At the 2023 China Real Estate Big Data Annual Conference and 2024 China Real Estate Market Trend Report held recently, Huang Yu, executive vice president of the China Index Research Institute, predicted the future trend of China's property market in his keynote speech: 1. Looking forward to 2024, the recovery of the real estate market still depends on whether home buyers are expected to recover. 2. It is estimated that the sales area of commercial housing will decrease by 4.9% year-on-year in 2024. In the face of Huang Yu's prediction, some industry insiders said that if there is no accident, there is a high probability that it is right.
In fact, Huang Yu's prediction that the sales area of commercial housing in 2024 will fall by 4.9% year-on-year is based on evidence. In 2023, after the mainland has introduced a large number of favorable policies, the transaction area of the domestic property market will still decline significantly. According to data from the China Index Research Institute, from January to November, the sales area of newly built commercial residential buildings in key 100 cities fell by about 5% year-on-year.
In 2024, with the continuous introduction of good news, the full recovery of the macro economy, the gradual increase in people's income, and the full relaxation of restrictions on developers' price reductions in various places, it is unlikely that the sales area of commercial housing will continue to fall sharply next year, and it is a high probability that there will be a "slight decline".
At the beginning of December, after Suzhou fired the "first shot" to cancel the price reduction restrictions on new commercial housing, now Shenzhen and Nanjing have also announced the cancellation of the "price limit order", that is, developers can decide whether to reduce prices and how much according to their actual conditions. More cities are expected to lift their "price caps" for developers in 2024.
In fact, the relaxation of restrictions on the price reduction of commercial housing in various places is also to help developers destock and return funds as soon as possible. This can reduce the possibility of a developer's debt crisis and the possibility of unfinished buildings. Of course, in the environment of developers' price reductions and promotions, it is not difficult to understand that the sales area of commercial housing is expected to "fall slightly".
So, since there are various favorable policies introduced in 2024, there are developers who reduce prices and promotions, and there are residents whose incomes will increase. So Huang Yu should predict that the transaction area of the property market in 2024 should rebound sharply compared with this year, why only give a result of the property market transaction area continuing to "decline slightly" next year? This is mainly due to the fact that Vice President Huang Yu said before that the recovery of the real estate market still depends on the expected recovery of home buyers. There are three main aspects of home buyer expectations:
First, the restoration of confidence in the property market. Now leading real estate companies such as Country Garden and Evergrande Real Estate have unfinished buildings, which will seriously dampen buyers' confidence in buying houses. Many potential home buyers are worried that they will suffer significant losses if they buy an unfinished property. Therefore, many potential home buyers are in a wait-and-see state and are not willing to enter the market easily. Obviously, getting homebuyers' confidence back to full recovery won't happen overnight.
Second, the expectation of future housing price trends. Some people buy a house mainly based on the expectation of future housing price trends. They are not worried that house prices will fall in the future, but that they are worried that they will continue to fall after buying a house. From the perspective of real estate in 2023, housing prices in many cities have fallen significantly, not only in second- and third-tier cities, but even in first-tier cities such as Beijing, Shanghai and Shenzhen. This is expected to continue into 2024. In the case of expecting housing prices to fall in the future, it is unrealistic to expect a large number of residents to enter the market to buy houses.
Third, the recovery of future revenue expectations. In the wake of the pandemic, many people have lost their incomes or lost their jobs, and many families have lowered their expectations for future income growth. Of course, in 2024, the income of many residents will gradually resume growth, but it is no longer possible to have the same optimistic expectations as in the past. Obviously, the people's expectations for future income growth have not recovered, so don't expect a big reversal in the transaction area of the property market, and it would be good to be able to maintain a "slight decline".
Huang Yu predicts the trend of China's property market in 2024: 1. The future recovery of the real estate market still depends on whether home buyers expect to recover. 2. It is estimated that the sales area of commercial housing will decrease by 4.9% year-on-year in 2024. What Huang Yu means is that whether the real estate market can recover in 2024 depends on the expectations of home buyers. She predicts that there will be a "slight decline" in the sales area of commercial housing next year. The main thing is to see that people's expectations for the future are not optimistic. Of course, we also need to see favorable factors such as favorable policies and developers' price reductions and promotions. Therefore, it is likely to be right to predict a "slight decline" in the sales area of commercial housing in 2024.