Will cooling realty sector warm up in 2025?

In the year of 2024, China's real estate sector has been undergoing a challenging adjustment period. Despite unprecedented policy easing measures slowing the decline in market transactions and housing prices, the overall market performance remains subdued. Between January and October, housing prices across 70 major cities experienced widening year-on-year declines, which only began narrowing in November. Similarly, sales by the top 100 real estate enterprises declined by 32.9 percent year-on-year from January to November. Despite slight improvements, sales in November fell 18.62 percent month-on-month, underscoring the persistent weakness in demand.

Some encouraging developments have emerged in late 2024, driven by a series of supportive policies implemented since September. The key policies include granting local governments the flexibility to adjust or eliminate restrictions on purchases, sales, pricing, and housing classifications; further lowering mortgage interest rates; increasing investment in urban village redevelopment and hazardous housing renovation projects; and expanding credit support for select "white-listed" developers.

In response, cities such as Beijing, Shanghai, Guangzhou and Shenzhen have led the relaxation of purchase and lending restrictions, which upgraded housing demand. By November, first-tier cities saw a modest uptick in housing prices, particularly in the secondhand market.