Haitong: Policy direction is more positive, real estate may see overall improvement by 2025.

Haitong released a research report stating that the policy direction has shifted to be more positive. It is believed that by 2025, the overall real estate market in China may see some improvement, and the differentiation between large and small cities may continue. It is believed that policies will be adjusted according to changes in the economic situation. In the medium to long term, the Chinese economy still has great potential to be unleashed. More financial investment is needed in real estate policies. Haitong's main points are as follows: By 2025, the real estate market may see some improvement, with a possible narrowing of the decline. Since 2021, there has been a significant adjustment in the Chinese real estate market. Referring to overseas experiences, the adjustment in real estate "prices" in China is relatively slow, but the adjustment in "quantity" is significant and faster. Taking into account changes in the trend of homebuyers in China, the displacement effect of existing homes, inventory issues, etc., with positive policy support, the overall real estate market in China may improve by 2025, with the decline possibly narrowing. Sales performance may be better than prices, but there will still be pressure on new investments. The differentiation between large and small cities may continue, with high-tier city prices still under pressure, but quantity may still show resilience, and low-tier cities may struggle with real estate volume. At the regional level, real estate market adjustment in China's first-tier cities has been slower, with price adjustments happening faster than quantity adjustments. There is still significant pressure on inventory clearance in low-tier cities. Overseas experiences show that the size of the real estate bubble and population factors have a significant impact on the real estate market trends. Therefore, without considering new policies, we believe that the pressure on real estate quantity in high-tier cities may be less than on prices, while the pressure on real estate quantity in low-tier cities remains high. More financial investment is needed in real estate policies, and currently, there are marginal changes happening in policies. By 2024, the focus of stabilization policies for real estate has shifted from monetary tools to fiscal tools. In 2025, there is still room for policies supporting resident demand, especially for high-tier cities, where adjusting home purchase policies may be effective. Incremental policies should also increase fiscal support to revitalize assets and especially target low-tier cities. Adapting policies according to specific circumstances is still the main direction for policy adjustments. Risk Warning: Delays in the implementation of real estate policies and slower-than-expected economic recovery in China.