Core Insights - The real estate market is characterized by a paradox of high vacancy rates alongside soaring property prices, with developers continuing to build new projects despite the apparent oversupply [1][3]. Group 1: Market Dynamics - The phenomenon of "buying on the rise, not on the fall" is often cited, but the core issue lies in the perception of real estate as an investment tool rather than merely a living space [3]. - The profit motive drives developers to construct new homes, while the influx of buyers further escalates property prices, exacerbating social inequalities and making it harder for genuine homebuyers to purchase homes [5]. Group 2: Government Intervention - The government has recognized the issue and implemented the "housing is for living, not for speculation" policy, which has proven effective even during the pandemic, curbing the upward trend in property prices and challenging developers' cash flow [7]. - As speculative buying decreases and developers scale back on construction, the supply-demand relationship in the real estate market is expected to normalize, potentially resolving the issue of excessive vacant properties [9].

Core Insights - The real estate market in China has undergone a fundamental shift from a seller's market to a buyer's market, leading to significant challenges for homeowners trying to sell their properties [3][4][7] Group 1: Market Dynamics - The rapid urbanization over the past two decades created immense housing demand, resulting in rising property prices and a seemingly perpetual boom [3] - Currently, most families already own homes, and the demand for new purchases has decreased due to demographic changes and a decline in the younger population [3] - The expectation of rising property prices has diminished, prompting investors to sell off properties, leading to an increase in listings and a shift to a buyer's market [3] Group 2: Buyer and Seller Psychology - Sellers often price their properties based on previous years' prices, struggling to accept the reality of asset depreciation [4] - Buyers, on the other hand, are hesitant to purchase, anticipating further price drops, resulting in a significant gap in price expectations between buyers and sellers [4] Group 3: Financing and Market Conditions - Despite a slight decline in property prices, the actual barriers to purchasing have increased, with banks being more cautious in approving loans for second-hand homes [5] - The tightening of loan conditions and the absence of favorable interest rates have further strained buyers' purchasing power [5] - Developers are incentivizing new home sales with various promotions, making new properties more attractive compared to second-hand homes [6] Group 4: Changing Perceptions of Real Estate - The market has shifted from a scenario where buying a home required competition to one where developers actively promote new properties [7] - This change reflects a broader re-evaluation of real estate as a commodity subject to market forces, countering the previous belief that property prices would only rise [7] Group 5: Asset Liquidity Challenges - For many families, real estate constitutes a significant portion of their assets, and the inability to sell properties leads to liquidity issues [8] - While well-located and reasonably priced properties still attract buyers, those that are outdated or poorly located struggle to find buyers, indicating a growing divide in market demand [8] Group 6: Strategies for Homeowners and Buyers - Homeowners are advised to adjust their expectations and set prices based on recent sales rather than past highs to facilitate transactions [9] - Buyers now have more options and negotiating power, allowing them to make informed decisions rather than rushing into purchases [9]

Core Viewpoint - The Shanghai housing market is experiencing significant price declines, with some properties seeing reductions of up to 60-70% from their peak values, indicating a severe downturn in the real estate sector [1][12][19]. Market Overview - A specific property, a 90㎡ unit in the Poly Linglan Pavilion, sold for 4.78 million yuan in February 2021, but similar units are now listed at 2.43 million yuan, reflecting a drastic price drop [6][8]. - The average price in core districts like Huangpu and Jing'an remains stable at 120,000-150,000 yuan per square meter, but some areas have seen extreme declines, with certain school district properties dropping by 43.9% [10][11]. Price Declines - Traditional quality school district properties, such as those in Pudong, have seen prices fall from 90,000 yuan per square meter to 60,000 yuan, a 37% decrease [11]. - Non-core areas like Minhang and Pudong have experienced declines exceeding 40%, with some neighborhoods reporting drops of up to 48.4% [11]. Buyer Market Characteristics - The current market is characterized by a clear buyer's market, with an average negotiation space of 7.05% [19]. - There are over 30,000 unsold properties in the Lingang area, indicating a significant oversupply [19]. Sales Performance - From January to July, the top 10 residential projects in Shanghai generated a total sales amount of 77.74 billion yuan, with the top project, Shanghai One, alone accounting for 16.59 billion yuan [22]. - The market is seeing a seasonal adjustment, with high-quality projects in prime locations continuing to attract buyers despite the overall slowdown [19][22]. Market Dynamics - The fluctuations in property prices are attributed to supply and demand dynamics, with the current situation reflecting broader economic conditions [23]. - The real estate market is undergoing structural differentiation and cyclical adjustments, necessitating a focus on core areas and high-quality developments by real estate companies [22][23].

Summary of Real Estate Market Conference Call Industry Overview - The conference call discusses the current state of the real estate market in China, particularly focusing on new and second-hand housing transactions in major cities like Shanghai, Beijing, and Guangzhou [1][3][4]. Key Points and Arguments Market Performance - In early June 2025, new home transaction volumes in 40 key cities decreased by 36% month-on-month, with significant contraction in first-tier cities [1][3]. - The second-hand housing market remains relatively stable, with absolute transaction volumes still higher than new homes, indicating overall market weakness [1][4]. - In Shanghai, second-hand home transactions showed a declining trend, with April's volume barely maintaining above 20,000 units, dropping further in May [8][9]. Price Trends - The price indices in Beijing, Shanghai, and Guangzhou have been fluctuating downwards, falling below levels seen before policy changes in February 2025 and September 2024, suggesting potential further price declines in the coming months [1][6][7]. - In Shanghai, the proportion of high-end second-hand homes priced above 11 million yuan decreased from 3.7% in April to 2.63% in May, while the proportion of affordable homes under 3 million yuan increased [11]. Inventory and Supply Issues - Most cities have inventory turnover cycles exceeding 18 months, with insufficient new home supply leading to increased absolute inventory levels [1][23]. - Private enterprises hold less than 20% of the land market, while state-owned enterprises dominate with 80%, indicating a lack of competition and innovation in land acquisition [22]. Future Outlook - The market is expected to remain stable until the end of 2025, but challenges may arise in 2026 due to limited high-quality land supply and the potential exhaustion of high-end buyers [18][30]. - The government is anticipated to implement further policies to stabilize prices in core cities, with a focus on maintaining market confidence [41]. Policy Impact - Continuous policy support is deemed necessary for stabilizing price expectations in core cities, with recommendations to invest in development stocks during key political meetings [2][31]. - The impact of rumored restrictions on resale has affected market sentiment, leading to some developers offering discounts on existing properties [32]. Regional Differences - The performance of the real estate market varies significantly across different regions, with core urban areas showing more resilience compared to suburban regions [12][25]. - The price dynamics in Shanghai's inner and outer rings reflect a disparity, with inner ring prices continuing to rise while outer ring prices remain stagnant [15]. Transaction Volume and Market Dynamics - The transaction volume for second-hand homes is expected to face challenges due to various factors, including limited quality supply and economic uncertainties [33]. - The overall trend in the second-hand market shows a gradual increase in transaction volume, driven by a growing inventory base and suppressed new home supply [34]. Conclusion - The real estate market in China is currently characterized by a mix of stability and underlying challenges, with significant reliance on government policies to navigate through the complexities of supply, demand, and pricing dynamics [30][41].