22.9 months!The inventory removal cycle of 100 cities has set a new record in the past 14 years, and experts said that "the property market will be under great pressure in 2024-2025"

Every reporter: Chen Li Every editor: Chen Mengyu

Inventory in 100 cities hit a record high.

According to the latest "January 2024 China 100 Cities Inventory Report" released by the E-House Research Institute, in January, the inventory scale of newly built commercial residential buildings in 100 cities was 502.55 million square meters, an increase of -0.5% month-on-month and a year-on-year increase of -4.2%, and the inventory-to-sales ratio was 22.9 months, the highest level since data monitoring began in 2010.

"The frequency of easing policies for the property market around the Spring Festival is high, and market expectations are also actively adjusted. On February 22, Yan Yuejin, research director of Shanghai Yiju Real Estate Research Institute, said in an interview with the reporter of "Daily Economic News" that with the release of various policy effects, the subsequent destocking cycle of various cities will usher in an inflection point, and the market will develop in the direction of stabilization and improvement.

A new record for the inventory depletion cycle

In January, the supply area of newly built commercial residential buildings in 100 cities across the country was 14.49 million square meters, and the transaction area was 17.12 million square meters, showing an overall trend of supply exceeding demand.

As of the end of January 2024, the inventory of newly built commercial residential buildings in 100 cities across the country was 502.55 million square meters, an increase of -0.5% month-on-month and a year-on-year increase of -4.2%. This is the 12th consecutive month of year-on-year decline in the inventory scale of 100 cities across the country, which means that the inventory trend has been the main feature of the following behavior since 2023.

In terms of urban energy level, as of the end of January, the total inventory of newly built commercial residential buildings in the first, second, third and fourth tiers of the country's 100 cities was 34.8 million, 244.06 million and 223.69 million square meters respectively, with a month-on-month growth rate of -2.5%, -0.7% and 0.0%, and a year-on-year growth rate of 6.0%, -6.9% and -2.5% respectively. In general, the supply capacity of first-tier cities is relatively strong, while that of second- and third-tier cities is weak.

Year-on-year growth rate of new commercial housing inventory in first-, second-, third- and fourth-tier cities Source: CRIC and E-House Research Institute

"Such data shows that the potential supply capacity of some cities is constrained. Recently, since the promotion of the financing coordination mechanism across the country, commercial banks have actively connected with specific projects, which objectively helps to improve the financial situation of real estate enterprise projects and also helps to restore the supply capacity of real estate enterprises. E-House Research Institute analysis said.

It should be noted that in January, the inventory-to-sales ratio of the inventory removal cycle in 100 cities across the country was 22.9 months, which was the highest level since data monitoring began in 2010. Among them, the inventory-to-sales ratios of newly built commercial residential buildings in the first, second, third and fourth tiers were 16.6, 19.6 and 30.2 months respectively. On the whole, the de-urbanization cycle of first-tier cities is relatively good, with second-tier cities in the middle, and third- and fourth-tier cities being the longest.

From the ranking, it can be found that Chengdu, Sanya and Hangzhou have relatively good de-escalation rates, with inventory-to-sales ratios of 6.4 months, 7.9 months and 8.1 months, respectively, while two cities with de-escalation periods of more than 100 months are Shaoguan (141.7 months) and Jinjiang (108.9 months).

Yan Yuejin said that the current macroeconomic environment is generally improving, the effect of the housing purchase policy is gradually being released, and the contradiction between real estate supply and demand is gradually being resolved, and such factors will gradually improve the real estate decentralization situation, "Before and after the Spring Festival, the property market easing policies are introduced frequently, and the market is expected to be actively adjusted, and the destocking is facing a better environment, and the project will usher in an inflection point, and the real estate market will have a stable and good development foundation in 2024." ”

"The property market will be under great pressure in 2024-2025"

It should be noted that the growth of new housing inventory in various cities is not only affected by the overall environment, but also related to various factors such as land and population.

According to a report from the Tongce Research Institute, between 2014 and 2023, the scale of commercial residential sales in mainland China was 13.2 billion square meters, and during this period, 19.8 billion square meters of land were transferred, virtually increasing the potential inventory of 6.6 billion square meters.

On this basis, a large number of cities have a generalized inventory removal cycle of more than 3 years, such as Changchun, Chongqing, Dalian, Shenyang and other cities The generalized inventory removal cycle is more than 6 years, even in the popular Yangtze River Delta hot areas, Nanjing also needs 3.4 years, Suzhou 2.54 years, mainly due to the 24% decline in the transaction area of commercial housing in Nanjing in 2023, and the decline of 35% in Suzhou, but the lack of pullback on the land supply side, the transaction scale of land construction in Nanjing in 2023 will only decline by 6.9%, and Suzhou will only decline by 15.2% , which led to a significant increase in the generalized digestion cycle in Nanjing and Suzhou.

In addition, residents' preference for buying houses has also changed significantly, with the ratio of second-hand and first-hand transactions in 2023 rising from 0.77 in 2022 to 1.06, and the absolute value has reversed substantially.

"With the increase in the supply of second-hand housing, the increase in prices and declines, the demand for tax incentives under administrative intervention, and the increase in the number of buyers, the advantages of second-hand housing will be more obvious, and it will also accelerate the crowding of the new housing market, and the substitution effect of second-hand housing on new housing will be more obvious. According to the analysis of Tongce Research Institute, the country will be in the stage of destocking from 2024 to 2025, and the property market will be under great pressure.

Judging from market feedback, during the Spring Festival in 2024, the promotion efforts in various places will be average, and most of the marketing efforts will continue the pre-holiday sprint level, and the performance of the property market in many places will be relatively flat.

According to the statistics of the China Index Research Institute, the average daily transaction area of first-tier cities increased by 108% during the Spring Festival, second-tier cities fell by 46%, and third- and fourth-tier cities fell by 29%.

In addition, according to CRIC data monitoring, the Spring Festival week (February 9-February 15, 2024) in most cities is close to zero supply, and the new supply in 50 key cities during the two weeks of the Spring Festival (February 2-February 15, 2024) is only 3.9644 million square meters, down 11% year-on-year and 53% compared with the same period in 2022.

However, it should be pointed out that recently, a new round of property market policies has been introduced in many places. For example, Hainan, Jinan, Tianjin and other places have successively issued provident fund policies to adjust the minimum down payment for the first housing provident fund loan to 20%, and the minimum down payment ratio for the second set to 30%; Xingwen County, Sichuan Province, has invested 30 million yuan in a special fund for building and purchasing houses, and has supported deferred down payment and monthly payment advance.

Chen Wenjing, director of market research at the China Index Research Institute, said that after the Spring Festival, residents are gradually on the right track to work, buy houses, and continue to optimize the property market policies in core cities, which is expected to have a "small spring" market in this part of the city, which will also have a positive impact on the national market. In addition, just two days ago, the LPR of more than 5 years was sharply reduced, and the cost of home buyers fell, which is expected to strengthen the effect of core city policies and create a better financial environment for the property market to destock.

National Business Daily