China Economic Review: Confidence in the Stability and Recovery of the Real Estate Market Second hand Housing | City | Market

The real estate market has once again entered a stalemate. Whether from the May statistics released by the National Bureau of Statistics or the recent sales and prices in the market, the real estate market's recovery is hindered, still in a period of adjustment and slow recovery, and the market still faces many difficulties. To better play the role of stabilizing the real estate market in stabilizing the macroeconomic situation, we should further stabilize expectations, strengthen confidence, promote transformation, and take multiple measures to promote the stable and healthy development of the real estate market.

Currently, there are more cities with declining housing prices, and hot cities such as Beijing and Shanghai have experienced the largest decline in second-hand housing prices. According to data from the National Bureau of Statistics, in May, the number of cities with new and second-hand housing prices falling compared to the previous month increased in 70 large and medium-sized cities. Among them, there are 55 cities with declining second-hand housing prices, accounting for nearly 80%. The price of second-hand houses in Shanghai has dropped by 0.8% compared to the previous month, with the largest drop among 70 large and medium-sized cities, while Beijing has fallen by 0.6%, making it the most significant drop among the 70 large and medium-sized cities. In addition, the prices of second-hand houses in Xiamen have dropped by 0.7% compared to the previous month.

In the past, housing prices in first tier cities were relatively stable, but in May, the prices of second-hand houses in Beijing and Shanghai decreased more significantly. This indicates that hot cities are also facing a situation of strong wait-and-see sentiment among homebuyers and a game between buyers and sellers. In the past two to three months, the number of second-hand housing listings in Beijing and Shanghai has increased, while the transaction volume has decreased. However, unlike the month on month decline in second-hand housing prices, new housing prices in Beijing and Shanghai have both shown positive growth compared to the previous month, indicating that new housing in Beijing and Shanghai is more attractive than second-hand housing. A considerable portion of the increase in the number of listings for second-hand houses is "sell one buy one", or homebuyers who sell old to buy new tend to buy new houses when replacing their homes.

Differentiation is a prominent characteristic of the current real estate market. There is a differentiation between new and second-hand houses. In the same city, it is not uncommon for new house prices to rise while second-hand house prices decline; The differentiation between hot cities such as first and second tier cities and third and fourth tier cities and county towns has always been significant, with market activity in first and second tier cities being better than in third and fourth tier cities and county towns. The differentiation of heat in different regions of the city is also significant. In the core areas of some cities, housing prices are steadily increasing; In areas far from the core area, the decline is more pronounced. The land market is also divided, with hot cities with good sales recovery experiencing a hot land market, while cities with high destocking pressure continue to be deserted. The target cities and areas for real estate companies to acquire land are increasingly concentrated in a few hot cities and key areas.

There is no need to be overly pessimistic about the real estate market. The enthusiasm of real estate companies to acquire land reflects the adequacy of their funds and their future market layout. The continued popularity of land auctions in some cities indicates that some real estate companies are optimistic about the future and still actively investing. If Beijing land auctions maintain high popularity and transaction prices are not low. In Hangzhou, private enterprises are more active in acquiring land, and a certain plot of land has attracted 66 companies to participate in the lottery. Entering June, as real estate companies sprint towards mid year performance and increase their promotion and discount efforts, the market's trading volume and activity are expected to recover compared to the previous period. With the recovery of the economy and the effectiveness of policies to stabilize the real estate market, market expectations have improved, and the real estate market is expected to gradually stabilize.

Faced with the current difficulties in the real estate market, policy support can still be increased from both supply and demand sides.

On the demand side, improvement needs should be highly valued and potential should be deeply tapped. The demand for improved housing will gradually increase in the future and has great potential. This group of people has better payment and loan repayment abilities. Currently, due to the relatively high down payment ratio and mortgage interest rates, the overall cost of purchasing improved housing is still higher than purchasing the first home. Further reasonable support should be provided for the demand for improved housing, and the purchase cost can be appropriately reduced according to the actual situation to stimulate their enthusiasm for housing consumption. In addition, appropriately reducing the interest rate on existing housing loans can also become an alternative option in the policy toolbox. Reducing the repayment pressure on residents who have purchased housing can reduce the situation of early repayment of housing loans, help residents invest more funds in other consumption, and boost domestic demand.

On the supply side, we should further implement financial support policies such as the "Three Arrows" and the policy of ensuring the delivery of buildings. While encouraging enterprises to actively alleviate difficulties, it is necessary to implement these support policies in place to meet the reasonable financing needs of real estate enterprises that focus on their main business and have stable finances. Currently, some banks have reservations about their support for real estate enterprises and the implementation of relevant support policies due to safety considerations. They should increase their efforts to ensure that the support policies are implemented effectively. Ensuring the delivery of buildings is crucial for the recovery of the market. Only by delivering on time, with quality and quantity guaranteed, can market confidence be truly restored. We should continue to promote the delivery of buildings and ensure that relevant financial support is in place.

The real estate market is in a period of adjustment, gradually transitioning from a rapid increase in the past to a stage of less total volume, slower speed, and stable development. The adjustment stage is harboring opportunities for reform. Transforming and exploring new development models is the future, and stabilizing the market is the top priority. Promoting market stability and recovery is undoubtedly the most important task at present, and new opportunities and future strategies are often gradually becoming clear during the adjustment stage. The real estate industry should not only strive to do immediate things well, but also focus on the long-term, and strive to promote market recovery and corporate strategic transformation.