The property market is tepid during the Spring Festival. Can “Xiaoyangchun” be expected?

Securities Times ·  Feb 20 10:20

Source: e-Company Author: Chen Ying

Recently, Kerui, China Index, Anjuker, Zhuge Housing Search, etc. have all released property market data during the Spring Festival. Overall, during the Spring Festival this year, the supply and transactions of new homes in major cities were not ideal.

The holiday market is not active enough

According to statistics from the Kerry Research Center, during the 2024 Spring Festival holiday, housing enterprises were generally not very motivated to sell. Affected by the slump in the property market, most housing enterprises mainly sell smoothly and remove inventory. Most cities have close to zero supply during the Spring Festival week (February 9 to February 15). Combined with the cumulative two weeks of new supply during the week before the Spring Festival (February 2 to February 8), there is still no room for optimism. The 50 key cities according to the Kerry Research Center added only 3.964,400 square meters of new supply during the two weeks of the Spring Festival (February 2 to February 15), a year-on-year decrease of 11% and a decrease of 53% from the same period in 2022.

New housing transactions in 44 key cities were only 233,800 square meters during the Spring Festival week (February 9 to February 15, same below), down 87% from the week before the Spring Festival (February 2 to January 8), down 40% from last year's Spring Festival week, and 82% from the same period in 2022.

Data source: Middle Index Data CREIS

The data from the China Index Research Institute's “2024 Spring Festival Property Survey” is also not optimistic. According to the data, during the 2024 Spring Festival holiday period (2.10 to 2.17), the average daily sales area of new homes in the 25 representative cities decreased by about 27% compared to the previous year's Spring Festival holiday (2023.1.21 to 2023.1.27).

According to an analysis by the China Index Research Institute, overall, the transaction performance of new housing markets around the world during the Spring Festival was relatively lackluster, and buyers were still very wait-and-see. Market sentiment has rebounded in Beijing and Shenzhen, driven by policies, but transactional performance is not obvious; Shanghai and Chengdu are affected by travel and homecoming, and market activity during the holiday period is insufficient. It is expected that they will gradually pick up after the holiday season, while the property markets in Qingdao, Zhengzhou and other places are still in a short period of market adjustment.

Second-hand housing sales performed well

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Planning Institute, believes that there are four main reasons for the poor performance of the Spring Festival property market:

1. Enthusiasm for travel is extremely high, diluting the property market.

The 2024 Spring Festival was the only Spring Festival holiday not affected by the epidemic in the past four years. Despite deregulation during the Spring Festival last year, the number of infected people spread rapidly, and travel was affected. As a traditional festival that Chinese people value, demand for travel, travel, and homecoming has been suppressed, and accumulated demand has been released. As a result, data on travel, travel, movie viewing, and consumption have all reached record highs. Naturally, there is less house viewing and buying. This is the main reason.

2. The motivation of supply-side pushes is low.

During the Spring Festival holiday, property market sentiment continued the sluggish trend of January. Both supply and demand sides are weak. In January, the supply of new homes in 30 key cities fell 47% month-on-month, with an average monthly decline of 44% compared to 2023. During the Spring Festival, the supply of new homes during the Spring Festival week (February 9 to February 15, 2024) in most cities was close to zero. Of course, there are objective reasons. For example, many companies had an early vacation a few years ago, such as just sprinting to their annual results. Importantly, the rate of removal of new listings in major cities last year was 30% to 50%. They all have value on sale, and introducing a new one will give the market the feeling that it just can't be sold.

3. Insufficient preferential measures for developers.

Not only is the supply less active, but there are no surprises with the strong discounts. There is also a reason for this. On the one hand, selling houses at reduced prices throughout 2023, and discount marketing continued. Regular marketing offers continued during the Spring Festival, such as a purchase price, discounts, property delivery, home appliances, lottery, etc.; on the other hand, the developers knew that everyone had gone home, they all went out, and the sales office was deserted, so they maintained a smooth sales attitude. Also, if prices continue to be cut, the results may not be good, because the market expects prices to drop, and it will also destroy the brand.

4. Market expectations are still unstable.

The author stepped offline and found that during the Spring Festival, the number of visitors to major sales offices was only about 20 group/day. This is not much different from Kerry's average trading average of 20-70 groups of customers/market during the Spring Festival. The developer sells smoothly. There are no more surprising discounts. If they can sell it, it's not difficult to shout. Buyers expect the price to drop in the future. Just take a look. The attitude is very Buddhist, and the conversion rate is relatively low. The media revealed that during the 8-day vacation in major cities, each market sold less than 5 units on average.

However, it should be noted that during the Spring Festival this year, second-hand housing performed well.

According to the Shell Research Institute, the level of second-hand housing viewing and transaction volume in 50 key cities during the 2024 Spring Festival holiday showed a sharp recovery compared to 2023. According to daily average statistics, in terms of energy levels, first-tier cities increased 90% over last year's Spring Festival, only slightly lower than in 2021; second-tier cities increased 180%, and third-tier cities increased 140%, all significantly exceeding 2023 and 2021. Li Yujia believes that the main reason is that buyers are worried about difficulties in delivering off-plan housing and are switching to the second-hand housing market; on the other hand, there are a wide range of second-hand housing options, with many small units, manageable total prices, and degree or location advantages; in addition, during the Spring Festival last year, second-hand housing listings, negotiations, and transactions were all affected by the epidemic, leading to a low base for the same period.

Can Xiaoyangchun be recreated?

Judging from statistics from various platforms, the volume of new housing sales in key cities began to fluctuate and decline in the week before the 2024 Spring Festival, falling to a low level during the Spring Festival week. However, starting from the second day of the year, daily turnover began to slowly rise, reaching 110,000 square meters on February 17 (January 8), a single-day high during the Spring Festival holiday. However, overall transactions have not yet returned to the level of a week before the holiday season, indicating that demand is slowly recovering. The success of “Xiaoyangchun” in the first quarter of 2023 formed a high base, and it is difficult to have outstanding trading data for the first quarter of this year.

Regarding the future market, Li Yujia believes that whether the market can stabilize in the end depends on the March-April data. On the one hand, starting in late March of last year, sales began to slow down, forming a low base; on the other hand, key cities introduced major bailout policies before the holiday season. In addition, this year placed steady growth, domestic demand expansion, and employment promotion in a more prominent position. Considering that the demand side is being repaired, it is expected that the commercial housing market will return to a steady trend from March to April.

The Kerui Research Center believes that the opening of the property market in 2024 is still very “difficult”. A few years ago, core Tier 1 and 2 cities such as Shanghai, Suzhou, and Shenzhen loosened purchase restrictions one after another, but the combination of intensive favorable policies did not seem to stir up much waves in the Spring Festival property market: first, the number of hot cities and hot projects was still declining. Only a few cities, such as Xi'an, Hangzhou, and Chongqing, performed slightly better than last year; second, the third- and fourth-tier cities returned to their hometowns to buy and sell their contracts. The negative effects of the newly needed downgrade purchasing power on the property market are also gradually showing. Third, the second-hand housing market in core cities such as Shanghai, Beijing, and Hefei has yet to improve significantly, and demand for replacement is difficult to release. Based on this, we believe that overall transactions in February 2024 may decline further month-on-month, and market recovery is expected until March-April.


The translation is provided by third-party software.

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