Core Insights - The real estate market in key cities such as Shenzhen and Beijing has shown positive growth in both new and second-hand property transactions in the first seven months of 2025, with Shenzhen leading in transaction volume growth at nearly 30% year-on-year [1][2] - Shenzhen's housing prices have been in a downward trend since Q3 2023, indicating a correction of the "bubble" in the market, leading to a shift in buyer demand from investment to residential needs [1][2] - The overall transaction volume for both new and second-hand homes in Shenzhen increased by 27% year-on-year, supported by first-time buyers and those upgrading their homes [1][2] Transaction Data Summary - In the first seven months of 2025, Shenzhen's new home transaction area increased by 25% and transaction amount by 19%, while second-hand home transaction area rose by 29% and amount by 25% [2] - The total transaction area and amount for both new and second-hand homes in Shenzhen reached 575 million square meters, with a year-on-year growth of 27% [2] Price Segment Analysis - The most significant transaction segment in Shenzhen is the price range of 300 million to 400 million yuan, accounting for 20.89% of total transactions, an increase of 4.58 percentage points from the previous year [3] - There is a noticeable decline in demand for high-end and luxury properties, particularly in the 1 million to 3 million yuan price range, where the transaction share dropped by 2.47 percentage points to 9.86% [3] Area Segment Trends - The primary transaction area segment remains 70-90 square meters, accounting for 36.05% of total transactions, with a slight increase from the previous year [6] - Larger properties over 120 square meters have seen a decline in transaction share, indicating a retreat in high-end demand [6] Market Characteristics - The Shenzhen market is characterized by a strong demand for affordable and high-value properties, with a significant number of transactions occurring in the 3-8 million yuan per square meter price range [9] - The second-hand market is experiencing a trend of "price for volume," with lower total price and higher value properties gaining a larger share of transactions [11] - The overall market is expected to continue its weak recovery trend, with sustained demand for affordable and upgraded housing options in the new home market, while the second-hand market may experience high volatility [17]

Core Viewpoint - The real estate market in China is experiencing significant declines, with prices dropping by as much as 70% in some areas, leading to a crisis for homeowners and investors who are heavily leveraged in property investments [3][10][12]. Group 1: Market Trends - In 2018, predictions were made about a major correction in the housing market, which has since materialized with national average price drops of 30% and some areas seeing declines of up to 70% [3]. - Specific examples include properties in Shanghai and Beijing, where prices have fallen from 9.8 million to 4.6 million and from 10 million to 5.2 million respectively [3]. - Approximately 45% of urban households own two or more properties, indicating a significant portion of wealth tied up in real estate [3]. Group 2: Cost of Holding Properties - Holding costs for properties are increasing, with property management fees expected to rise alongside inflation and labor costs, creating financial strain for homeowners [5][6]. - For example, in a high-end area of Beijing, monthly fees can reach 3,000 yuan, and property taxes are anticipated to add further financial burdens [6]. Group 3: Asset Depreciation - Properties in less desirable locations are experiencing severe depreciation, with some areas seeing prices drop from 11,000 yuan per square meter to 6,500 yuan, resulting in a lack of buyers [10]. - The disparity in price drops is evident, with premium properties in central areas losing only 15% in value compared to 45% in outer districts [12]. Group 4: Liquidity Crisis - The real estate market is facing a liquidity crisis, with a significant number of properties listed for sale but few transactions occurring, leading to a backlog in the market [13]. - In major cities like Beijing and Shanghai, the number of listed second-hand homes has reached 147,000 and 170,000 respectively, with price reductions becoming commonplace [13]. Group 5: Policy Changes - Government initiatives to increase affordable housing supply are impacting rental markets, with new regulations causing rental prices to drop significantly, further complicating the financial situation for property owners [15]. - Many landlords are now facing negative cash flow situations, where rental income does not cover mortgage payments, leading to a shift in strategy among property owners [15]. Group 6: Strategic Responses - Some property owners are taking proactive measures to mitigate losses, such as selling off non-core assets at reduced prices and paying down debt to lower leverage [17]. - There is a growing trend of homeowners looking to exchange older properties for new ones, taking advantage of potential subsidies [17].