Core Viewpoint - Goldman Sachs reports that China's demand for new homes will remain low, with annual new demand expected to be slightly below 5 million units from 2025 to 2030, a 75% decline from the peak of 20 million units in 2017, driven by demographic changes, policy shifts, and a reversal in investment demand [1][14][42]. Demographic Changes Impacting Housing Demand - China's population peaked in 2021 and is projected to decline, leading to a negative contribution to new home demand, shifting from an average of 1.5 million units per year in the 2010s to -0.5 million in the 2020s and -1.4 million in the 2030s [2][15]. - Urbanization is slowing, with the urbanization rate expected to increase by only 0.5 percentage points annually from 2024 to 2030, contributing an average of 3.8 million units per year in the 2020s, down from 6.4 million in the 2010s [2][18]. - The trend of shrinking household sizes is partially offsetting the negative impacts of population decline and urbanization, with contributions to new home demand expected to rise from 1.4 million units in the 2010s to 1.8 million in the 2020s [2][19]. Declining Demolition and Renovation Demand - The average demolition demand is projected to decrease from 4.7 million units per year in the 2010s to 2.7 million in the 2020s due to improved housing quality and a shift in government focus from demolition to renovation [3][27]. - The government’s shanty-town redevelopment program (2015-2018) accelerated demolitions, leading to a front-loaded demand that will result in fewer demolitions in the coming years [3][35]. Investment Demand Reversal - Investment demand, which was a significant driver of housing demand in the 2010s, is expected to turn negative, with an average of -1.8 million units per year from 2025 to 2030 and -1.2 million in the 2030s, as owners are likely to sell vacant apartments [4][39]. - The urban housing vacancy rate was approximately 20% in 2020, indicating a substantial number of empty apartments that could suppress new construction [4][41]. Overall Housing Demand Outlook - Overall, urban demand for new properties in China is expected to remain slightly below 5 million units per year, reflecting a combination of declining population, slowing urbanization, reduced demolition needs, and a fundamental shift in investment demand [4][42].