China’s Housing Market Experiences Key Shift as Secondary Home Transactions Surpass 60%
By曹子健, China News Service
Beijing, September 2, 2024
China’s housing market is undergoing a significant shift in demand structure and market dynamics, with one of the key indicators being the continuous rise in the proportion of secondary home transactions. According to a report by the China News Service, the secondary housing market has become increasingly vibrant, accounting for over 60% of total transactions.
Market Transformation
The transformation in the housing market is evident in the sustained increase in the volume of secondary home transactions. This year, strategies such as trading volume for price have driven the activity in the secondary market well above that of new homes. Data from the China Index Academy revealed that between January and July 2024, the cumulative total number of transactions for new and secondary homes in 25 representative cities saw a year-on-year decline, with the proportion of secondary home transactions rising to 64.1%. In 2023, this proportion stood at 55.6%.
Continuing Trend in August
The trend continued into August, with the China Index Academy noting that the average weekly transaction volume of secondary residential properties in 11 key cities increased by 22.3% compared to the same period last year. Meanwhile, the transaction area of new commercial residential properties in 100 key cities saw a decline both year-on-year and month-on-month.
Analysis from Industry Experts
Wei Xie, the Research Director of the 58 Anjuke Institute, pointed out that the current new home market is characterized by a low volume-price ratio. Although the total volume of purchasing demand is on a downward trend, there is an increase in structural demand. Sales data for the first half of this year in most cities show that the volume of secondary home sales has surpassed that of new homes, with nearly two-thirds of cities experiencing year-on-year growth in secondary home sales despite a significant decline in new home sales.
Shift in Market Dynamics
Wei Xie believes that China’s real estate industry is at a critical juncture of potential transformation. Since the end of 2021, industry data has been徘徊ing at low levels for over three years. Secondary home transactions have become the driving force of the new home market, he stated. The main demand in the housing market has shifted from an incremental market driven by urbanization and the need for basic housing to a stock market driven by replacement and improvement needs.
Challenges for Developers
For real estate developers, this shift poses new challenges. To effectively respond to the pressure of customer diversion from the secondary market, projects must create unique advantages in terms of resources, products, and pricing. Only by doing so can developers effectively address the competition from secondary homes, Wei Xie noted.
Implications for the Future
The increasing dominance of secondary home transactions in the housing market has significant implications for both buyers and sellers. As the market shifts towards a focus on existing homes, the dynamics of supply and demand, pricing, and market sentiment are likely to change. For policymakers, the shift may necessitate a reevaluation of current housing policies and regulations to ensure stability and sustainability in the housing market.
Conclusion
The rise in secondary home transactions to over 60% of the market signals a pivotal shift in China’s housing market. As the industry continues to evolve, stakeholders must adapt to the new market dynamics to thrive in this transformed landscape. The shift from a focus on new homes to existing ones reflects broader changes in consumer behavior and housing needs, marking a new era for China’s real estate industry.
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