Core Insights - The real estate market is experiencing a paradox where new residential buildings are being constructed while many remain vacant, leading to a disconnect between supply and demand [1][3] - Traditional economic principles suggest that excess supply should lead to price reductions, but this logic appears ineffective in the real estate sector [3] - The consumer psychology of "buying high, not low" influences market behavior, with many buyers viewing properties as investment tools rather than for actual living purposes [5][7] Market Dynamics - Continuous buyer interest allows developers to keep launching new projects, which in turn drives up prices despite high vacancy rates [7] - The transformation of residential properties into investment vehicles exacerbates social inequalities, making it difficult for genuine homebuyers to enter the market [7] Policy Response - The government has recognized these issues and implemented the "housing is for living, not for speculation" policy, which has effectively curbed the upward trend in housing prices [9] - Despite the challenges posed by the pandemic, this policy has led to a slowdown in land acquisition and construction by developers, as well as a decrease in speculative buying [9] - As speculative buyers withdraw from the market and developers reduce construction, the issue of vacant properties is expected to gradually improve [9]

A new California law making it easier for developers to build multistory apartment buildings near major commuter stops has triggered fierce opposition from Los Angeles and other coastal cities https://t.co/iI573NsbxS ...

Hong Kong’s lawmakers have passed a bill to phase out substandard tiny residential units, as the government moves to address Beijing’s call to improve the city’s living conditions https://t.co/HmwifvkiSU ...

Policy Adjustment - Hainan Province is optimizing control policies, including acquiring existing commercial housing for affordable housing and resettlement [1] - Acquisition area standards for affordable rental housing may be appropriately relaxed [1] - Counties with high destocking periods are encouraged to prioritize "purchase instead of construction" for resettlement [1]

Housing Policy - Beijing residents and non-Beijing residents with 2+ years of continuous social insurance or individual income tax payment in Beijing can purchase unlimited units of commercial housing outside the 5th Ring Road [1]

Core Insights - The current real estate cycle shows significant price drops, particularly in older residential properties, which are less appealing to younger families due to their age and lack of modern amenities [2][4][5] - There is a notable increase in the sales of older, smaller units in major cities, with a high percentage of transactions involving these types of properties [4][5] - The government has indicated a focus on stabilizing the real estate market, but experts predict a continued "price drop wave" in the coming years due to various signals [6] Signal 1: High Inventory Levels - The inventory of unsold residential properties remains high, with new housing stock expected to increase from 670 million square meters in 2023 to 798 million square meters by March 2024, particularly in third and fourth-tier cities where the inventory turnover period exceeds 36 months [7] Signal 2: Demographic Trends - The aging population in China has surpassed 300 million, accounting for 22% of the total population, leading to a significant reduction in housing demand as family structures change [8][9] - The declining birth rate, with a projected 15% decrease in newborns in 2024 compared to previous years, further diminishes future housing demand [9] Signal 3: Policy Direction - The government is committed to controlling housing prices and promoting rental housing, with plans to build 36,000 affordable rental units and renovate 2.7 million old residential units by 2025 [12][13] - The introduction of property taxes is expected to increase holding costs for investors, leading to a surge in listings and forcing developers to lower prices to attract genuine buyers [14][15] Investment Opportunities - Despite the overall market downturn, three types of properties are expected to appreciate: prime locations in core cities, high-quality upgraded housing, and rental-oriented affordable housing [15][16][17] - Properties in core urban areas, such as new developments near transportation hubs, continue to see demand despite high prices, indicating a preference for quality over quantity [15] - The government's push for high-standard housing is leading to price increases in compliant developments, while non-compliant properties are experiencing declines [16] - Rental properties, particularly those converted from existing stock, are showing stable returns, making them attractive to investors [17] Market Outlook - The current price declines present opportunities for first-time homebuyers to select properties more freely, while investors must be cautious to avoid potential losses in a changing market [19]

Summary of Conference Call on China Property Market Industry Overview - The conference call focused on the **China Property** market, specifically the performance of major developers in February 2025, as tracked by **CRIC** [1][2]. Key Points Sales Performance - **Contracted sales** of 30 major developers dropped **16% year-on-year (y-y)** in February 2025, following a low base [1]. - The **top 50 and top 100 developers** saw attributable sales growth of **3% and 2% y-y**, respectively, compared to declines of **-4% and -1% in January** [2]. - Year-to-date (YTD) sales decline for the top developers narrowed to **-1% and 0% y-y** in the first two months of 2025, contrasting with **+5% and +2% in Q4 2024** [2]. Divergence in Performance - **State-Owned Enterprises (SOEs)** outperformed others, with notable growth from **Yuexiu (+63%)**, **COLI (+55%)**, **CR Land (+47%)**, and **C&D (+36%)** y-y [3]. - Conversely, some developers like **Zhongliang**, **Zhongnan**, and **Seazen** experienced declines exceeding **50% y-y** [3]. - Semi-SOE developers such as **Gemdale** and **Vanke** also reported weak performance, with declines of **-45% and -27% y-y**, respectively [3]. Future Outlook - Sales for major developers are expected to weaken y-y in the coming months due to reduced saleable resources and a higher base [4]. - The housing policy response is anticipated to remain reactive, with limited demand-side stimulus until housing prices stabilize [4]. - There is a need for faster policy implementation, particularly regarding funding and inventory buybacks, to bolster homebuyer confidence [4]. Investment Recommendations - The industry performance may hinge on sustained sales and home price recovery, with mixed signals observed in the physical market [5]. - The recommendation is to focus on **defensive SOE players** with substantial saleable resources in tier 1 cities, such as **CR Land (1109.HK)**, **Greentown (3900.HK)**, and **Yuexiu (0123.HK)** [5]. Additional Insights - The **fragility of residential sentiment** is highlighted, as reflected in declining secondary listing prices [5]. - The **aggregate sales** for the top developers showed a **-1% y-y** change, with a **-5% month-on-month (m-m)** decline in February 2025 [9]. Conclusion - The China Property market is facing challenges with declining sales and a reactive policy environment. However, SOEs are showing resilience, and strategic investments in top-tier developers may present opportunities amidst the volatility.