China's New Home Transactions Fell 6% Year-on-Year Last Year... Lowest in 8 Years

Last year, the scale of new housing transactions in China decreased to the lowest level in eight years, according to survey results. The market expects that the real estate market will find it difficult to escape the recession this year as well.

On the 2nd, China’s First Financial Newspaper cited statistics from the Index Research Institute, reporting that the transaction area of new commercial housing in 100 major cities last year decreased by 6% compared to the previous year. The absolute scale fell to the lowest level in eight years since 2015.

[Image source=Reuters Yonhap News]

However, prices rose slightly. The Zhongzhi Research Institute, operated by Zhongzhi Group, a real estate lending institution, estimated that the average price of new housing in 100 cities last year was 16,220 yuan per square meter (approximately 2.97 million KRW), up 0.27% from 2022.

The official real estate data from the National Bureau of Statistics has only been released up to the end of November. Based on this figure, the nationwide commercial housing transaction area was 1.01 billion square meters, down 8.0% year-on-year. The transaction amount was 10.5 trillion yuan, a decrease of 5.2% during the same period.

Existing housing prices showed weakness while transactions became more active. According to the Zhongzhi Research Institute, the transaction price of existing homes in 100 cities last year fell by 3.53% compared to the same period the previous year. As of December last year, transactions occurred at 15,315 yuan per square meter, continuing a decline for 20 consecutive months. Supported by the price weakness, some cities are showing a preference for existing homes over new ones. According to the Index Research Institute, the volume of second-hand home transactions in 15 major cities from January to November last year increased by 36% compared to the same period the previous year. Ding Zhuyue, chairman of China Real Estate Information Corporation (CRIC), explained, "This year, second-hand housing transaction performance is outstanding," adding, "The brokerage industry has overcome difficulties through this."

Land transactions significantly decreased. According to Keerluoyi, a Chinese real estate market research firm, the nationwide land transaction area last year was 1.28 billion square meters, down 20% year-on-year. The transaction amount was 3.9 trillion yuan, a 17% decline. Based on transaction amount, Shanghai, Hangzhou, Beijing, Chengdu, Guangzhou, and Nanjing were identified as the six major cities.

The market expects it will be difficult for transactions to rebound this year as well. In the recently released report titled "China Real Estate Medium- to Long-Term Development Dynamic Model," the Zhongzhi Research Institute forecasted that the nationwide commercial housing sales area will decrease by 4.9% year-on-year this year, continuing the sluggish trend.

This content was produced with the assistance of AI translation services.