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Source: Times Finance Author: Ali Mire

Half of 2024 has passed, what kind of answer has the real estate market given?

On July 15, the National Bureau of Statistics announced the changes in the sales prices of commercial housing in 70 large and medium-sized cities in June. At the same time, the housing price data for the first half of the year was also released.

Data shows that in the first half of the year, new home prices rose year-on-year in seven cities, namely Tianjin, Shanghai, Hangzhou, Changsha, Chengdu, Xi'an and Sanya. Among them, Shanghai and Xi'an led the increase, both up 4.3% year-on-year.

In terms of second-hand housing, from January to June this year, the sales prices of second-hand housing fell year-on-year. However, the situation is improving. According to the monthly data, the number of cities with a month-on-month increase in second-hand housing prices in June broke the "zero" situation, with second-hand housing prices rising in four cities: Shanghai, Hangzhou, Beijing, and Nanjing.

"Overall, driven by the continued impact of the new policy, second-hand housing prices showed signs of marginal improvement in June. However, the price recovery is far slower than that on the transaction side. Second-hand housing transaction volume achieved a new breakthrough in June, and the current second-hand housing market still has the feature of 'trading price for volume'," Guan Rongxue, senior analyst at Zhuge Data Research Center, told Times Finance.

Throughout the first half of the year, the entire real estate market has experienced a series of policy adjustments. At the local level, according to China Index Academy's monitoring, in the first half of 2024, about 180 provinces, cities (counties) across the country issued more than 360 policies, involving purchase restrictions, relaxation of loan restrictions, and increase in housing provident fund loan quotas.

With the support of many policies, what changes has the property market experienced in the first half of the year? The current real estate market is still in the process of adjustment and transformation, how will the property market develop in the second half of the year?

Shanghai and Xi'an lead the rise in new home prices

In terms of prices of newly built commercial housing, Shanghai and Xi'an saw the highest increases in the first half of this year, both rising 4.3% year-on-year.

Among them, Shanghai had the largest month-on-month increase in June, reaching 0.4%, and the year-on-year increase has been above 4% for 16 consecutive months.

Li Yujia, chief researcher at the Housing Policy Research Center of Guangdong Provincial Urban Planning Institute, told Times Finance that Shanghai and Xi'an have always been two cities with relatively active new home markets. For Shanghai, the continuous optimization of policies and the hot sales in the luxury home market have effectively boosted market confidence and attracted considerable high-end demand.

From the policy perspective, in the past two years, Shanghai has made significant adjustments to its previous strict restrictions on purchases and loans, implemented policies such as "recognizing housing but not loans", adjusting the standard of ordinary housing, and reducing down payment ratios and mortgage interest rates. In the first half of this year, Shanghai's relevant policies continued to increase, and the new home market also benefited from this.

After the central bank released its mortgage policy on May 17, Shanghai became the first first-tier city to follow suit. At the end of the month, Shanghai also issued the "Nine Measures" to optimize and adjust the real estate market, including lowering the social security threshold for non-local residents to buy houses and supporting multi-child families to buy houses.

"These policies have effectively boosted market confidence and stimulated housing demand. Recently, Shanghai also canceled the 10% upper limit on the premium rate of commercial housing land, allowing the market to determine land prices, and returning commercial housing to its commodity attributes, thereby releasing some potential housing demand." Li Yujia said.

In addition to policy support, the hot high-end residential transactions have also driven up the Shanghai housing price index.

According to CRIC data, in the first half of the year, 1,544 high-end residential units with a total price of more than 30 million yuan were sold in Shanghai, the largest transaction volume in the past 10 years and 2.6 times the total transaction volume of the same price range in Beijing, Guangzhou and Shenzhen during the same period.

Why is Shanghai's high-end residential property market so popular? The above-mentioned agency analyzed that, on the one hand, the increase in market supply has driven further growth in transactions, and on the other hand, the low supply in the early stage has caused some buyers to hold on to their money and wait for many years, and this part of the suppressed demand has been released in a concentrated manner. In addition, some luxury housing projects still have inverted prices, which has further boosted transaction activity.

Looking at Xi'an, Li Yujia believes that the rise in housing prices in Xi'an in the first half of the year was mainly due to the attraction of talent policies and adjustments to the housing market policies. Among them, the talent policy provides a demand basis for the real estate market.

In 2023, Xi'an's population will continue to grow. Statistics show that by the end of 2023, Xi'an's permanent population will reach 13.0782 million, an increase of 82,300 over the previous year, continuing to consolidate its position as the third largest city in northern China in terms of permanent population.

"In recent years, Xi'an's population growth has brought strong demand for housing purchases, especially in the new housing market. The increase in demand for improved products and the relatively tight supply of residential land have further driven up housing prices. At the same time, the optimization of the population structure and the gathering of high-quality talents have also provided stable support for the real estate market and promoted the coordinated development of housing prices and population." said Li Yujia.

Second-hand housing prices in some cities have rebounded

In terms of second-hand housing, compared with the same period last year, second-hand housing prices in 70 cities fell from January to June this year. Among them, Xuzhou's second-hand housing prices fell the most, down 11.2%.

This is mainly because the Xuzhou second-hand housing market has experienced significant fluctuations in recent years.

According to CRIC Huaihai's previous analysis, from 2015 to 2021, Xuzhou's second-hand housing market experienced a six-year bull market, with the cumulative increase ranking second in the country, second only to Xi'an. However, since the price peaked in 2021, the market has entered a three-year decline, and the decline is also the largest. Combining the overall environment of the national real estate market and Xuzhou's local transaction prices, transaction volumes and market expectations, the overall trend of Xuzhou's second-hand housing market is expected to gradually stop falling and stabilize, and the decline is expected to narrow.

Looking back at the first half of this year, although second-hand housing prices fell overall, some cities have shown clear signs of recovery under the support of the new policy. Data shows that second-hand housing prices reversed the overall decline in June, with housing prices in Beijing, Shanghai, Nanjing and Hangzhou rising month-on-month.

Guan Rongxue analyzed that among the four cities, Shanghai led the way with a month-on-month increase of 0.5%, which may be closely related to the continued fermentation of the "Shanghai Nine Measures" new policy. At the same time, Beijing's new credit policy was implemented at the end of June, which also played a certain role in boosting market confidence. In June, Beijing's second-hand housing prices rose for the first time this year, with a month-on-month increase of 0.2%.

For Nanjing, the rebound in local second-hand housing prices was mainly due to the dual impact of the stable growth of market transaction volume and favorable policies.

Guan Rongxue pointed out that on the one hand, the transaction volume of second-hand houses in Nanjing has performed well this year, and the monthly transaction volume in June was at a medium-high level since the second half of last year. Therefore, under the condition of stable volume, market expectations have improved, and prices have seen initial signs of improvement. On the other hand, Nanjing has released space for housing demand to increase, restored market confidence, and house prices have stopped falling and rebounded through policy measures such as lowering the interest rates of commercial loans and provident fund loans and relaxing settlement conditions.

"The same is true in Hangzhou. Favorable measures such as canceling purchase restrictions, allowing residents to settle down after buying a house, and implementing the '517' new policy have also played a role in boosting market confidence. However, in addition to policy support, the rise in second-hand housing prices in Hangzhou also seems to be related to the recent hot sales of 'old, dilapidated and small' houses in the city center, which has driven up the overall price." she said.

Yan Yuejin, research director of E-House Research Institute, told Times Finance that the recovery of second-hand housing prices in some large cities shows that the policy effects in these cities are positive and obvious. "This also shows that other cities may have similar logic in the future, that is, the market will have positive performance and trends."

Based on the above analysis, the real estate market is currently in a critical period of adjustment and transformation. Against this background, the State Council executive meeting held on June 7 pointed out the need to ensure the effective implementation of existing policy measures and continue to study and prepare new policy tools to promote inventory clearance and long-term market stability.

Faced with such policy orientation and market environment, how will housing prices develop in the second half of the year?

Analysis by China Index Academy shows that with the continued efforts of various policies, the downward trend in the new home market is expected to slow down in the second half of 2024. However, as residents' income expectations and expectations of falling housing prices have not improved significantly, the national real estate market is still facing adjustment pressure, and the new home market may still be in the bottoming out stage.

In terms of second-hand housing, Zhuge Research Institute analyzed that second-hand housing transactions in June were outstanding, with both month-on-month and year-on-year growth, and the year-on-year growth ended the "four consecutive declines" and turned positive, which means that the effectiveness of the "517" new policy has emerged, especially the restrictive policies in first-tier cities have been loosened, sending a positive signal to the market. Looking ahead, the second-hand housing market will emerge from the downturn in the second half of the year, and the month-on-month growth will be better. The annual transaction is expected to exceed the transaction level of last year, but the increase will be limited. In terms of price, the year-on-year decline in prices in the second half of the year is expected to narrow.