Dongxing: First-tier city housing prices are more resilient Low-tier city housing prices have already undergone deep adjustments

Dongxing released a research report stating that overall, the resilience of new housing prices is generally stronger than that of second-hand houses. Prices in first-tier cities show stronger resilience, while prices in lower-tier cities have already undergone deep adjustments. The trend in housing prices shows that the higher the city level, the greater the overall cumulative increase, but in first-tier cities, the cumulative increase in new housing prices lags behind that of second-hand houses, while in second and third-tier cities, the cumulative increase in new housing prices exceeds that of second-hand houses. The higher the city level, the smaller the decline from the peak of housing prices, and the shorter the duration of the decline. In terms of city level: Both new and second-hand housing supply and demand in first-tier cities have been in a tight state for a long time, forming a stronger support for property prices. Especially with strong high-end purchasing power combined with long-term undersupply and arbitrage opportunities, it effectively maintains the resilience of prices in its high-end improvement market. Dongxing believes that current first-tier cities are generally relaxing purchase restrictions and canceling standard requirements for ordinary residential buildings, and the long-suppressed demand for improvements is expected to be effectively released. Second-hand house prices are expected to stabilize ahead of new housing. With the disposal of high-quality second-hand housing supply and the optimization of new housing supply, new housing market prices are also expected to gradually stabilize. The situation in second-tier cities is more differentiated, but also follows the rule that the higher the city's relative level, the more resilient the housing prices. Cities like Hangzhou, Chengdu, and Xi'an, with good population inflow and economic development, have the highest cumulative increase in housing prices among second-tier cities, with the smallest decline from the peak. Dongxing believes that the gap in the cumulative increase between new and second-hand housing in some second-tier cities is significant. Against the background of a significant relaxation of sales restrictions, the influx of a large number of new houses may exert certain pressure on the prices in the new housing market. Many new and second-hand housing markets in third-tier cities are already in a state of deep adjustment. Dongxing believes that due to cost support, there may not be much further room for the downward trend of new housing prices in many third-tier cities. However, the housing price trends in such cities continue to be weak, demand is clearly insufficient, and future new housing still faces slow and persistent destocking pressure. In terms of household type: Large-sized housing in first-tier cities has stronger demand support. Dongxing believes that the supply of high-end markets in first-tier cities and some core second-tier cities is relatively scarce, and the purchasing power released by high net worth individuals is expected to support the resilience of prices in their high-end improvement markets. However, in the context of relaxed planning and design standards and developers paying more attention to the development of high-end improvement products, the second-hand market in the high-end market may face pressure from lagging product strength and an increase in listings. Starter small-sized housing in all-tier cities is facing greater pressure. Dongxing believes that as the fundamental shortage of housing has fundamentally changed, improvement demand has become the market's leading force. The commodity housing market will focus more on solving the problem of people "living well," and starter small-sized housing will face the dual pressures of declining demand and the market for affordable housing. Compared to the United States, China's housing price adjustment time has been long enough, and perhaps the period of greatest pressure on housing prices is passing. The duration of the housing price decline in 70 Chinese cities has exceeded the duration of the continuous decline in 20 American cities after the financial crisis. Although the percentage decline in housing prices in China's 70 cities from the peak is not as large as that in 20 American cities, when calculated in terms of cumulative increases and decreases, the cumulative increase in housing prices in China's 70 cities within the same period is significantly lower than that in 20 American cities. Risk warning: Risks of industry policies falling short of expectations, risks of continued downward fundamentals in the industry