Real estate market expectations are gradually improving
In recent times, several Chinese government departments, including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, the Ministry of Natural Resources, the People’s Bank of China, and the Financial Regulatory Authority, have been actively implementing the directives from the Central Political Bureau meeting. They are guiding local governments to take positive actions to ensure the effective execution of existing policies while introducing new measures to stabilize and revitalize the real estate market.
According to statistical data, the policies are making strides toward stabilizing the real estate sector. Sheng Laiyun, deputy director of the National Bureau of Statistics, noted that in the first three quarters, the area of newly constructed commercial housing sold nationwide reached 70.284 million square meters, a decrease of 17.1% year-on-year. However, this decline has narrowed by 1.9 percentage points compared to the first half of the year and by 0.9 percentage points compared to the first eight months; it has shrunk for four consecutive months by September. The sales revenue from newly built commercial housing amounted to 6.888 trillion yuan, representing a 22.7% drop, yet the decline is also slowing, narrowing by 2.3 and 0.9 percentage points respectively, and this trend has continued for five months. Over the first nine months, investment in real estate development fell by 10.1%, marking a slight improvement compared to the previous eight months. Additionally, the decline in funds available to real estate development enterprises has reduced by 2.6 percentage points since the first half of the year, continuing for six months.
China’s real estate market has undergone around three years of adjustment. On September 26, the Central Political Bureau meeting emphasized the need to promote stabilization in the real estate market. In response, major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen optimized their regulatory policies, alongside the introduction of a series of incremental measures, which have significantly boosted confidence and improved expectations in the market.
Ni Hong, the Minister of Housing and Urban-Rural Development, outlined a comprehensive approach to stabilize the market consisting of four cancellations, four reductions, and two increases. The four cancellations include lifting purchase restrictions, sales limits, price caps, and distinctions between ordinary and non-ordinary residential classifications. The four reductions involve cutting housing provident fund loan rates by 0.25 percentage points, lowering the down payment ratio for housing loans to a uniform 15% for both first and second homes, reducing existing loan rates, and alleviating the tax burden on buying new homes while selling old ones. These measures aim to lower home purchasing costs, relieve repayment pressures, and support both essential and upgrade housing demands. The two increases pertain to adding 1 million units of urban village and dilapidated housing renovations through monetary settlements and expanding the credit quota for “white list” projects to 4 trillion yuan by the end of the year.
Sheng Laiyun expressed optimism regarding the future of the real estate market following the rollout of these comprehensive policies. The National Bureau of Statistics recently conducted a monthly survey among real estate development companies and intermediaries across 70 major cities. The results revealed a 10-percentage point increase in optimism among new housing professionals in September compared to the previous month, while second-hand housing professionals saw a 6.5-percentage point increase, indicating a significant boost in confidence.
The positive changes in the real estate market during the National Day Golden Week and the subsequent ten days reflect this growing optimism. Data shows substantial improvements in both visitor counts and transaction volumes for various real estate developments. In a market analysis, new home transaction areas surged by 102% while second-hand housing transactions increased by 205% during the Golden Week. This stabilization trend has continued post-holiday, particularly in first-tier cities, which have shown a general recovery since October. On October 13, Shanghai recorded 1,334 second-hand home transactions, the highest single-day volume since September of last year. In the first week after the holiday, Beijing’s Lianjia platform reported a 58.4% increase in second-hand home transactions compared to the previous week, and a remarkable 135.9% increase relative to the typical levels prior to the holiday, marking the highest weekly volume this year. As of October 13, Shenzhen also recorded its highest daily average of second-hand home contracts this year and in nearly four years.
Li Yujia, chief researcher at the Guangdong Province Housing Policy Research Center, has noted a rebound in non-hotspot areas as well. From September 30 to October 6, Guizhou Province saw 209,500 square meters of new commercial housing signed, representing a year-on-year growth of 10.0%, with total signing amounts reaching 1.123 billion yuan, a 13.4% increase. Li commented on the visible stabilization in the commercial housing market, attributing it to comprehensive policy effects that have “lowered costs, reduced thresholds, and raised expectations,” along with coordinated efforts among various departments and cities coupled with the launch of promotional activities across a hundred cities and a thousand companies in October, which have bolstered market confidence.
Ni Hong concluded that, thanks to these policy measures, after three years of adjustment, the housing market is beginning to find its footing. “We anticipate that October data will present a positive and optimistic picture,” she stated, emphasizing the importance of collaborative efforts to effectively implement these policies so that their benefits can be fully realized and enjoyed by the public.
