Core Insights - The recent surge in second-hand housing transactions in first-tier cities, reaching 49,000 units in November, is primarily driven by price reductions, with sellers often accepting prices 15% lower than their expectations [1][3] - The market is experiencing a shift in buyer sentiment, moving from a wait-and-see approach to a willingness to negotiate due to perceived value in declining prices [1][3] Market Dynamics - The increase in transaction volume is likened to a seasonal sale, where the influx of buyers is a response to significant price discounts rather than an increase in purchasing power [3] - The rise in second-hand housing listings from 67,000 at the beginning of the year to 89,000 in November indicates a growing supply, leading to increased buyer options and negotiation power [3] Inventory and Pricing - Despite the uptick in transactions, housing prices continue to decline, with a reported month-on-month drop of 1.15% in first-tier cities from June to November [1][5] - The concept of "broad inventory" includes unsold properties and projects that have not yet started construction, with some second-tier cities facing a de-stocking period exceeding five years [5][6] Policy Responses - The government is shifting its focus from stimulating price increases to stabilizing the market and gradually reducing inventory, as indicated in the 2025 government work report [5][6] - Local governments are utilizing special bonds to purchase existing housing stock, which helps developers recover funds and reduces market supply [6] Financial Environment - Mortgage rates for first-time homebuyers have reached historical lows, and many cities have relaxed down payment requirements, aiming to ease the financial burden on genuine homebuyers [8] - Banks are exercising caution in lending, emphasizing strict income verification to mitigate risks [9] Market Outlook - The current market is characterized as a "buyer’s market," where price declines are driven by excess inventory, and the focus is on genuine housing needs rather than speculative investments [12] - The ongoing process of "squeezing out excess" from the market is painful, reflected in falling prices and distressed sales, but is necessary for a return to value based on real demand and income [9][12]