real estate developers are not enthusiastic about launching new homes in the "golden september" period, and the pressure to sell new homes is the main reason
2024-09-14
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"golden september and silver october" has always been the peak sales season for the real estate market. during this period, real estate companies do a good job in marketing, actively promote sales, and attract buyers through preferential policies and activities. in september and october every year, the supply and sales performance of real estate companies are usually significantly better than in other months.
however, it is worth noting that in this year's "golden september", real estate developers were not very active in launching new projects. the reason for this is that the downward trend in market sales has not changed, the inventory of new homes is high, the sales cycle is prolonged, the scale of land transactions has shrunk, and real estate developers are under financial pressure.
lack of enthusiasm for sales promotion
recently, data from a survey by real estate research firm cric showed that the estimated new commercial housing supply area in 28 key cities in september is 7.03 million square meters, a 4% decrease from the previous month and a 59% decrease from the previous year. the absolute amount is significantly lower than the monthly average level in the second quarter and is basically the same as the monthly average of 6.99 million square meters in the first quarter.
looking at the cities, only the supply in first-tier cities will increase by 10% month-on-month, while the supply in third- and fourth-tier cities will almost be halved both month-on-month and year-on-year.
among the first-tier cities, beijing and guangzhou saw a concentrated increase in new home supply, with the supply increasing by 28% and 33% month-on-month respectively. the supply of new homes in shanghai and shenzhen was on a downward trend both month-on-month and year-on-year. among them, shenzhen had the largest decline, down 22% month-on-month and 70% year-on-year. the supply may be less than 3,000 units.
the supply in second-tier cities fell slightly by 5% month-on-month and by more than 60% year-on-year, with differentiation continuing to intensify. among them, xi'an and changsha had large monthly supply, exceeding 500,000 square meters, up 4% and 79% month-on-month. although the supply in ningbo, chongqing and xiamen was less than 500,000 square meters, the month-on-month growth was large, at 660%, 79% and 32% respectively. the supply in the remaining second-tier cities basically maintained a trend of both year-on-year and month-on-month declines. even in chengdu and hangzhou, which were relatively popular in the early stage, the supply of new homes in september also fell month-on-month, and the enthusiasm of real estate developers to launch new projects was not high.
compared with first- and second-tier cities, the supply of new homes in third- and fourth-tier cities has dropped significantly, with year-on-year and month-on-month declines of more than 40%. according to cric research center, due to the sluggish market, third- and fourth-tier cities are basically in the stage of destocking.
mingyuan real estate research institute believes that the real estate market used to have distinct off-seasons and peak seasons. there was a "small spring in march" after the chinese new year, which continued to the "golden week in may". from june to august, the market gradually returned to normal, and returned to its peak in september, hence the "golden september and silver october". the reason for the peak season is, on the one hand, related to the linkage effect brought about by the concentrated launch of real estate companies during the peak season, and on the other hand, during these peak seasons, the accumulated demand in the previous few months of the off-season exploded. however, the weak market demand in recent years has smoothed out all the peaks and troughs, and the "golden september and silver october" is no longer as good as it used to be. since august this year, the effect of the new policy has gradually weakened, and the heat of the real estate market has fallen again. real estate companies do not have high expectations for september transactions.
destocking pressure is the main reason
liu shui, director of corporate research at china index academy, told china business news that the traditional marketing peak season of "golden september and silver october" has arrived, but real estate developers are less active in launching new homes this year, mainly due to the current downward pressure on the market. "the downward trend in new home sales has not changed, and the scale of land transactions has continued to shrink, resulting in the supply of new homes remaining low. in addition, real estate developers are currently under financial pressure, which has led to them being more cautious in launching new homes."
li yujia, a researcher at the guangdong housing policy research center, told china business news that developers were not very enthusiastic about launching new projects in the "golden september". the main reason behind this is that developers have a large number of unsold houses in their hands. in addition, the overall sales rate of developers' new projects is relatively low, and the sales cycle is relatively long. according to his statistics, about half of the new houses on the market are stocks that were listed before 2024. "in this case, if developers still launch new projects and sales are not smooth, it will only lead to worse market expectations and extend the cycle of developers' capital recovery. the current primary goal of developers is to sell the houses they have first." li yujia said.
li yujia also said that during his research, he found that the pace of developers launching new properties has also changed: "in the past, they launched properties by building, but now some real estate projects have begun to launch properties by floor, with smaller steps. this is consistent with the logic that real estate developers were not enthusiastic about launching new properties in september. the reason behind this is that the inventory in the market is high and developers have difficulty in selling them."
it is a fact that the overall sales rate of the new home market has slowed down and the sales cycle has lengthened. in early september, at the secondary market marketing summit forum of the real estate agency shenzhen centaline, ren zhuang, general manager of the secondary market strategy center of centaline real estate in the mainland, said that when the real estate market was good in 2016 and 2017, the sales rate of new residential projects in 29 key cities across the country was around 70% on average in the first week of opening, and then gradually declined. after the "517 policy" this year, the overall down payment ratio across the country was lowered, the market conditions improved, and the weekly average sales rate rose to 33%. as the effect of the "517" new policy weakened, the value fell back to 29% in august.
according to the calculation results of china index academy, a real estate research institution, by july 2024, the national residential "started but unsold inventory" will be 2.52 billion square meters, of which "completed but unsold inventory" will be 380 million square meters. although the inventory volume has decreased, from the perspective of the clearance cycle, the current clearance cycle of "started but unsold inventory" is about 3.4 years, and it is showing an upward trend, so the pressure to sell is relatively large.
china index academy believes that although the current inventory scale has declined, it is different from the decline in market inventory scale from 2016 to 2017. the situation in 2016 to 2017 was "market sales increased, inventory levels decreased, the destocking cycle shortened, and market inventory pressure eased", while at present "although the market inventory level has declined, sales continue to be sluggish, the destocking cycle is still extended, and market inventory pressure is rising."
since may this year, "destocking" has become an important policy direction for the real estate industry. many cities have successively issued notices to collect and store housing sources. however, affected by factors such as purchase prices, capital costs, and housing mismatch, the state-owned enterprises' "destocking" model is still in the exploratory stage as a whole.
china index academy believes that my country's real estate sales are still facing adjustment pressure, and the market is still in the bottoming stage. if the "destocking" policy is implemented faster in the next few months, it will have a positive impact on the improvement of real estate companies' cash flow and residents' expectations. on the housing side, state-owned enterprises' acquisition and storage is the most direct means of destocking, but the policy details still need to be optimized and the implementation pace needs to be accelerated. on the land side, revitalizing existing land and optimizing land supply are the main policy directions, among which land withdrawal and replacement may become an effective way to improve the land inventory structure.
liu shui said that on the market demand side, there is a lot of room for optimization of the purchase restriction policy in first-tier cities. at the same time, further lowering mortgage interest rates and increasing the deduction of mortgage interest from personal income tax may become the direction of demand-side policy optimization, thereby further reducing residents' housing purchase costs. overall, with the arrival of the traditional peak season of "golden september and silver october", real estate companies still need to fully seize this opportunity and actively respond to market challenges to achieve the goal of rapid sales.
(this article comes from china business network)
