Core Viewpoint - The real estate market in 2024 is facing a perplexing situation with favorable policies failing to stimulate a significant recovery, as evidenced by a prolonged downward trend in housing prices and demand [1][3][11] Group 1: Policy Impact - Despite the implementation of favorable policies such as the lifting of purchase restrictions and reductions in mortgage rates below 4%, the market has not rebounded as expected, with average second-hand housing prices in 100 cities declining for 25 consecutive months to 14,870 yuan per square meter [1][3] - The number of cities experiencing month-on-month price declines has exceeded 90 for 12 consecutive months, indicating a persistent market downturn [1][3] Group 2: Market Conditions - The real estate market is experiencing severe oversupply, with the Ministry of Housing and Urban-Rural Development reporting 600 million existing homes, which could accommodate 6 billion people if each home housed 10 individuals [5] - 96% of households own at least one home, and 41.5% own two or more, highlighting a significant surplus in housing stock [5] Group 3: Consumer Behavior - There is a notable increase in residents' savings willingness, with new deposits reaching 8.56 trillion yuan in the first quarter of 2024, reflecting a cautious approach to financial commitments amid economic uncertainties [7] - The pessimistic outlook on future income growth has led consumers to avoid leveraging for home purchases, resulting in a continued decline in housing demand [7] Group 4: Supply of Affordable Housing - The acceleration of affordable housing supply is set to provide 6 million units over the next five years, averaging 1.2 million units annually, aimed at meeting the needs of low-income groups [9] - This increase in affordable housing is expected to divert demand from the commercial housing market, facilitating a process of de-speculation and de-bubbling in the real estate sector [9][11]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - New and second-hand housing transaction areas have shown a month-on-month increase, continuing to promote urban renewal efforts. In the tracked 68 cities, new housing transactions increased month-on-month but decreased year-on-year, while 20 cities saw an increase in second-hand housing transactions both month-on-month and year-on-year. Land transaction areas also increased month-on-month and year-on-year, with a decrease in premium rates. The issuance scale of domestic credit bonds has increased month-on-month. The National Development and Reform Commission (NDRC) will continue to promote urban renewal projects, supporting the renovation of old residential areas and urban villages [5][6][56]. Summary by Sections 1. Urban Renewal and Housing Supply - The NDRC is committed to advancing urban renewal initiatives, including the renovation of old residential areas and urban villages. Shanghai is increasing the supply of affordable housing and optimizing tax policies [6][15][16]. 2. Sales Performance - In the 21st week of 2025, the total transaction area of commercial residential properties in 68 cities was 2.7 million square meters, a year-on-year decrease of 3% but a month-on-month increase of 15%. Year-to-date, the cumulative transaction area reached 49.11 million square meters, down 4% year-on-year. The second-hand housing transaction area in 20 cities was 223 million square meters, with a year-on-year growth rate of 3% [17][32]. 3. Investment Performance - In the 21st week of 2025, 100 major cities launched land planning with a total area of 24.54 million square meters, with a transaction area of 24.5 million square meters, a year-on-year increase of 30%. The premium rate for land transactions was 1.4%. Notably, Beijing successfully auctioned a residential land plot in Haidian District for a total price of 4.545 billion yuan, with a premium rate of 11.95% [37][39]. 4. Financing Trends - In the 21st week of 2025, the issuance of credit bonds reached 4.3 billion yuan, a year-on-year increase of 87% and a month-on-month increase of 187%. The average weighted interest rate was 2.12%, a decrease of 43 basis points [45][48]. 5. Market Review - The real estate index fell by 1.47% during the week of May 19-23, 2025, underperforming the Shanghai and Shenzhen 300 index, which decreased by 0.18%. The report highlights the performance of individual stocks within the real estate sector [50][52]. 6. Investment Recommendations - The report maintains a "Positive" rating for the industry, citing the month-on-month growth in new housing transactions and the ongoing supportive policies from the government aimed at stabilizing the real estate market [56].