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Baidu opinion - China economy: "Worse than falling house prices, store closures, office buildings being hollowed out.." - February 11, 2022

sharon sanders

Editor-in-Chief & President
Worse than falling house prices, store closures, office buildings being hollowed out, and four factors

Lao Wu talks about business
Release time: 2022-02-11 14:03

In order to control the surge in domestic house prices, the state finally took action. First, it warns against buying a house as an investment, and then plans to gradually start the property tax collection policy. Right now, the housing market is cooling significantly, with prices falling in some areas.

There is a downward trend in house prices. Data show that in February last year, the average domestic house price was as high as 11,200 yuan per square meter. At the end of the year, the sales area of ​​commercial housing reached 213.02 million, the transaction volume was 20,263 trillion, and the average house price was 9,512 yuan. It can be seen that compared with the beginning of the year, it has dropped by 15.22%. You know, that unit price has returned to 2019 levels.

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Real estate companies and real estate speculators will be the first victims after falling house prices. Some experts predict that as many as 80% of domestic real estate companies will face bankruptcy after the property market slumps. In addition, after seeing the crisis in the real estate market, a large number of real estate speculators began to resell idle real estate, hoping to stop losses in time.

But right now, there is something more serious than the fall in house prices. Numerous stores were closed and office buildings were gutted. This phenomenon will affect employment and the economy. It is understood that this situation is mainly due to the following four reasons.

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First of all, the rent of the store is too high. You know, when domestic house prices soar, so do rents for shops and office buildings. In fact, many landlords of office buildings and shops also buy through loans, so they can only create more profit margins for themselves by charging expensive rents. Opening a store and starting a business cannot be done without the office environment of a store or office building. The problem is, after opening a store or starting a business, development may not be so smooth. If the business is not good, it has been in a state of loss, coupled with the pressure of rent, it will definitely not be able to support in the future.

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Second, the scale of shops and office buildings is too large, already saturated and greatly surplus. In the early years, the country vigorously promoted urban development. The number of office buildings in prosperous cities such as Beijing, Shanghai, and Guangzhou was limited, and supply and demand were relatively balanced. But later, with the rapid development of the development, many developers began to vigorously build office buildings. Gradually, more and more office buildings are oversupplied.

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Third, due to the impact of the new crown pneumonia epidemic, many enterprises have closed down one after another, resulting in the closure of a large number of stores and the hollowing out of office buildings. In the context of the epidemic, the development of trading enterprises has been hindered, especially small and medium-sized enterprises. In addition, international commodity prices rose, and domestic raw material prices rose. Many small and medium-sized enterprises are afraid of losing the market and can only choose to cut prices and profit margins, affecting the economy of the entire industry.

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Fourth, it is still related to the epidemic. The domestic epidemic is relatively stable, but European and American countries are still in a state of chaos. Most people are worried about being infected when they go out, so most people refuse to go out to shop and can only buy some necessities through online shopping. The advantage of online shopping is that it is convenient, fast and cheap. In this case, the business of brick-and-mortar stores is not as good as it used to be. Many stores lost foot traffic but had to pay rent at the same time. Of course, the wages of the employees cannot be paid more.

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Stores are closed and office buildings are emptied, which will result in a huge waste of resources. At present, we only hope that the epidemic will pass soon, housing prices will flatten, and businesses and businesses will have the confidence to consider reopening stores. In order to support the real economy, the central bank made it clear that the country will take measures. In fact, as the e-commerce industry grows, many buyers gradually discover the shortcomings of the industry. For example, online shopping products are seriously adulterated, and many products are found to be of poor quality after purchase, and have to troubleshoot returns and exchanges later.

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