On October 17, heads from five government departments appeared at a press conference organized by the State Council Information Office, centered on the theme of the real estate market. Over the past few months, how effective have the policies aimed at stabilizing and revitalizing the real estate market been? With the increase of credit for the “white list” projects in real estate to 4 trillion yuan and the launch of new initiatives for the renovation of 1 million obsolete urban village homes, what do these developments signify?
In this episode of “News 1+1,” we spoke with Dr. Yu Xiaofen, the director of the China Housing and Real Estate Research Institute at Zhejiang University of Technology, for her analysis.
What is your perspective on the effectiveness of regional self-regulation and city-specific policies?
Dr. Yu Xiaofen: The real estate market is inherently regional, with varying supply and demand dynamics across different cities. Each city has distinct characteristics and positioning. Major cities, particularly the four first-tier ones, have adopted city-specific strategies that have yielded positive outcomes. I’ve been closely monitoring metrics like new home sales and the inventory in the secondary market. Our observations indicate that first-tier cities are leading a significant surge in transaction volumes, with third and fourth-tier cities following suit for the first time. New home sales have started to catch up with the previously dominant secondary market. This is especially propelled by pent-up demand entering the market, which has boosted sales for ordinary developments and enhanced overall market confidence. The recent easing of purchase limitations and sales restrictions in first-tier cities has contributed to the stabilization of the real estate market.
The Ministry of Housing and Urban-Rural Development has stated the real estate market is beginning to find its bottom. How should we interpret the concept of “finding the bottom”?
Dr. Yu Xiaofen: To me, “finding the bottom” refers to the stabilization of both volume and price, where sales volumes and housing prices essentially level off. I believe we have solid grounds to conclude that the real estate market is stabilizing at or near its bottom. Three main points support this:
1. The decline in housing prices observed in August and September has slowed, both month-over-month and year-over-year. In particular, we expect substantial growth in commodity housing sales in October compared to previous years.
2. Based on typical patterns in the real estate market, after three years of adjustment, we should witness signs of stabilization.
3. In most cities, the recent price adjustments have been significant, with prices returning to a relatively reasonable range. Transaction volumes have dropped by nearly 50% from their peak, indicating that the market is poised for stabilization.
Regarding the initiative to renovate 1 million dilapidated urban village homes, what do you perceive as the intent behind this policy?
Dr. Yu Xiaofen: The urban village renovation effort serves two key purposes. Firstly, it aims to improve living standards. Many homes in urban villages are informal, often posing safety risks and lacking adequate amenities, resulting in poor living conditions. Through renovation, we can drastically enhance the living environment and quality for residents. This policy emphasizes the use of monetary compensation for displaced residents, allowing them to purchase preferred housing options directly in the market without a transitional period, enabling an immediate move into new homes. Additionally, this initiative can help local property markets reduce inventory, further balancing supply and demand dynamics in the real estate sector.
What’s your view on the need to “win” the battle for ensuring housing delivery?
Dr. Yu Xiaofen: When we talk about “winning” the battle for housing delivery, it essentially involves diligently managing every step of the housing delivery process. The phrase indicates the government’s firm commitment and determination to succeed, which implies a mandate for success without room for failure. Achieving this goal requires collaborative efforts across all sectors and domains to secure victories in housing delivery.
