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E-mail China.org.cn, February 25, 2025
Red Star News:
In the past year, the central and local governments have introduced a series of measures to stabilize the housing market. What effects have these combined efforts had on halting and stabilizing the decline of the real estate market? How would you evaluate the outlook for the real estate market? Thank you.
Kang Yi:
Thanks for your questions. Real estate is a topic of significant public interest because it is closely linked to both economic development and improvements in people's livelihoods. In 2024, in response to the complex situation in the real estate market, the meeting of the Political Bureau of the CPC Central Committee on Sept. 26 stated that "efforts will be made to stabilize the property market and reverse its downturn." Multiple departments swiftly refined policies related to land, finance, taxation and banking. They removed restrictions on home purchases, sales and pricing, as well as the standards distinguishing ordinary from non-ordinary housing. They also lowered interest rates for housing provident fund loans, down payment requirements, existing loan rates and tax rates for home replacement purchases, collectively delivering a comprehensive policy package. Each locality has also implemented tailored policies based on its specific circumstances. The effectiveness of these policies is gradually becoming evident in several aspects.
First, market transactions have become more active. The continuous rollout of the policy package has effectively lowered the threshold for residents to purchase homes, alleviated the pressure of mortgage repayments, increased residents' willingness to buy homes, and led to an improvement in real estate sales. In the fourth quarter, both the sales area and value of newly built commercial residential properties experienced positive growth. According to sales data from 40 key monitored cities, the sales area and sales value of newly built commercial housing in December increased by 0.3% and 4.1% year on year, respectively.
Second, property prices have gradually stabilized. With the continued release of demand for first homes and improved housing supply, the supply-demand relationship has improved, leading to stabilized housing prices. In December, among 70 large- and medium-sized cities, the sales prices of newly built commercial residential properties increased month on month in 23 cities, while the prices of second-hand residential properties rose month on month in nine cities. In particular, the sales prices of newly built commercial residential properties in first-tier cities increased by 0.2% month on month, marking the first increase since June 2023. Meanwhile, the sales prices of second-hand residential properties rose by 0.3% month on month, experiencing an increase for three consecutive months. The sales prices of newly built commercial residential properties in second-tier cities shifted from a decline last month to remaining flat month on month. The month-on-month decline in the sales prices of newly built commercial residential properties in third-tier cities has continued to narrow for four consecutive months. Year-on-year declines in commercial housing prices have narrowed across cities of all tiers.
Third, market expectations have continued to improve. Thanks to the combined effects of the policies, key indicators of the real estate market are consistently improving, gradually boosting market confidence. In December, a monthly housing price survey conducted in 70 large- and medium-sized cities showed that 69.3% of surveyed industry professionals expected prices of newly built commercial housing to remain stable or increase in the next six months, up 0.8 percentage points from the previous month.
Fourth, there has also been an improvement in sectors related to real estate. The recovery of the real estate market has led to improvements in related industries. In December, the business expectation index for the construction sector increased by 1.5 percentage points compared to the previous month, marking the third consecutive month of growth. As sales of commercial housing improve, the demand for decoration and renovation is gradually increasing, leading to an uptick in the sales of furniture and building materials. In December, retail sales of furniture by enterprises above designated size rose 8.8% year on year, marking four consecutive months of growth. Building and decoration material sales increased 0.8%, posting two straight months of growth.
Overall, in recent times, the real estate market has seen an increase in positive changes due to the effects of the policy package, and market confidence is gradually being strengthened. With the effective implementation of both existing and incremental policies, the real estate market is expected to continue improving in the next phase. In the medium to long term, China's urbanization process remains incomplete, with continued potential for first-home purchases and housing improvements. Demand for safer, more comfortable, greener and smarter homes will continue to grow as new development models for the real estate market gradually take shape. This will support the real estate market's stable and healthy development.
Thank you.
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