Core Viewpoint - The Chinese real estate market has undergone significant adjustments since 2021, with sales, investment, and prices continuing to decline, leading to a shift in the sector's contribution to GDP from positive to negative [5][6][25]. Group 1: Current Market Status - The real estate market has experienced a deep adjustment since the second half of 2021, with key metrics such as sales area and sales revenue dropping to 60.4% and 56.9% of their 2021 peaks by 2024, respectively [8]. - By the first half of 2025, the sales area and revenue further declined to 57.6% and 50.9% of the same period in 2021, indicating a continued downward trend [11]. - The inventory of unsold properties has increased significantly, with a 47.6% rise in unsold area by 2024 compared to 2021 [8]. Group 2: Price Trends - New home prices in first- and second-tier cities showed signs of stabilization in late 2024 and early 2025, but began to decline again in the second quarter of 2025 [9]. - As of June 2025, new home prices fell by 3.7% year-on-year, while second-hand home prices dropped by 6.1%, although the rate of decline has slowed compared to previous periods [17]. Group 3: Economic Impact - The real estate sector's contribution to GDP has shifted from a positive to a negative impact, with its value added decreasing from a peak of 9 trillion yuan in 2021 to a projected 6.3% of GDP in 2024 [25][26]. - Real estate investment accounted for approximately 20% of fixed asset investment, becoming the largest drag on overall investment growth [28]. - The construction industry, heavily reliant on real estate, has seen a significant reduction in employment, with nearly 13 million migrant workers leaving the sector from 2021 to 2024 [31]. Group 4: Fiscal Implications - Land sale revenues have declined sharply, affecting local government finances. In 2024, land sale revenues fell to 4.87 trillion yuan, down from a peak of 8.71 trillion yuan in 2021 [34][35]. - The reliance on land sale revenues for local government budgets has decreased from 35.9% in 2021 to 17.3% in 2024, limiting fiscal capacity [35]. Group 5: Future Outlook - The real estate market is currently in a slow bottoming phase, with long-term demand supported by urbanization, population growth, and housing improvement needs [9]. - The transition from a high-growth model to a more stable one is ongoing, with the need to manage market adjustments carefully to prevent excessive price fluctuations [40][41].