At the beginning of 2020, China has ushered in the first round of overall reductions. On Jan.
On the one hand, interest rates have been cut in various economies around the world since this year, some of them adopt zero or even negative interest rates. The United States has also cut interest rates by 75 basis points for three consecutive months this year. In this low interest rate environment, it is just a matter of time for China to follow up again.
On the other hand, the consumer price index (CPI) has continued to rise since the second half of last year and has broken through% in November, hitting a record since January 2012. Although the CPI is more affected by pork, prices are still in the upward cycle compared to the declining financial returns.
When the nominal interest rate (market interest rate) is lower than the inflation rate (CPI), the real interest rate (return on investment) is negative. This is the case now, when market interest rates continue to fall and CPI continues to rise, leading money to seek higher asset gains.
It's japan that takes negative interest rates to their fullest (zero-interest-rate policy), where you generally put your money in the bank, where you use your money to invest, lend, and then pay you interest; but in the future it's you who put your money in the bank, and instead of interest, you charge the bank interest and management fees.
In theory, when the era of negative interest rates comes, the disguised depreciation of cash deposits will continue to flow into other areas of investment, making the value of investment in the real estate market begin to highlight. The reasons are as follows:
First of all, real estate is physical real estate, in the case of currency depreciation, physical assets can play the role of value preservation or appreciation. Second, lower market interest rates have reduced the cost of housing financing. Because real estate is a typical capital-intensive industry, negative interest rates further reduce the cost of housing financing, which is conducive to real estate enterprises to obtain more funds to achieve expansion. Moreover, people in the case of negative interest rates, more inclined to wealth management funds, real estate and other assets to seek higher returns.
According to the historical data of the National Bureau of Statistics, during the four negative interest rates in China since 1987, the average price of domestic commercial housing has increased by 60%,34%,% and 15% respectively. That is, when market interest rates tend to fall, real estate is more likely to rise.
But I think this round of real estate market cycle is not the same as the previous general rise in the market pattern, because in the early period of this round of real estate cycle, more rigid demand in the first and second tier city house prices rise quickly, third and fourth tier city house prices because of the monetization of shed reform, also rose a lot. But now there is no sign of full relaxation in the housing market, and mortgage rates remain high even in the context of a downward trend in interest rates.
In addition, the current domestic urban development differentiation phenomenon is serious, the third and fourth tier cities because of the shed reform task \"discount\" facing destocking pressure, real estate industry supply and demand difference. So real estate in this round of negative interest rate market, even if the policy is marginally loose, it is difficult to appear before the rally.
In the era of negative interest rates, the first choice for ordinary people is insurance products, because in the future, as market interest rates become lower and lower, premiums will become more expensive. The essence of insurance products is cash flow discounting, and low interest rates mean that the present value of future insurance companies pay you is higher, and the benefits of premiums are lower, and insurance companies will naturally raise premiums in order to maintain the benefits. The european and japanese experience tells us that insurance and pension funds are favored by residents at negative interest rates, while insurance and pensions are more likely to invest in equity assets to boost returns.
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