After more than twenty years of development, China’s real estate market has undergone major “adjustments” in the past four years—from 2021 to 2024 … When discussing real estate, five indicators are typically mentioned.
The first indicator is the total construction volume of real estate, including residential and non-residential properties. In 2020, it was 2.2 billion square meters, while the total data for 2024 is not yet available but based on the data from the first eleven months and estimating one more month, it is over 600 million square meters …
The second indicator, aside from construction, is the sales of completed homes. In 2020, new home sales were 1.8 billion square meters, while last year’s sales volume was 500 million square meters, which is also a decline of about 60%. That’s two indicators, each down over 60% …
The third indicator is land leasing volume. In 2020, national land leasing amounted to 8.7 trillion yuan, while the estimate for 2024 is around 3 trillion, which is still relatively optimistic. From January to October, the land leasing volume was actually over 2 trillion. Even if the last two months add another trillion, it would just exceed 3 trillion. In summary, 8.7 trillion minus over 5 trillion is about a 30% reduction …
The fourth indicator that everyone is concerned about is housing prices. Overall, housing prices have dropped by 40% to 50%. By the end of 2024, the figures are not yet out, but as of November, the national statistical indicators show housing prices have dropped by 40% compared to 2020. Some places have dropped a bit more and some a bit less, etc …
The fifth indicator is that real estate has historically accounted for 45% of all financing in China’s financial system. Last year, the public’s desire to buy houses significantly decreased, leading to a 50% annual reduction in mortgage loans compared to 2020. Developers want funds, but their credibility is poor and their debt levels are extremely high, so banks are hesitant to lend large amounts to developers. Consequently, developers’ financing abilities have also weakened significantly, with a reduction of about 50%.
In summary, among the five indicators, three have dropped by two-thirds, and two are down nearly 50%. In this sense, you can certainly say that China’s real estate market has undergone a very serious adjustment, the most severe in 20 years.
