Since the implementation of the heavy new policies in the real estate market on May 17, it has been a month now, and the stimulating effect of the policies on various real estate markets has been manifested. It is highly anticipated whether there will be further policies to continue to boost the market. In terms of policy effects, the volume of transactions in first-tier cities such as Shanghai and Guangzhou has increased significantly, but the transaction volume in Shenzhen is lower than expected. And in second-tier cities like Hangzhou, Chengdu, Wuhan, the transaction volume has also increased, but it is still not as good as the same period last year.
On May 17, the regulatory authorities issued heavy new policies for the real estate market, which have been in effect for a full month. The stimulus effects of the policies on the real estate markets of various regions have already been apparent, and whether there will be further policies and escalation is highly anticipated.
Industry insiders believe that from the perspective of policy effects, the '5.17' new policy has increased market activity, but the overall effect is slightly lower than expected. Transaction data shows that after the new policy was implemented for one month, the real estate markets in first-tier cities Shanghai and Guangzhou saw a significant increase in transaction volume, but the increase in transactions in Shenzhen is not yet obvious. As for second-tier cities such as Hangzhou, Chengdu, and Wuhan, the market transaction volumes have increased after the new policy, but it is still not as high as the same period last year.
'After experiencing rapid development for more than a decade, the real estate market has entered a period of economic growth rate shifting, structural adjustment, and digestion of previous stimulus policies, making the effect of some loose policies on the market lower than expected,' said Zhang Dawei, chief analyst of Century 21. He further stated that there are signs of a downturn slowdown in the current market, and as core first- and second-tier cities gradually implement various measures, the market is expected to enter a period of policy effect realization. Meanwhile, real estate companies will enter the first half of the year performance sprint stage in June, and market activity is expected to rebound.
It is worth noting that on June 7th, the National Development and Reform Commission held a special meeting to discuss the real estate market situation and continue to study policy measures to clear the real estate inventory and stabilize the market. Analysts believe that as 2024 is approaching the halfway point, the real estate market is showing obvious improvement, and the policy may continue to be intensified.
'We believe that June is the halfway point for real estate enterprises' annual sprint node, and their marketing efforts are bound to increase, the total transaction volume in June may stabilize and increase, and the absolute amount is expected to reach a new high for the year. However, based on the higher base figure last year, the year-on-year decline may continue,' said analysts at Kererui.
Shanghai's real estate market has shown a clear resurgence.
On May 17th, the People's Bank of China and other departments announced the nationwide reduction of down payments, cancellation of the lower limit of housing loan interest rates, and reduction of provident fund loan interest rates. Subsequently, local governments have successively implemented the new '517' policies and introduced related measures to support the local real estate market based on the local situations.
Among them, the effects of the policies in cities such as Shanghai and Guangzhou are relatively significant.
On May 27th, Shanghai issued the 'Shanghai Nine Measures' to optimize and adjust its real estate market policies, which include measures such as lowering down payments, optimizing purchase restrictions, and lowering interest rates.
Data from Zhongzhi Research Institute shows that the 'Shanghai Nine Measures' have a relatively obvious boost effect on the Shanghai new housing market. In the first and second weeks after the new policy was implemented, a total of 277,000 square meters of commodity houses (excluding indemnificatory apartments) were sold in Shanghai, a 10% increase compared to the previous two weeks.
From the perspective of new housing sales, indicators show that reformed housing projects have seen a significant increase in visits and performance since the new policy was implemented, with a preference over projects in the suburbs for end-user demand.
In the second-hand housing market, the number of house visits and signings on many Shanghai-based real estate platforms has increased after implementing the 'Shanghai Nine Measures.' From June 1st to 16th, 13,381 second-hand residential units in Shanghai were signed, an 82% increase compared to the same period last month, showing a significant escalation in activity.
'Due to the lifting of purchase restrictions for singles, coupled with a larger drop in the prices of old and dilapidated houses in the suburbs than previously, clients are choosing to sell quickly based on expectations of a potential rise in house prices after the policy is implemented,' said Chen Julan, senior analyst at Zhongzhi Research Institute.
'Based on past experiences, market sentiment may soar in the short term after the new policy is released, and this can be seen at first in the second-hand housing market, followed by activity increases in new housing markets. In the short term, transaction activity in the real estate market may further increase,' said Chen Julan.
Guangzhou's new home sales have risen by 12%.
Meanwhile, the market reaction in Guangzhou has also been positive.
After the implementation of the new policy, the down payment ratio in Guangzhou has decreased to the historically lowest level, and the city's purchase and loan policies have become the most relaxed in first-tier cities. With the support of the policy, the atmosphere of home buying in Guangzhou has already seen some changes.
On May 28, Guangzhou issued a new real estate policy, which includes a variety of measures, such as optimizing land and housing supply, adjusting and optimizing housing purchase restrictions, optimizing differential housing credit policies, lowering the required deposit period for provident fund loans, supporting down payments with provident funds, optimizing sales restriction policies, and supporting 'trade-in' measures for homes.
After the implementation of the new policy, Guangzhou's down payment ratio has dropped to the historically lowest level. Currently, the city's purchase and loan policies are the most relaxed among first-tier cities.
Under the stimulus of the new policy, the atmosphere of home buying in Guangzhou has already seen some changes. Regardless of the visiting or transactions, both have seen a certain amount of recovery. With the New Policy that was implemented on May 28th, Guangzhou's real estate market's heat level has risen to a new level.
According to data from China Index Academy, from May 17th to June 16th, the number of newly signed contracts for housing in Guangzhou reached 5,849 sets, an increase of 12.2% compared to the 5,213 sets in the previous month. From a weekly perspective, the number of newly signed contracts for housing in Guangzhou from June 10th to June 16th was 1,565, reaching a new weekly high since April.
Analysts believe that with the continued positive effects of the new policy, the demand for home purchases in Guangzhou is expected to further increase.
The market in Shenzhen has recovered less than expected.
Unlike Shanghai and Guangzhou, the effects of the new policy in Shenzhen have led to some market recovery, but the effects are not yet obvious.
According to data from China Index Research Institute, from May 18th to June 17th in 2024, the total number of newly sold commodity housing in Shenzhen was 2,286 sets, with a total area of 232,100 square meters, an increase of 3.96% compared to the previous month before the new policy; a total of 4,136 second-hand residences were sold, with a total area of 403,200 square meters, an increase of 2.86% compared to the previous month before the new policy.
"Overall, the recovery of the Shenzhen housing market is lower than expected, and the market situation is uneven," said Sun Hongmei, senior analyst at China Index Research Institute South China Branch. High-quality properties in the core regions are relatively active, and there has been a recent digestion of many properties, including those in the new and second-hand housing market. However, it is relatively difficult for unpopular sectors in the real estate market to dispose of properties at present.
Sun Hongmei further stated that the supply of new housing in the Shenzhen market is sufficient, house prices have been running at a low level, and there are more and more indemnificatory apartments in the Shenzhen market, diverting a lot of potential homebuyers' demand, but Shenzhen residents' income growth has not met expectations, and most citizens are still cautious about entering the market.
Analysts believe that the Shenzhen policy landing at the end of the month has not yet fully exerted its influence on the market, and coupled with the long process of second-hand housing transfer, the transaction data is lagging, so policy effects are expected to gradually be realized in June.
"Although there are some positive factors for the Shenzhen housing market, its market foundation is not solid and its relaxation level is lower than that of Guangzhou among the four first-tier cities. Currently, the Shenzhen real estate market is in a stage of stabilizing and recovering, and the recovery of transactions still needs to be consolidated," said Sun Hongmei.
Will the policy be further strengthened in the second half of the year?
In addition to the above four first-tier cities, market activity in some second-tier cities such as Hangzhou, Chengdu, and Wuhan has also rebounded to some extent.
On May 9th, Hangzhou issued the "Hangzhou Seven Measures", announcing the complete cancellation of purchase restrictions. According to China Index Academy data from May 9th to June 9th, Hangzhou sold a total of 5,439 new homes, higher than the levels in April and May; second-hand home sales also performed well, with about 8,000 transactions in May.
In Chengdu, under the resonance effect of the "517 New Policy" and the "428 New Policy," the scale of second-hand home transactions in May exceeded that of the new property market, but the decline in the new property market has narrowed.
Regarding the changes in the Wuhan market, Li Guozheng, market analyst at China Index Research Institute Central China, said that under the stimulus of the new policy, the activity level of the Wuhan market has obviously improved, with more inquiries about new and second-hand homes, and transaction volume has increased, but the improvement was not significant. Overall, the performance of second-hand homes in Wuhan still outperforms that of the new property market.
"Under the new policy, the effect may not be as significant as originally expected, but it will definitely help to improve the vitality of the housing market. Some places will be more sensitive to policy reactions, such as central cities with good prospects, which will have a faster market reaction; whereas in areas with large amounts of inventory to digest and dominated by buyers' markets, the reaction will be slower," said Jia Kang, former director of the Institute of Fiscal Science at the Ministry of Finance.
"Overall, the First-tier cities are generally more active than second- and third-tier cities. With the positive effects of the new policy in Shanghai, Guangzhou, and Shenzhen, transaction volumes are expected to stabilize. For cities such as Chengdu and Xi'an with strong market resilience, even if some hot property cooling occurs, the overall market is still expected to run at high levels. For most weak second- and third-tier cities, market activity still needs to be transmitted from core first- and second-tier cities, and the trend of low-level fluctuations may continue in June." said a real estate industry analyst.
According to the aforementioned Krui analysts, the effects of the new policy are still being persistently felt, and the market is expected to enter the period when the policy effects are realized in June, but it is worth noting that the pace of market recovery still depends on changes in residents' income expectations.
In this regard, some analysts believe that if the real estate market does not improve significantly, the policy may continue to be strengthened.
"In 2024, it will take some time for the demand for the housing market and the confidence of homebuyers to recover. At present, the market is still gradually bottoming out, and the market also expects policies to be more powerful," said Zhang Dawei.