Core Insights - The Chinese real estate market is undergoing a significant transformation, moving from a "golden era" of rapid growth to a challenging "new normal" characterized by declining sales and changing housing demands [2][3][5] Group 1: Market Trends - In Q1 2025, the national sales area of commercial housing decreased by 8.7% year-on-year, with sales revenue dropping by 12.3% [2] - The average return on residential investment has halved from 9.7% in 2018 to 3.2% in 2025, indicating a shift away from real estate as a reliable investment [3][5] Group 2: Challenges Facing the Housing Market - The housing market is facing four major challenges: the return of housing to its primary function of residence, demographic changes leading to a qualitative shift in housing demand, regional disparities causing market segmentation, and high financial pressure on households [2][6][8][9] - Approximately 45% of families will confront these challenges, which include a significant decline in the perceived investment value of real estate [2][5] Group 3: Demographic Shifts - The birth rate in China is projected to fall below 10 million by 2024, with a natural population growth rate of only 0.9‰, leading to an aging population where those over 60 may comprise nearly 30% by 2035 [6] - There is a growing demand for age-appropriate housing and senior living facilities, as 42.7% of seniors feel their current housing conditions are inadequate [6][7] Group 4: Regional Disparities - The price gap between first-tier cities and third- and fourth-tier cities has widened, with the difference in price fluctuations increasing from 5.7 percentage points in 2020 to 11.3 percentage points [8] - About 127 third- and fourth-tier cities have new housing inventory turnover periods exceeding 24 months, indicating significant market pressure [8] Group 5: Financial Pressures on Households - The average monthly housing loan payment now accounts for 38.2% of urban household income, surpassing the internationally recognized threshold of 30% [9] - Households with mortgages spend 27.3% less on education and entertainment compared to those without, highlighting the financial strain caused by high housing costs [9] Group 6: Future Outlook and Recommendations - Families are advised to reassess their housing needs, focusing on the primary function of housing as a place to live rather than an investment vehicle [10][12] - Emphasis should be placed on long-term city development prospects and the diversification of household assets to ensure financial stability [10][12]