SCIO briefing on China's economic performance in Q1 2025

CNBC:

Some analysts believe that the real estate data for January and February was relatively optimistic, but the March data showed a slowdown and was more pessimistic. How do you view the direction of the real estate sector? Thank you.

Sheng Laiyun:

Thanks for your question. First, housing prices remained generally stable in the first quarter. Housing price monitoring data from 70 large- and medium-sized cities shows that in March, prices demonstrated positive changes across the board in first-, second- and third-tier cities, for both new homes and existing homes. In March, sales prices of second-hand housing in first-tier cities rose month on month, and the monthly decline in sales prices of second-hand housing in second- and third-tier cities narrowed. From this perspective, the effects of real estate market regulation policies continue to emerge, and contrary to what you suggested, we did not see a slowdown in the real estate market in March.

Second, under the influence of policy measures, the real estate market continues to stabilize, and market transactions continue to improve. Since the fourth quarter of last year, the CPC Central Committee has emphasized the need to reverse the downturn of and stabilize the real estate market. Relevant departments have formulated a series of policies to improve real estate investment, advance the renovation of old urban residential compounds, strengthen construction of government-subsidized housing, implement a "white list" system for real estate enterprises, and provide support for financial loans. Looking at the overall picture, these policies are continuing to show positive effects. In the first quarter, the sales area of newly built commercial housing nationwide fell 3%, narrowing 9.9 percentage points compared to last year. It also narrowed 2.1 percentage points compared to the first two months of this year. Sales revenue fell 2.1%, narrowing 15 percentage points over last year and 0.5 percentage point compared to the first two months of this year. According to monitoring data from 40 key cities, the sales area and sales of newly built commercial housing in the first quarter increased 1.2% and 4.4%, respectively. First-tier cities performed relatively well, with the sales area of newly built commercial housing increasing 0.6% in the first quarter as market transactions became more active.

Third, the operating conditions of real estate enterprises have improved. Thanks to the recovery in real estate sales and the implementation of "white list" policies, the financial situation of some enterprises has also gotten better. In the first quarter, among the funds in place for real estate developers, the decline in domestic loans narrowed by 3.8 percentage points compared with the first two months of this year. The decline in personal mortgage loans narrowed by 4.7 percentage points. These improvements reflect the continuing effectiveness of our policies.

Overall, the real estate market is still in the adjustment stage, and the demand in the real estate sector still needs to be further released. From a development perspective, China's consumption pattern is still upgrading and urbanization remains incomplete. This creates significant growth potential for the real estate market. Residents' desire for green, spacious and comfortable quality housing continues to generate substantial market demand. Looking ahead, we'll earnestly implement the series of policies and measures introduced by the CPC Central Committee to curb the downturn of and stabilize the real estate market. We'll continue to promote the construction of quality housing and actively develop a new model for the real estate sector to ensure its sustained and healthy growth. Thank you.