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  China Real Estate News (Liu Min/Text)July was the traditional off-season for the market, but with policy support, there was no cliff-like drop and the new home transaction market remained stable overall.

  New home sales have narrowed year-on-year for five consecutive months

A report from the Shanghai E-House Real Estate Research Institute showed that the transaction area of ​​newly built commercial housing in 50 key cities across the country was 11.41 million square meters in July, a decrease of 26% month-on-month and 13% year-on-year.

Year-on-year, the growth rate in February was -69%, and the decline in subsequent months showed a trend of narrowing month by month. Cumulatively, the cumulative transaction area grew by -48% year-on-year in January-March, and narrowed to -38% in January-July, and the year-on-year decline curve narrowed.

E-House Research Institute said that the overall trend in the same period last year was cooling down, and the continued increase in housing purchase policies in the second quarter of this year released positive effects. At present, the transaction volume of new homes has shrunk by nearly 40% compared with the same period last year. The period of maximum sales pressure has passed, and there is a trend of bottoming out and warming up.

  5 cities maintain positive growth

From the perspective of city levels, in July, the transaction areas of newly built commercial housing in 50 first-tier, second-tier, third-tier and fourth-tier cities across the country were 2 million square meters, 6.13 million square meters and 3.28 million square meters, respectively, with month-on-month growth rates of -19%, -31% and -21%, and year-on-year growth rates of -1%, -19% and -8%, respectively.

The report believes that the market pressures in the three types of cities are similar. With the current round of supply and demand adjustments and housing price adjustments, market risks have been largely cleared, especially in first-tier cities, where the year-on-year growth rate has shown a more obvious turnaround from negative to positive.

In terms of cumulative year-on-year growth, in July, the cumulative transaction areas of newly built commercial housing in 50 first-tier, second-tier, third-tier and fourth-tier cities across the country were 12.47 million square meters, 44.90 million square meters and 25.17 million square meters, respectively, with year-on-year growth rates of -28%, -41% and -38%, respectively. The current sales data generally shrank by 30% compared with the same period last year, and shrunk by 20%, 60% and 65% compared with 2019.

In this regard, E-House Research Institute believes that first-tier cities are more resilient, while second- and third-tier cities face greater market adjustment pressure. Local governments should further strengthen housing purchase policies based on the degree of such shrinkage to better boost transaction conditions.

Specifically, among the 22 cities, only Fuzhou, Nanjing and Chengdu showed positive month-on-month growth in July, Lanzhou showed zero growth, and the remaining 18 cities all showed declines to varying degrees. In terms of year-on-year growth, only five cities, Nanning, Fuzhou, Guangzhou, Nanjing and Chongqing, showed positive growth.

The report stated that the housing purchase policy is positive and effective, and it is expected that the number of cities with positive year-on-year growth will increase in the future.

  Luxury homes and new suburban properties are the best sellers

The report shows that in July this year, the number of new homes sold in Beijing, Shanghai and Shenzhen with a total price of 20 million yuan or more was 500, a decrease of 49% from the previous month and an increase of 28% from the previous year. The number of luxury home transactions in the first seven months of 2019-2024 in the three cities was 2,371, 2,275, 3,397, 4,085, 3,795 and 4,418, respectively. Based on this, the growth rates in the first seven months of 2024 are 86%, 94%, 30%, 8% and 16% respectively.

E-House Research Institute pointed out that the hot luxury home transactions have played a very good role in guiding the market, further confirming the positive trend of the real estate market. The rapid sales of luxury homes will help real estate companies to speed up the recovery of funds and improve cash flow. At the same time, real estate companies with good luxury home transactions may become the main force in the next round of land acquisition in major cities.

On the other hand, the sales of luxury housing projects in cities such as Shenzhen and Nanjing occupy the top spot in the city's new home sales rankings, with large transaction volumes, indicating that the release of demand for improved housing is slightly stronger than that for rigid demand. At the same time, the hot-selling new home projects in some cities are generally located in new urban areas, where the unit price and total price of houses in such areas are controllable, meeting the needs of families with rigid demand and improved housing purchases.

E-House Research Institute said that the market in 50 key cities across the country has been adjusted sufficiently, and the foundation for continued recovery is good in the process of subsequent policy guidance, supply and demand and housing price adjustments. It is expected that the number of cities with positive year-on-year new home transactions in August will increase, which will have a very good effect on the adjustment of market expectations.