Ke Rui Real Estate Research: "The more expensive luxury new houses will be bought in 2024" Why is the growth of second-hand transactions slightly lackluster?

Ke Ruirui Real Estate Research released a document stating that the luxury housing market will go against the trend in 2024, with a significant differentiation and a prominent feature being that the more expensive the high-end luxury new houses, the more they are purchased. The growth of second-hand transactions is relatively weak, and the differentiation between cities continues to intensify. What are the underlying reasons? What are the housing preferences of the high-end purchasing power? Can the heat of the high-end luxury housing market in 2025 continue? Transactions above 30 million total price increase significantly More expensive new houses are bought, while the growth of second-hand transactions is relatively weak In 2024, the high-end residential market remained relatively strong, especially for transactions of residences with a total price above 30 million, with new houses outperforming second-hand ones: according to CRIC monitoring data, in 2024, there were 4,356 transactions of new houses and 1,497 transactions of second-hand houses priced above 30 million in 30 key cities, up by 65% and 17% year-on-year respectively. The increase in new house transactions significantly exceeded that of second-hand houses. Among them, new houses exhibited the feature of "buying more expensive," with transactions of houses worth over 100 million doubling year-on-year, a significant increase compared to the 97% increase in houses priced between 50 million and 100 million and the 58% increase in houses priced between 30 and 50 million. However, transactions of second-hand houses worth over 100 million only remained stable compared to 2023. The concentration of transactions of luxury new houses in first-tier cities is increasing Shanghai is still the primary choice for concentrated high-end demand In terms of tier levels, the concentration of transactions of luxury new houses in first-tier cities remains stable while that of second-hand houses has decreased: according to CRIC monitoring data, in 2024, there were 4,094 transactions of luxury new houses priced above 30 million in the four first-tier cities, accounting for 94% of the total in 30 key cities, up from 91% in 2023; while there were only 1,278 transactions of luxury second-hand houses priced above 30 million, accounting for 85% of the total in 30 key cities, down from 87% in 2023. Looking at the cities, whether it is new houses or second-hand houses, Shanghai remains the primary place for concentrated high-end demand: according to CRIC monitoring data, in 2024, there were 2,600 transactions of new houses priced above 30 million in Shanghai, accounting for 60%, while there were 635 transactions of second-hand houses, accounting for 43%. Increase in supply of luxury new houses stimulates explosive transactions Product iteration and upgrade cater to the upgraded demand The surge in transactions of luxury new houses is closely related to the increase in supply since 2024. Cities like Shanghai, Shenzhen, and Suzhou have seen varying degrees of increase in the supply of luxury new houses in 2024. Specifically, in Shanghai, ... In terms of tier levels, the concentration of transactions of luxury new houses in first-tier cities is stable, while that of second-hand houses has decreased. According to CRIC monitoring data, in 2024, there were 4,094 transactions of luxury new houses priced above 30 million in the four first-tier cities, accounting for 94% of the total in 30 key cities, up from 91% in 2023; while there were only 1,278 transactions of luxury second-hand houses priced above 30 million, accounting for 85% of the total in 30 key cities, down from 87% in 2023. In terms of cities, whether it is new houses or second-hand houses, Shanghai remains the primary place for concentrated high-end demand: according to CRIC monitoring data, in 2024, there were 2,600 transactions of new houses priced above 30 million in Shanghai, accounting for 60%; second-hand transactions amounted to 635, accounting for 43%. The surge in transactions of luxury new houses is closely related to the increase in supply since 2024. Cities like Shanghai, Shenzhen, and Suzhou have seen varying degrees of increase in the supply of luxury new houses in 2024. Specifically, in Shanghai, the supply of luxury new houses priced above 30 million in 2023 was less than 850 units, with a supply-demand ratio remaining below 0.9, reaching 0.57 in 2022. However, since 2023, the supply of luxury houses has steadily increased, with 3,342 units supplied in 2024, doubling from 2023. The central districts of Huangpu and Jing'an have also seen an influx of luxury houses, leading to a steady increase in market transactions. In Shenzhen, 2024 also saw a significant increase in the supply of luxury houses, with the supply of houses priced above 30 million reaching 656 units, doubling from 2023, reaching a new high in five years, with a stable supply-demand ratio at around 1. In Suzhou, 2024 saw the introduction of nearly 100 houses priced above 30 million in areas like the Double Lake area of the Garden City Rose Garden, the Lion Mountain area of the New District, and the White Pond No.1 project in the Lake East area, filling the gap in luxury housing supply in the previous two years and leading to a doubling of transactions of luxury new houses priced above 30 million. It is worth noting that the luxury new housing market has shown the feature of "the more expensive, the more purchased," i.e., the higher the price range of the houses, the greater the increase in transactions, which starkly contrasts with second-hand luxury houses. This also implies that the high-end purchasing power is willing to pay for products and services rather than just the price. For example, in Shanghai in 2024, luxury housing products had the following three main characteristics of innovation: (1) At the community level, low-density communities, large-scale sizes, and pure villa-type neighborhoods are more favored by high-end customers. For example, the Yuyuan project in Shanghai is a mini villa development with a low plot ratio of 1.3, a building height of 16 meters, covering an area of approximately 7,523 square meters, including around 10,600 square meters of Shikumen lane, planning to build 40 Chinese-style villas. Compared to mixed-use products with fashion villas and high-rise buildings, small scale + pure format may become the core advantage that attracts homebuyers. (2) In terms of unit design, projects with high floor area ratio and multi-functional spaces are often hot sellers. Projects like the second phase of Rongchuang The Bund One Square and Longsheng Bay in Shanghai in August 2024, High-rise projects with steel structure, have achieved high sales by optimizing the building structure to improve the floor area ratio of high-rise luxury housing products, thus helping with the sales of the projects. The second phase of Rongchuang The Bund One Square achieved a floor area ratio of over 80% through careful optimization of the core structure. If some high-rise projects follow this method to increase the floor area ratio, they will also achieve good sales. (3) Customized design according to local conditions and emphasis on heritage design will also resonate with high-end customers emotionally. A typical example is the project of Zhonghai Shunchang Jiuli in Shanghai, which upholds the cultural spirit of "inheritance and innovation" and preserves the original three major groups of Pingjiangli, Dakangli, and Yongfuli within the plot, restoring the urban fabric of the three major groups, two main alleys, and nine horizontal lanes. Second-hand luxury housing saw a decrease in new listing volume and smaller price drops, indicating less attractiveness to high-end demand compared to new houses. Focusing on the new listing data for second-hand houses, Ke Ruirui Real Estate Research found that in 2024, only two cities, Beijing and Shanghai, had more than 1,000 new listings of houses priced above 30 million, with Beijing and Shenzhen seeing an increase compared to 2023, while the other five cities had varying degrees of decrease in new listings, indicating a relatively low enthusiasm among property owners. Furthermore, Ke Ruirui Real Estate Research selected 205 communities with a cumulative listing volume of more than 10 units from 2023 to 2024 as samples and observed the changes in comparable listing prices for second-hand houses. It can be seen that the listing prices for most communities only saw a slight decrease of 10%, indicating that property owners still have high price expectations. Combining with the increase in supply of luxury new houses, productThe increase in occupancy rate and the indirect price reduction to promote customer return indicate that second-hand luxury home projects lack significant appeal to high-end customers.Overall, it can be seen that the high-endization of new housing transactions and the necessity-based nature of second-hand transactions have become undeniable facts. In addition, with land prices at high levels and limited downward pressure on new housing prices, real estate developers can only continuously upgrade their products to gain a competitive advantage. Looking ahead, Ke Research believes that the new luxury housing market will continue to outperform the second-hand market. For the future luxury housing market, competition between regions and products will continue to intensify, and areas with concentrated supply need to accelerate their market entry pace to enhance product competitiveness and achieve project hot sales.