Source: Xinhua News Agency

Authors: Qi Zhongxi, Wang Youling.

Xinhua News Agency, Peking, December 8.

The housing issue is both a livelihood concern and a development issue. The current trends in the real estate market are attracting significant attention from all parties.

The meeting of the Political Bureau of the CPC Central Committee held on September 26 emphasized, "We must promote the stabilization of the real estate market and stop its decline," "We need to respond to public concerns, adjust housing purchase restrictions, lower existing mortgage rates, and expedite the improvement of policies related to land, finance, and taxation, fostering a new model of real estate development."

From the central to local levels, a package of policies has been intensively launched, sending out strong bullish signals to stabilize the real estate market. How effective are the measures in boosting market expectations and development confidence? What changes have occurred in the market?

(1)

After the Central Political Bureau meeting on September 26, multiple departments launched a "combination punch" of policies to promote the stable and healthy development of the real estate market, summarized as "four cancellations," "four reductions," and "two increases." Various regions, especially first-tier cities, have adjusted and optimized related policies in the real estate market to encourage market recovery.

Different measures, from different angles, directly address the current "pain points" and "bottlenecks" of the real estate market:

Local policies have been tailored to the city, canceling or reducing restrictive measures to release housing demand; optimizing tax policies to lower transaction costs for home purchases; adjusting land policies to control new additions and manage existing stock, further utilizing land reserves as a "reservoir"; enhancing financial support to inject "fresh water" into industry liquidity...

What is the effect of this set of policy measures? Let's observe several key indicators.

Looking at sales area—

According to the latest data from the National Bureau of Statistics, from the sales situation of 40 monitored key cities, the marginal improvement in the second-tier cities, which had previously seen a significant decline, is quite apparent, with positive growth in sales area in October and a notable narrowing of the sales revenue decline.

From January to October, the sales area of newly built commodities nationwide decreased by 15.8% year-on-year, a reduction of 1.3 percentage points compared to January to September; the sales revenue of newly built commodities decreased by 20.9% year-on-year, a reduction of 1.8 percentage points compared to January to September.

According to data from the Ministry of Housing and Urban-Rural Development, the volume of online signed transactions for newly built commodities nationwide increased by 0.9% year-on-year in October, marking the first growth after 15 months of decline; the total transaction volume of newly built and second-hand homes increased by 3.9% year-on-year, also marking the first growth after 8 months of decline.

Looking at the leading indicators -

Observing the activity level in the real estate market, in addition to the sales volume, there are two leading indicators: the number of visits to new homes and the number of showings for second-hand homes.

Purchasing a home is a major consumer expenditure. It generally requires a longer process, from the intention to buy a house, to carefully selecting a satisfactory property on-site, and then to negotiating the price.

Recently, reporters visited real estate agencies in peking, shanghai, nam cheong, and other places to find that, whether on weekdays or weekends, there are many clients coming to sign contracts and negotiate. The signing rooms are often filled with buyers and sellers haggling. The number of visits to new homes and the showing rate of second-hand homes has also clearly increased. Behind these phenomena, more residents are already in the process of buying a home, indicating at least some intention or demand for purchasing, which shows a certain degree of marginal improvement in market activity, and this is a bullish signal for stabilizing the real estate market.

Looking at market expectations -

Confidence is more valuable than gold. With the increase in sales area and the rise in leading indicators, consumer confidence in the future of real estate has also been strengthened, and market expectations have improved.

According to the PMI survey, in October, the business activity index of the real estate industry rose by 2.5 percentage points from the previous month, and the market expectation index increased by 1.8 percentage points. This indicates that under a series of policy pushes, the prosperity of the real estate market is beginning to improve.

Reporters found that in first-tier cities like peking, shanghai, guangzhou, and shenzhen, as well as in second-tier cities such as wuhan, suzhou, and hangzhou, market trading activity has increased. New clients are making decisions faster from viewing properties to final purchases, while old clients have reduced hesitation and even felt a sense of urgency to buy. Whether in the new home or second-hand home market, the transaction cycle has significantly accelerated.

The above multidimensional indicators show that the real estate market is showing some signs of warming.

The real estate market has traditionally had the saying of 'golden September and silver October.' The positive momentum seen in the real estate market in October, particularly the phenomenon where the commodity housing transaction market experiences a 'silver October' surpassing 'golden September' for the first time since 2007, also reflects the driving force of policy adjustments and optimization in stabilizing the real estate market.

Overall, a package of measures to promote the stabilization of the real estate market has shown effects, and there are positive changes in the real estate market in October. As the effectiveness of various policies is further released, the momentum for stabilizing the real estate market will be strengthened.

China's real estate market, under the influence of a series of policies, has begun to bottom out after three years of adjustment.

The National Bureau of Statistics and the Ministry of Housing and Urban-Rural Development have made the above determinations.

(2)

On one hand, a package of policies has begun to be implemented effectively; on the other hand, it is important to recognize that the bottoming of the real estate market is a process that requires a combination of short-term and long-term measures, addressing both symptoms and root causes.

First, it is necessary to 'adapt to the new situation where there has been a major change in the supply and demand relationship of China's real estate market.' This was a significant judgment made at the Politburo meeting of the Central Committee on July 24 last year. To understand the current real estate situation, it is essential to grasp this change.

The relationship between supply and demand is a key factor affecting market prices, which is one of the basic principles of economics.

In the past 20 years, the overall trend of the real estate market in china has shown an upward trend, playing an important role in ensuring and improving people's livelihoods and supporting the economic and social development of china. At the same time, the rapid expansion of the real estate market has also led to some issues such as excessive concentration of funds in real estate and some real estate companies facing 'high debt, high leverage, and high turnover'.

From the market boom and even price distortions created by past supply shortages, to recent years where the main contradiction has shifted from total shortages to a basic balance in total supply and structural supply shortages, the underlying logic of the real estate market has changed. Therefore, to promote the further stability of the real estate market, the construction of commercial housing should focus on 'strictly controlling increments, optimizing existing stock, and improving quality'.

From the perspective of existing stock, the supply scale of newly built commercial housing in china is large, and digesting the existing stock is an important adjustment direction.

It has been clearly stated at the policy level that in cities where there is a large inventory of commercial housing, the government can make purchases according to needs and actively support the acquisition of existing commercial housing for use as indemnificatory apartments. Currently, various regions are accelerating the promotion of acquiring existing commercial housing for use as indemnificatory apartments, and special bonds supporting the reclamation of idle existing land and increasing land reserves are also being implemented more quickly.

From the perspectives of increase and quality, people's demand for housing has shifted from 'whether it exists' to 'how good it is', and meeting this market demand is an important direction for adjusting increase and improving quality.

Secondly, it is necessary to restore the credit chain, rebuild market confidence, and promote a positive cycle between finance and real estate. Winning the battle to ensure housing delivery is a top priority.

For a period of time, during the adjustment process of the real estate market, due to funding issues and debt problems, some already sold housing projects under construction have faced delivery difficulties. This phenomenon not only seriously harms the rights and interests of homebuyers but also affects market confidence, hindering the orderly operation of the market.

In response to this "pain point", the work to ensure the delivery of houses is steadily advancing, and a city real estate financing coordination mechanism has been timely launched — compliant real estate projects are included in the "white list", maximizing necessary support and crediting to meet the reasonable financing needs of projects, becoming an important measure and strong guarantee for achieving a positive cycle between finance and real estate, and improving market expectations.

Currently, 297 cities at the prefecture level and above across the country have established a real estate project financing coordination mechanism. As of October 31, the loan approval amount for "white list" projects has exceeded 3 trillion yuan. By the end of the year, with the orderly expansion of the "white list", this scale is expected to increase to 4 trillion yuan.

The increase in the scale of crediting indicates that financing for real estate projects is becoming quicker and more convenient, ensuring the continued advancement of the delivery of houses. As of November 13, in the battle to ensure delivery, a total of 2.85 million units have been delivered nationwide, effectively safeguarding the legitimate rights and interests of homebuyers while also bringing about a significant improvement in market expectations.

Furthermore, it is necessary to release the potential demand in the market, activating the real estate market further from both the supply and demand sides.

Based on the current main contradictions in the real estate market, there is a relative shortage in the supply of indemnificatory housing, high housing prices in large cities, and a heavy housing burden on new citizens and young people. In terms of housing demand, the demand for improved housing continues to upgrade, and residents have a stronger desire to enhance their living quality.

Therefore, reducing the cost of home purchases through the "four cancellations" and "four reductions", increasing the construction of indemnificatory apartments, and transforming urban villages will inject new demand into the real estate market.

From the perspective of the medium to long-term trends in the real estate market, there is still room for development to meet rigid and improved housing demands. China is still in the later stage of urbanization development, and continuing the promotion of people-centered new urbanization will unleash greater demand potential in the real estate market.

(Three)

The traditional real estate development model is difficult to sustain. Where will real estate development head in the future?

Visiting the China State Construction Engineering Corporation technology exhibition in Peking may provide some inspiration.

When the door is opened, the lights, curtains, and music inside will automatically turn on, welcoming the owner home; upon entering the living room, sitting on the sofa and pressing a button, the wall cabinet across will slowly move forward, transforming into a children’s 'playground'... This is a scene the reporter recently witnessed in the 'model room of good houses' at the China State Construction Engineering Corporation technology exhibition.

In real estate development, the final goal is to improve people's livelihoods.

Shifting from 'whether there is' to 'how good it is,' enhancing the quality of residence and happiness for residents is the direction of future real estate development. Through empowering technology and innovation leadership, both new and old houses should become good houses.

Accelerating the construction of a new model for real estate development is a fundamental solution for the steady and healthy development of the real estate market. Better satisfying rigid and improving housing demands, perfecting the real estate development, trade, and usage systems, and establishing a new mechanism for 'people, houses, land, and money' element linkage are important contents for accelerating the construction of a new model for real estate development.

China's real estate market has gone through over 20 years of rapid expansion. The past development model is no longer suited to the new requirements of high-quality development, and constructing a new model for real estate development is an inevitable trend.

Creating safe, comfortable, green, and smart good houses has become an important way to meet the needs of people's beautiful lives and is also essential for promoting high-quality development in the real estate industry.

Shifting from supporting urban expansion to participating in urban renewal, from incremental drive to a linkage between increment and stock... Real estate development should focus on the diverse housing needs of the lbx pharmacy chain joint stock in the new development stage, working on outdoor environments, making them age-friendly, and promoting green and low-carbon initiatives to upgrade the quality of housing construction comprehensively.

Currently, the policy support for urban village renovation has expanded from the initial 35 major cities to all cities at the prefecture level and above. A total of 1,632 urban village renovation projects have been implemented in various major cities. From January to October, a total of 3.17 million units of indemnificatory housing and urban village renovation relocation housing have been constructed nationwide; by the end of this year, it is expected to help over 10 million disadvantaged groups improve their housing conditions.

Actively implementing urban renewal actions is an important measure to transform the urban development model and achieve high-quality development.

Systematically advancing the construction of "four good" - good houses, good communities, good neighborhoods, and good urban areas - is the focus of future real estate industry development. In 2023, more than 66,000 urban renewal projects have been implemented nationwide, with a cumulative investment of 2.6 trillion yuan, and the comprehensive effects of the urban renewal actions are gradually emerging. In 2024, a plan is in place to start renovation of 54,000 old urban communities, with 53,000 already initiated in the first 10 months.

Collaborative interaction and prevention of sharp fluctuations are necessary to achieve stable, healthy, and high-quality development of the real estate market.

The real estate industry is currently at a critical stage of transitioning from old to new models. Facing challenges head-on and actively breaking through. Following the central government's unified deployment, all regions and departments are working together to formulate a combination of policies regarding land, finance and taxation, and finance, ensuring that the effects of these policies are fully realized.

High-quality development in real estate will accumulate more new momentum for high-quality economic development in china and provide stronger support for building "good houses" that meet the new expectations of the people.

Editor/Rocky