Real estate market shows signs of stabilization and improvement
Real estate market shows signs of stabilization and clear improvement.
TroibNews 
Editor's note: This article was written by Wu Yuzhe, a professor at the School of Public Affairs at Zhejiang University and director of the Institute of Land Science and Property at the university. Translated from Chinese, the article reflects the author's opinions and not necessarily the views of CN.
In April of this year, China's real estate market faced significant difficulties, both in terms of transaction volumes and prices. The inventory of ordinary commodity housing reached a new high, with unsold areas hitting 746 million square meters—surpassing the previous record of 739 million square meters set over a decade ago. Concurrently, second-hand housing prices in major first-tier cities fell back to levels observed in 2016.
In response to these challenges, on May 17, the People's Bank of China, along with the National Financial Regulatory Administration and other agencies, introduced a comprehensive set of measures aimed at revitalizing the real estate market. Following this, on October 17, various institutions, including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the Ministry of Natural Resources, rolled out additional initiatives to bolster stable and healthy market development.
The Political Bureau of the Central Committee of the Communist Party of China convened a meeting on September 26, advocating for measures to stabilize the real estate market. This included a focus on tightly regulating new housing supply, optimizing existing inventory, enhancing the quality of commodity housing construction, and fostering the creation of a new model for real estate development. Indicators suggest an improvement in China's real estate climate.
In September, real estate companies ramped up their land procurement activities. E&H Consulting's data indicates that the total transacted construction area of urban residential land reached 54.065 million square meters, marking a year-on-year increase of 31.6 percent and a month-on-month rise of 25.9 percent. In certain cities, land auctions became highly competitive, with premiums exceeding 30 percent. Particularly in cities like Guangzhou, Shenzhen, and Chengdu, some auctions saw over 100 bidding rounds, pushing floor prices to new highs. Since October, real estate transaction volumes have begun to stabilize.
Data from China Real Estate Information Corp reveals that during the National Day holiday, the purchased area of new housing projects in 23 key cities surged by 77 percent month-on-month and 65 percent year-on-year. In first-tier cities, the year-on-year increase reached an impressive 102 percent. Furthermore, second-hand housing transactions have been consistently recovering week by week, with the second week of October seeing a doubling of transaction volumes in 14 key cities compared to both month-on-month and year-on-year figures. Shenzhen and Hangzhou even achieved their highest weekly transaction volumes of the year.
With the introduction of new policies on October 17 aimed at relaxing management controls in the real estate market—including lifting restrictions on housing purchases, sales, and price caps, as well as abolishing the distinction between ordinary and non-ordinary residential properties—the market is poised to become more dynamic. These relaxation measures are expected to draw in new participants to help reduce existing inventories of commodity housing.
Notably, the new policies also address the completion of renovations for an additional 1 million housing units in urban villages and dilapidated areas by offering monetary compensation to residents, which directly aids in destocking. This strategy will help developers establish a positive cash flow. The removal of the distinction between ordinary and non-ordinary residential properties could also provide fresh perspectives on optimizing housing supply.
This development indicates that improved housing options could emerge as a new growth area for the real estate market. On October 17 of the previous year, the Ministry of Natural Resources issued a notice lifting the requirement that housing projects in urban suburbs maintain a floor area ratio of at least 1.0. Paired with the removal of the distinction between types of residential properties, this shift is seen as a confidence booster for establishing a new real estate development model in China.
Despite these positive changes, real estate prices continue to undergo adjustments. Prices in major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen have decreased further from their historical peaks, with declines reported at 29.0 percent, 29.2 percent, 29.4 percent, and 39.1 percent in September, respectively. This trend represents a cyclical correction following consumers' previously inflated expectations in the real estate market. The current stabilization of prices is essential for laying the groundwork for future market stability and potential price increases.
Emily Johnson for TROIB News
In April of this year, China's real estate market faced significant difficulties, both in terms of transaction volumes and prices. The inventory of ordinary commodity housing reached a new high, with unsold areas hitting 746 million square meters—surpassing the previous record of 739 million square meters set over a decade ago. Concurrently, second-hand housing prices in major first-tier cities fell back to levels observed in 2016.
In response to these challenges, on May 17, the People's Bank of China, along with the National Financial Regulatory Administration and other agencies, introduced a comprehensive set of measures aimed at revitalizing the real estate market. Following this, on October 17, various institutions, including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the Ministry of Natural Resources, rolled out additional initiatives to bolster stable and healthy market development.
The Political Bureau of the Central Committee of the Communist Party of China convened a meeting on September 26, advocating for measures to stabilize the real estate market. This included a focus on tightly regulating new housing supply, optimizing existing inventory, enhancing the quality of commodity housing construction, and fostering the creation of a new model for real estate development. Indicators suggest an improvement in China's real estate climate.
In September, real estate companies ramped up their land procurement activities. E&H Consulting's data indicates that the total transacted construction area of urban residential land reached 54.065 million square meters, marking a year-on-year increase of 31.6 percent and a month-on-month rise of 25.9 percent. In certain cities, land auctions became highly competitive, with premiums exceeding 30 percent. Particularly in cities like Guangzhou, Shenzhen, and Chengdu, some auctions saw over 100 bidding rounds, pushing floor prices to new highs. Since October, real estate transaction volumes have begun to stabilize.
Data from China Real Estate Information Corp reveals that during the National Day holiday, the purchased area of new housing projects in 23 key cities surged by 77 percent month-on-month and 65 percent year-on-year. In first-tier cities, the year-on-year increase reached an impressive 102 percent. Furthermore, second-hand housing transactions have been consistently recovering week by week, with the second week of October seeing a doubling of transaction volumes in 14 key cities compared to both month-on-month and year-on-year figures. Shenzhen and Hangzhou even achieved their highest weekly transaction volumes of the year.
With the introduction of new policies on October 17 aimed at relaxing management controls in the real estate market—including lifting restrictions on housing purchases, sales, and price caps, as well as abolishing the distinction between ordinary and non-ordinary residential properties—the market is poised to become more dynamic. These relaxation measures are expected to draw in new participants to help reduce existing inventories of commodity housing.
Notably, the new policies also address the completion of renovations for an additional 1 million housing units in urban villages and dilapidated areas by offering monetary compensation to residents, which directly aids in destocking. This strategy will help developers establish a positive cash flow. The removal of the distinction between ordinary and non-ordinary residential properties could also provide fresh perspectives on optimizing housing supply.
This development indicates that improved housing options could emerge as a new growth area for the real estate market. On October 17 of the previous year, the Ministry of Natural Resources issued a notice lifting the requirement that housing projects in urban suburbs maintain a floor area ratio of at least 1.0. Paired with the removal of the distinction between types of residential properties, this shift is seen as a confidence booster for establishing a new real estate development model in China.
Despite these positive changes, real estate prices continue to undergo adjustments. Prices in major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen have decreased further from their historical peaks, with declines reported at 29.0 percent, 29.2 percent, 29.4 percent, and 39.1 percent in September, respectively. This trend represents a cyclical correction following consumers' previously inflated expectations in the real estate market. The current stabilization of prices is essential for laying the groundwork for future market stability and potential price increases.
Emily Johnson for TROIB News
