China Index Research: Second-hand housing transactions in 20 key cities increased 20% year-on-year in October, and the second-hand housing markets in Beijing and Shanghai continued to be highly active

The Zhitong Finance App learned that since October, second-hand housing transactions have remained active, and the new housing market is still undergoing an adjustment period. According to data monitoring by the China Index, in October (1-28), the number of second-hand residential units sold in the 20 key cities increased 20% year on year, and the transaction area of newly built commercial housing in the key 30 cities decreased 13% year on year. Second-hand housing markets in Beijing, Shanghai and some second-tier cities continued to be highly active. In the new housing market, Beijing was driven by early supply volume. High-quality projects in core areas of some cities were popular, but in most cities, the year-on-year decline was still declining.

Looking ahead to the end of the year, China Index research shows that interest rate discounts on home purchase loans will help reduce the interest burden on eligible buyers and support the release of demand for self-occupancy; combined with year-end promotion by housing enterprises, it is expected to provide some support for market transactions. Second-hand housing transactions remain active, which also helps replace families to return funds and create conditions for improving the release of sexual demand. High-quality projects in core cities are expected to continue to perform well, and the overall new housing market is still in the process of gradual restoration.

Second-hand housing market: transaction resilience continues, year-on-year growth continues

Figure: Weekly number of second-hand housing units sold in 20 key cities and the year-on-year trend

Data source: Middle Index Data CREIS

On September 29, the Ministry of Finance and three other departments issued the “Notice on Implementing the Interest Rate Discount Policy for Residents' Home Purchase Loans”. Starting October 1, households using newly issued commercial personal housing loans to purchase their first home, with a floor area of no more than 120 square meters and a total price of no more than 1.5 million yuan, will be given an annualized interest rate discount of 1 percentage point. Both new and second-hand housing are within the scope of application of the policy. Judging from the characteristics of housing, second-hand housing area and total price options are relatively rich, and the coverage of properties that meet the interest rate discount conditions is wider than that of new homes, so the policy has a relatively large potential to reach the demand for first-hand housing purchases.

According to data from the China Index, in October (1-28), the number of second-hand residential units sold in the 20 key cities increased 20% year-on-year, an increase over the previous month. Cumulatively, in January-October (1.1-10.28), 20 cities sold 1.22 million second-hand residential units, an increase of 7.5% over the previous year.

By city, from October 1 to 28, second-hand housing in Beijing and 21,000 second-hand commercial housing units were sold respectively, up 9% and 32% year-on-year respectively; Suzhou and Ningbo increased by more than 30%, while Hangzhou, Qingdao, Nanjing, Wuxi, and Wenzhou increased by more than 20%. Second-hand housing transactions in several third- and fourth-tier cities also maintained relatively rapid year-on-year growth.

New housing market: Most city transactions are still declining year on year, and high-quality projects remain popular

Figure: Weekly transaction area of newly built commercial housing in 30 key cities and the year-on-year trend

Data source: Middle Index Data CREIS

According to data from the China Index, in October (1-28), the transaction area of newly built commercial housing in the 30 key cities fell 13% year on year. Compared with second-hand housing, the supply of new housing is more concentrated on improved products. Some cities have relatively limited housing that meet the discounted area and total price requirements, and there are differences in the driving effect of policies on different cities and projects.

By city, Beijing was driven by the September supply volume. From October 1 to 28, the transaction area of newly built commercial housing increased by 28% year on year, while Shanghai, Guangzhou, and Shenzhen decreased by 1%, 6%, and 8%, respectively. Among second-tier cities, Jinan, Nanjing, and Xining all had a year-on-year increase of more than 10% due to their lower base figures last year, and most cities are still declining year-on-year.

On the supply side, from October 1 to 28, the approved listing area of newly built commercial housing in 30 key cities continued to decline year-on-year. Only a few key cities, such as Beijing, showed significant year-on-year growth. The decline in early land transactions and new construction has limited the scale of current marketable projects. The reduction in new supply in some cities has also affected the release of sales demand.

Table: Some recent popular projects in key cities

Data source: Comprehensive compilation by the China Index Research Institute

Judging from the recent performance of popular new homes, demand is mainly focused on projects with mature, high-quality and improved products, and reasonable prices. Education, commerce, and transportation facilities in the core area and mature sectors are relatively complete, and are still attractive to self-occupied buyers; product designs such as empty patios, sky patios, and LDKB integrated social spaces have increased actual usage space, providing new options for improving families. Some projects allow buyers to more intuitively understand products and delivery standards through realistic demonstration zones and quasi-existing housing displays, reducing concerns about buying a home.