The capital chain is unhealthy

The real estate industry is capital-intensive and highly dependent on bank credit. In recent years, the credit control of the real estate industry is relatively tight. At present, many developers have little cash reserves, and some housing enterprises have broken their capital chains. Once they lack cash, although a large number of assets are stored in unsold or under construction projects, it may also lead to the closure of housing enterprises.

Now some real estate enterprises are starting to sell properties at reduced prices, just to withdraw cash as soon as possible and increase cash reserves. Therefore, under such conditions, it is impossible for property prices to rise sharply again, and there may even be a large-scale decline. At the same time, some projects under construction may become unfinished buildings if they lack continuous financial support.

Real estate enterprises will also shrink their front lines and buy less land, so the price of land auctioned by local governments will also drop, and the land auctioned will also be reduced or even auctioned, which may lead to a sharp drop in local fiscal revenue. In short, according to this cycle, the country will enter a period of deleveraging. Personally, I think this regulation is correct. It is an unhealthy development model to rely solely on the growth of real estate to drive other industries. It has caused a serious asset bubble and overcapacity in the real estate sector, which is a mismatch of resources and is extremely harmful to the long-term development in the future. Now it is very necessary for the country to put the brakes on the real estate industry. For reference.