CRIC Real Estate Research: The property market will continue to bottom out in 2024, and some cities will stabilize in 2025.

The Keri Real Estate Research Report stated that the total demand for the real estate market in 2024 will remain stable, continuing the trend of bottoming out. Monthly trends showed a pattern of stability followed by a slight decrease and then an increase, with varying degrees of increase in transactions for both new and existing homes in the fourth quarter. There are signs of a slight increase in the proportion of new home transactions. In terms of tier levels, the overall resilience of first-tier cities is stronger, with market activity significantly increasing following the new policy on September 26th. The supply and demand of new homes in the fourth quarter increased compared to the previous quarter, with Shenzhen leading the pack. Second and third-tier cities have not recovered to the same extent as first-tier cities, leading to increased differentiation between cities. Looking ahead to 2025, it is believed that the overall supply of residential properties in the country will remain stable with a slight decrease. The decrease may be slower compared to 2024, and the scale of new home transactions may continue to remain stable or slightly decrease. The trend is expected to see a bottoming out in the first half of the year, with a weak recovery in the second half. Cities like Hangzhou, Shanghai, Chengdu, Xi'an, Tianjin, and Shenzhen are expected to stabilize first, while the warming up of other cities still awaits development. Market Overview: Total demand for new and existing homes decreases slightly by 8%, with first-tier cities experiencing a 7% increase and Shenzhen leading with a 45% rise. Since 2024, the total demand for new and existing homes has remained stable. According to CRIC monitoring data, the total transaction area of new and existing homes in 30 key cities in 2024 is expected to reach 370 million square meters, a slight decrease of 8% compared to 2023. However, in terms of structural composition, the increase in existing home transactions has slowed down, while the proportion of new home transactions has slightly decreased, with a decrease of 24%. In terms of tier levels, the recovery of first-tier cities is better than second and third-tier cities. According to CRIC monitoring data, in 2024, only the four first-tier cities saw a 7% increase in the total transaction area of new and existing homes compared to the previous year, with 11 third and fourth-tier cities experiencing a leading decrease of 14%. Looking at individual cities, Shenzhen saw the highest increase of 45%, followed by Changsha, Beijing, and Shanghai with increases ranging from 4% to 7%. New Supply: The fourth quarter sees a rebound in "sales determine production" trend, with a cumulative year-on-year decrease of 30% Since 2022, there has been a significant decrease in new housing supply in various cities, coupled with a stagnant market, resulting in low enthusiasm from real estate developers. The cumulative year-on-year decrease in the first 11 months is 30%. In terms of trends, in the fourth quarter of 2024, the national supply of residential properties steadily decreased compared to the third quarter. According to CRIC monitoring data, there was a 7% decrease in the average monthly supply of new housing in 115 key cities in October and November, with a 24% year-on-year decrease. The cumulative year-on-year decrease for the first 11 months is 30%. Based on month-on-month data for 30 cities, it is estimated that December data for 100 cities will reach 17.26 million square meters, a month-on-month increase of 6% but a year-on-year decrease of 30%. Looking at the overall annual data, the decrease is still around 30%, with a trend of decreasing supply continuing. Combining the estimated data for December in 30 key cities, it is clear that due to end-of-year performance impact, real estate developers have shown increased enthusiasm in pushing projects, with a 6% month-on-month increase in December supply. Overall, the supply in the fourth quarter increased by 5% compared to the third quarter, but it is still lower than the same period last year, with a cumulative year-on-year decrease of 29%, indicating a continued significant impact of supply constraints. In terms of tier levels, influenced by the "sales determine production" model, the increase in the first-tier cities in the fourth quarter is significantly higher than in the second and third-tier cities. The differentiation between cities continues to intensify, with cities showing significant month-on-month increases falling into two categories: those benefiting from the positive effects of the September 30 policy such as Shanghai, Shenzhen, Chengdu, and Hangzhou, and those like Nanjing, Suzhou, Ningbo, Wuxi, and Zhuhai largely due to a lower base in the third quarter seeing a temporary increase in the fourth quarter, although the overall scale of new projects is still below last year's levels. New Home Transactions: Reversing the trend to increase in the fourth quarter, reaching a new high, with a cumulative 24% decrease for the year, and Shenzhen showing a positive growth of 32% In the fourth quarter of 2024, the real estate market stabilized, with new home transactions reaching a new high for several months in a row. According to CRIC monitoring data, the total transaction area for new homes in 115 cities in October and November exceeded 50 million square meters, with a monthly average increase of 50% compared to the third quarter and a year-on-year increase of 12%. The cumulative year-on-year decrease in the first 11 months was 27%, which narrowed by 4 percentage points compared to the previous month. The trend showed a pattern of "low at first, then high", especially since entering the fourth quarter, new home transactions have reached new highs since the second half of 2023. Based on month-on-month data for 30 cities, it is estimated that December data for 100 cities will reach 26.48 million square meters, with respective month-on-month and year-on-year increases of 9% and 6%. The fourth quarter saw an increase in transactions due to policy influences, with a leveling up from the previous quarter. However, the cumulative year-on-year decrease is still gradually narrowing, reaching 24% overall. Transactions in the fourth quarter continued to climb, reaching a total transaction volume of 47.22 million square meters in 30 monitored cities, with a substantial increase of 63% month-on-month and a 12% year-on-year growth. The cumulative year-on-year decrease narrowed to 24%. In terms of tier levels, first-tier markets showed significantly better resilience than second and third-tier cities, with respective month-on-month and year-on-year increases of 44% and 77%, and a cumulative year-on-year decrease of 10%. Shenzhen's performance is noteworthy, with a doubling of new home transactions month-on-month in the fourth quarter due to the positive effects of new policies, achieving positive growth for the year and being the only city among the 30 surveyed to achieve a positive year-on-year change. Most second and third-tier cities saw a steady recovery in the fourth quarter, with increases in transactions month-on-month, but cities such as Wuhan, Hangzhou, Xi'an, Changsha, Changchun, and Zhuhai have not yet fully recovered to the levels of the same period in 2023. It is worth noting that the cumulative year-on-year decrease in eight cities has narrowed to within 20%, with Tianjin's purchasing power continuing to recover, showing a low-level rebound in transactions overall; in cities like Chongqing, Kunming, Xiamen, Fuzhou, Foshan, Changzhou, and Jiaxing, most have reached or are nearing the bottom in terms of transaction volume, with limited room for further decline. Second-hand Transactions: Increasing month by month, reaching a record high in the fourth quarter, with a year-on-year increase of 6%, and Beijing, Shanghai, Shenzhen, and Hangzhou seeing increases of over 20% In the fourth quarter of 2024, the cumulative transaction area of second-hand residential properties in 35 key monitored cities is estimated to be 66.69 million square meters, an increase of 23% month-on-month and 28% year-on-year. The total cumulative transaction area of second-hand residential properties for the year is 226.15 million square meters, with a year-on-year increase of 6%. Looking at the monthly changes throughout the year, there is an overall upward trend, with significant increases in transactions in the fourth quarter. From October to December, transactions continued to rise, with December reaching a monthly transaction volume of 24.11 million square meters, the second-highest level in four years (the highest being in March 2023 at 25.75 million square meters).Quarterly revenue reached an all-time high in the fourth quarter. Overall, the housing market continues to trend downward, with sales volumes expected to stabilize in the first half of 2025 and experience a slight decline for the year as a whole. The market is expected to bottom out as indicators such as sales of new and existing homes, inventory levels, and the availability of funding and supportive policies begin to show signs of improvement.Under the stimulus of policies, both new and second-hand housing transactions reached the highest point of the year in the fourth quarter of 2024. However, in the first quarter of 2025, during the off-season of the Spring Festival, transaction expectations are expected to decline, but are still expected to increase by 40% year-on-year. In terms of housing prices, in 2024, new housing prices as a whole maintained a high fluctuating trend, while second-hand housing continued to "trade volume for price." However, in the fourth quarter, some cities showed signs of stabilizing in new housing prices, predicting that in the first half of 2025, about half of the core 70 cities will see housing price expectations stabilize. Real estate development investment has seen a steady 10% year-on-year decrease for a year, and it is predicted that the cumulative year-on-year growth rate of real estate development investment in the first and second quarters of 2025 will remain stable. In terms of market levels, first-tier cities continue to have active transactions, with overall transaction areas stabilizing slightly. Second-tier cities have maintained stable transaction volumes, with a rotation of strength between cities. Third- and fourth-tier cities will continue to see a bottoming out trend in transaction volume. After two years of adjustment, most cities have fallen to the bottom of transactions, and places like Yiwu and Jinhua, as strong third-tier cities dependent on domestic demand, can still maintain market heat, with housing transactions expected to steadily increase compared to 2024. Additionally, it is worth noting that the resilience of second-hand housing compared to new housing will continue, but the percentage of second-hand housing tilting towards new housing will gradually increase. The flow of demand will still exist, especially in cities dominated by demand such as Tianjin, Zhengzhou, and Chongqing, where second-hand housing will continue to attract new housing customers. However, for improvement and high-end customer groups, new housing products will continue to upgrade and adjust prices accordingly, with outstanding cost performance attracting customers back to new housing. Some demand-driven products will also compete in luxury housing with "overallocated" standards, facilities, and services, gradually becoming "standard," further improving the cost performance of products, and attracting some demand to reconsider purchasing new housing.Cities: Hangzhou, Shanghai, Chengdu, Xi'an, Tianjin, Shenzhen and other 10 cities are expected to be the first to stop falling and stabilize, while other cities still need further transmission. Under the intensive policies introduced in 2024, the performance of the markets in various cities has shown significant differences. In fact, whether the city markets can stabilize mainly depends on economic, population, and other fundamentals. We have calculated the expected stabilization of 10 cities based on various dimensions such as scale, price, inventory, turnover, second-hand housing, conversion, investment, and profitability. The list is as follows: Hangzhou, Shanghai, Chengdu, and Xi'an belong to the first tier, with the market hotspots remaining hot in the short term but facing a cooling trend in the third quarter. It is fortunate that the policy support can still keep the market warm in the short term. Tianjin, Shenzhen, and others belong to the second tier, having experienced a deep adjustment in the earlier period. New home visits, subscriptions, and transactions of second-hand houses have all shown a significant increase in the short term, and the market is expected to continue to recover. Cities such as Hefei, Beijing, Guangzhou, and Changsha are mainly based on the low inventory situation. As long as sales improve, the market can quickly recover, showing great potential. Most of the remaining second and third-tier cities are still in a period of high inventory and slow turnover adjustment, with market recovery still depending on the transmission of heat from these ten core cities.