2024-08-09
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The real estate industry has always had two traditional peak seasons, the "little spring" in March and April each year and the "golden September and silver October". In addition, the mid-year and year-end are also the marketing sprint periods for major real estate companies.
In the middle of these periods, January and February each year are the periods with the lowest sales volume of the whole year. At the same time, July and August each year are relatively cold because they are between the mid-year sprint and the "Golden September and Silver October".
In the past July, the supply scale in key cities has steadily declined, but compared with the previous two years, July this year fell by 24% month-on-month from June, and the decline has narrowed.
According to CRIC's survey, in August, the new commercial housing supply area in 27 major cities is expected to drop by 7% month-on-month and 35% year-on-year. However, the supply in some hot cities continues to grow, with Beijing's concentrated supply increase, and the supply in August is expected to reach 490,000 square meters, the second highest in absolute terms this year.
Judging from the current market environment, the overall market is weak, with only core first- and second-tier cities such as Beijing, Shanghai, Chengdu, and Hangzhou having sales rates above 30%. However, the effect of the new policy on boosting the market is decreasing.
In this context, although August is still a traditional off-season, as the end of the month approaches the "Golden September" node, some real estate companies have begun to speed up the pace of obtaining certificates to seize the "Golden September" market in advance.
CRIC survey data shows that the new commercial housing supply area in 27 key cities is expected to be 6.72 million square meters in August 2024, a 7% decrease from the previous month and a 35% decrease from the previous year. The absolute amount is significantly lower than the monthly average in the second quarter and is basically the same as the monthly average of 6.74 million square meters in the first quarter.
In July and August every year, because the mid-year sprint in June has just passed and there is the traditional peak season of "Golden September and Silver October" afterwards, companies have not been very enthusiastic about launching new projects. Except for the Spring Festival holiday in January and February, the supply in July and August has been relatively low.
Looking at historical years, from 2019 to date, the supply in July has decreased by about 30% compared with June, with the largest decrease of 42% in 2023 and the lowest decrease of 12.4% in 2020. The supply in August increased by an average of about 10% based on the decrease in July, and the absolute value did not exceed the highs of June and the "small spring" in March and April.
Compared with previous years, the overall supply in July this year narrowed the month-on-month decline from June, but the estimated supply in August will drop by another 7% from July.
On the one hand, this is because July and August are traditionally the off-season. On the other hand, due to the overall market pressure this year and unsatisfactory sales, real estate companies generally adopt the strategy of "improving quality and reducing quantity".
While the overall market supply decreased, the supply in some cities increased significantly in August, among which the supply in the four first-tier cities all increased month-on-month.
CRIC survey data shows that the estimated supply in the four first-tier cities in August 2024 is 1.91 million square meters, a month-on-month increase of 34% and a year-on-year decrease of 25%.
Beijing is the focus of supply, and the supply in August is expected to reach 490,000 square meters, a month-on-month increase of 91% and a year-on-year increase of 37%. The absolute amount is the second highest in the year.It is expected that more than 4,600 housing units will be put on the market, and the cumulative year-on-year growth will be basically the same as the same period last year.
Guangzhou's supply is expected to reach 520,000 square meters in August, a month-on-month increase of 37%.The year-on-year decrease was 26%, making it the second-highest city in terms of month-on-month supply growth among the four first-tier cities. Meanwhile, Shanghai and Shenzhen also maintained month-on-month supply growth of more than 10%.
In addition to first-tier cities, there are also some second- and third-tier cities with high supply.
Overall, the supply of second- and third-tier cities has been stable with a slight decline, with a month-on-month decline of 17%, and the differentiation continues to intensify.The monthly supply in Tianjin and Changsha exceeded 500,000 square meters, with Changsha's month-on-month growth reaching 50%. In terms of month-on-month growth, the supply in Chongqing and Ningbo in August both increased by more than 70%.
On the one hand, some cities had a low base in July, so they saw a higher growth. On the other hand, although August is still a traditional off-season, the end of the month is close to the golden September node.Some real estate companies are speeding up the process of collecting evidence.
Specifically speaking, in terms of supply structure,The proportions of basic needs, improvements, and high-end in 27 key cities are 41%, 45%, and 14%, respectively, showing a supply structure dominated by improvements and basic needs, supplemented by high-end.
Among them, the supply of products for basic needs in cities such as Changchun, Shenzhen, Chongqing, Beijing, Xuzhou, Ningbo, Zhengzhou, Nanjing, Kunming, Wuhan and Xi'an accounts for more than 50%. In fact, cities such as Changchun, Chongqing, Xuzhou, Zhengzhou, Kunming and Wuhan are currently mainly driven by customers with basic needs, and real estate companies prefer to launch products for basic needs to cater to mainstream demand.
Xiamen, Zhangzhou, Qingdao, Hangzhou, Shanghai and Nanning still rely on improved products as the main supply, accounting for more than 70%. Meanwhile, the proportion of high-end products in Fuzhou, Hefei and Wuxi has increased significantly, reaching 60%, 42% and 40% respectively.
Further looking at the regional distribution of each project,The main cities, suburbs, and remote suburbs of key cities accounted for 57%, 29%, and 14% respectively. The supply focus this month is still concentrated in the main urban areas, followed by the suburbs, and the remote suburbs are the least. Xiamen, Zhangzhou, Kunming, Fuzhou, Hefei, Nanning, Chongqing, Zhengzhou, Wuhan, Shanghai, Xi'an, Hangzhou and other main cities accounted for more than 70%. Beijing, Changsha, Ningbo, Changzhou, and Tianjin are mainly suburban projects, accounting for 50% or more.
Based on the comprehensive supply structure and location distribution, it can be found that the proportion of improved supply in the main cities such as Shanghai, Hangzhou and Chengdu has increased significantly.
The main reason for this is that different cities are still showing significantly differentiated market conditions. Under the supply logic of "improving quality and reducing quantity" and "production based on sales", the mid-to-high-end markets in the core areas of these cities are more resilient.
For example, in Shanghai, the hot-selling news of luxury houses in Shanghai has been "flooding the screen" since 2024: On March 28, 2024, the Zhonghai Shunchang Jiuli project was launched, with sales reaching 19.653 billion yuan, setting a record for the highest sales of commercial housing in a single launch in the country; on April 18, Sun Hung Kai Riverside Arc de Triomphe was launched, and all 212 units were sold out on the same day, earning 7.027 billion yuan; on April 21, the second phase of Sunac Bund One Courtyard was launched and sold out on the same day, with sales reaching 9.997 billion yuan...
We believe that high-end products in urban center areas with strong fundamentals still show a certain degree of resilience.However, it should also be noted that high-end products are greatly affected by the supply side. At present, high-end residential transactions in some cities have shown obvious "weakness", and competition for subsequent products will further intensify.
We have made reasonable estimates based on the regions where the new properties were launched in August in different cities and the historical sales of various regional sectors since 2024. The expected sales rate in August 2024 is 26%, a decrease of 3 percentage points from the previous month and 9 percentage points from the previous year, which is basically the same as the market heat in the second quarter of 2024. Different cities are expected to continue to differentiate their market conditions, which can be roughly divided into the following typical cities:
The first category includes core first- and second-tier cities such as Beijing, Shanghai, Chengdu, and Hangzhou, where the sales rates are all above 30%.The new policies in Beijing, Shanghai, Hangzhou and other cities have had a decreasing effect on boosting the market. In July, visits and subscriptions have fallen to varying degrees. However, thanks to a slight increase in supply and improved structure, the overall sales rate has continued to increase month-on-month, but is still lower than the same period last year. Although Chengdu's current sales rate is still high, it has fallen both month-on-month and year-on-year, and is significantly lower than the average in the first quarter, and the growth momentum is slightly insufficient.
The second category includes Ningbo, Zhengzhou, Nanjing, Suzhou, Wuxi, etc. Due to the increase in supply or the continuous optimization of the supply structure, the market is expected to recover from a low level and increase month-on-month, which is better than the monthly average in the second quarter.Among them, Zhengzhou and Wuxi saw significant year-on-year and month-on-month increases, mainly due to the improvement in supply quality and reduction in quantity. For example, in Wuxi, only three projects were supplied in August, and most of them were high-end projects in the main urban area, which objectively increased the market heat. Ningbo's year-on-year and month-on-month increases were mainly due to the phased increase in supply, and the overall transaction heat is expected to rebound from a low level.
The third category is cities dominated by rigid demand, such as Kunming, Qingdao, Chongqing, etc. The sales rate may continue to decline both on a month-on-month and year-on-year basis due to mismatch between supply and demand or the diversion of second-hand houses at low prices.Qingdao has increased the proportion of improved product supply this month, but due to the location of individual projects, there has been no significant improvement in the sales rate. Chongqing and Kunming are still mainly supplying projects in the main urban areas this month. However, second-hand houses are favored by the rigid demand customers due to their low total price and wide selection. The continuous diversion of rigid demand customers also makes the expected sales rate of the two cities in August less than 15%. In fact, for this type of market, unless real estate companies can strengthen their marketing efforts and attract customers with low prices, it is difficult for the overall transaction to have a brilliant performance.
Overall, the supply volume steadily declined in August, mainly driven by basic needs and improvements in the main urban areas, and the supply structure continued to be optimized.
In the short term, the heat of first-tier and some second-tier markets still shows signs of stopping the decline and stabilizing, while for the vast majority of weak second- and third-tier cities, the sales rate is increasingly affected by the supply structure, the degree of profit concessions made by real estate developers, and other factors.Current MarketchangeThe sales of good housing are significantly better than those of housing with just-needed demand.itemThe differentiation between them will continue to intensify.
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