices have risen for over 20 years.In 1998, China’s urbanization rate was only 30%, but it has now exceeded 67%, with a large influx of rural population into cities. The rapid urbanization process has become one of the important engines for the rapid growth of housing demand; additionally, at that time, China had over 10 million new people added each year, and with so many people needing to move to cities, get married, and settle down, housing became the most essential need.
PART 02
Homebuyers and consumers are paying the price for high land prices, speculation premiums, and high prices.Recognizing the enormous potential and development space in the real estate market, major real estate companies have increased their efforts to bid for land from the government to seize quality resources. Intense land competition has continuously driven up land prices, with some core plots seeing heated bidding, resulting in frequent records of “land kings” in regional land prices.In addition to rising land costs, inflation and the actions of speculators are also driving up housing prices.Real estate developers sell overpriced housing to buyers, effectively passing on the increased land acquisition costs and speculation premiums to the buyers.At the same time, the continuous rise in housing prices has led to increasing operating costs across various industries.Price increases essentially transfer the increased operating costs to consumers.In other words, it is ultimately the vast majority of consumers and homebuyers who are paying for this era of inflated housing prices.Over the past two decades, rising land prices have increased government revenue, which has been heavily invested in infrastructure and public facilities. However, the proportion of funds that eventually reach the lower and middle-level employees is relatively small.From the above phenomena, it is not difficult to see that it is the general public who are paying for high land prices and speculation premiums, supporting national construction.Setting aside the fact that falling housing prices would shrink many people’s assets, for ordinary people, housing is the foundation of most industries, and housing prices are closely related to operating costs.Only by maintaining relatively low housing prices can we lead a more comfortable and stable life, escaping the state of being constantly exhausted.
PART 03
A social transformation is quietly brewing!If housing prices and prices are allowed to rise unchecked, ordinary people’s lives will become unbearable, as wage increases are very low and slow, while the continuous rise in housing prices and prices will greatly increase living costs, leading the lower classes into a state of constant struggle, similar to the Americans who have complained about high living costs on social media.If housing prices are allowed to fall, houses will become worthless, assets will shrink, and coupled with the layoffs and salary cuts that began during the pandemic, people’s desire to consume will naturally drop to freezing point!However, with the continuous decline in birth rates, significant population aging, and a slowdown in urbanization, all these phenomena indicate that the decline in housing prices is an unstoppable trend.Therefore, the social reality we are currently facing is that the general public has no money to consume and is afraid to consume.As the wave of the real estate era gradually recedes, another transformation driven by technology is accelerating. With the popularization of AI technology and robotics, a large number of low-threshold jobs will be replaced, likely leading to an increasing concentration of wealth in the hands of a few. If left unchecked, this could lead to social paralysis.Once upon a time, similar phenomena also appeared in capitalist countries. Although the causes were different, the results were similar.Due to capitalists continuously exploiting the surplus value of workers, a large portion of society’s wealth became concentrated in the hands of a small number of people, while the vast labor force had strong demand but no purchasing power, leading to a large number of unsold goods, idle production materials, bankrupt production enterprises and banks, mass unemployment, rapid declines in production, and the destruction of credit relationships, plunging the entire society into chaos.From 1933 to 1939, U.S. President Roosevelt implemented a series of reforms to respond to the Great Depression, stabilizing the situation through increased government intervention in the economy, ultimately revitalizing the U.S. economy.Historically, similar issues of “wealth concentration” have occurred multiple times, and they have often been broken through reform, providing a reference for the current transformation.It is evident that once the majority of society’s wealth is overly concentrated in the hands of a few, social operations will inevitably encounter problems, and only through reform can society be set back in motion. This principle is also an important basis for the assertion that “capitalist society” is destined to perish.Throughout history, every time significant new production tools emerged, they greatly promoted the development of productivity, thus driving changes in production relations, which is a law of social development, and knowledge that Marx and Engels popularized to the world long ago.By analogy, the popularization of AI technology and robotics will undoubtedly greatly improve production efficiency, promote the development of productivity, and become the catalyst for changes in production relations.Even though social transformation may bring painful rifts and turbulent waves, the ultimate destination will undoubtedly be a better life worth striving for!