According to the Futu Finance App, Ke Rui issued a statement on July 29, stating that in the first half of 2024, the real estate market continued to undergo a deep adjustment, and the total demand for housing continued to shrink. The total volume of new housing product sales significantly decreased, with the total transaction volume in 20 major cities dropping by 38% year-on-year and 21% month-on-month. In contrast, the second-hand housing market remained relatively resilient with a 7% year-on-year decrease and 5% month-on-month growth in transaction volume in the first half of the year. As a result, market share has further tilted towards second-hand housing, with the average transaction share for second-hand housing in 20 cities rising to 62%, up 9 percentage points year-on-year and 7 percentage points month-on-month. The market share of second-hand housing in Beijing, Shanghai, Hefei, Nanjing, and other cities has all increased to above 70%.

The total demand for house purchases continued to shrink in the first half of the year. New housing transactions continued to fall by 40% year-on-year, while second-hand housing transactions remained relatively resilient.

(1) The total demand for first-hand and second-hand housing continues to shrink, with transactions in 20 cities decreasing by 22% year-on-year and 7% month-on-month in the first half of the year.

(2) The decline in new housing sales is far greater than that of second-hand housing, and the market share of second-hand housing in cities such as Beijing, Shanghai, Hefei, and Nanjing has increased to more than 70%.

Compared to new housing, the transaction volume of second-hand housing is relatively resilient, with accumulated transaction volume in 20 major cities decreasing by 7% year-on-year and increasing by 5% month-on-month. In contrast, the accumulated transaction volume of new housing decreased by 38% year-on-year and by 21% month-on-month.

As a result, the market share of the real estate market is further tilted towards second-hand housing, with second-hand housing accounting for 62% of transactions in 20 cities, up 9 percentage points year-on-year and 7 percentage points month-on-month. The transaction share of second-hand housing in each city has also increased, with Beijing, Shanghai, Hefei, Nanjing, and other cities all seeing their market share of second-hand housing exceed 70%. The market share of second-hand housing in Ningbo and Lu'an has increased by nearly 20 BP compared to 2023.

What to buy: increase in the proportion of new housing with a large area and high total price; downward shift of the central total price in second-hand housing, but an upward trend in the middle and small area segments of total price.

(1) Transaction structure: the central total price of first-hand and second-hand housing moves in the opposite direction, and the area segment of second-hand housing is also connected to the large-scale first-hand housing.

1. Area segment: transaction volume of new housing with an area larger than 140 square meters is increasing, while the transaction share of second-hand housing with an area of 100-140 square meters is relatively stable with a slight increase.

(1) New housing: the transaction share of new housing with an area larger than 140 square meters is increasing. In particular, the transaction share of new housing in cities such as Shanghai, Hangzhou, and Ningbo with an area larger than 180 square meters has exceeded 10%. The trend of large-scale and improved new housing products has remained unchanged in the first half of 2024, and the transaction share of large-area products in each key city has generally increased. Specifically, the transaction share of small-area products with an area less than 100 square meters has decreased overall, especially for products with an area of 90-100 square meters, with a transaction share of only 14% in the first half of 2024, down about 2 percentage points from 2023. The transaction share of products with an area of 100-140 square meters is relatively stable with a slight decrease, but it still represents the absolute main force in the market. Among them, the transaction share for products with an area of 100-120 square meters is 24%, down 1 percentage point from 2023, while the transaction share for products with an area of 120-140 square meters is 19%, down 0.4 percentage points from 2023. The market share of products with an area of 140 square meters or more has significantly increased, especially for luxury homes with an area of 180 square meters or more whose transaction share has continued to increase in recent years, reaching over 8% in the first half of 2024.

(2) Second-hand housing: the transaction share of second-hand housing with an area of 100-140 square meters has increased by 8 percentage points, mainly in cities such as Hangzhou and Shenzhen with an area of 80-90 square meters and Zhengzhou and Wuhan with an area of 120-140 square meters. The trend of changes in the transaction structure of second-hand housing is significantly different from that of new housing. Specifically, the transaction share of small-area products with an area of less than 80 square meters, although still the main force in the transaction of second-hand housing, has continued to decline, with products with an area of less than 70 square meters accounting for less than 30% of transactions in the first half of 2024. The transaction share of products with an area of 100-140 square meters is relatively stable with a slight increase, with a transaction share of 12% for products with an area of 100-120 square meters, up 1 percentage point from 2023, and a transaction share of 10% for products with an area of 120-140 square meters, also up around 1 percentage point from 2023.

2. Total price segment: the market share of new housing products with a high total price has increased, and the central total price in second-hand housing has generally shifted downward.

(1) New housing: the market share of new housing products priced at over ten million yuan in cities such as Shanghai, Shenzhen and Hangzhou has increased, while products priced at around 3 million yuan in cities such as Wuhan and Lanzhou have sold well.

(2) Second-hand housing: the transaction volume is mostly concentrated in products priced below 1 million yuan in cities such as Shanghai, Shenzhen, Hangzhou, Tianjin, Zhengzhou, and Wuhan.

(II) Hot selling projects: new housing projects with a combined advantage in location, product offerings, and promotional discounts; second-hand housing projects focus on the overall price and proximity to schools.

1. New housing: projects with a combined advantage in location, product offerings, and promotional discounts are popular. The main reasons for the popularity of new housing projects are three-fold: first, they are located in core areas, many of which are improvement parcels located in city center areas with limited supply; second, their products have strong competitiveness in terms of quality and brand appeal, and some projects have achieved good sales performance by leveraging their development brand reputation and product quality; third, they have price advantages.

New housing projects are hot sellers due to a combination of factors, including a prime location, strong product offerings, and high cost-effectiveness.

New housing projects are selling well for three main reasons: first, they are located in prime areas and are often improvement projects located in city centers with limited supply; second, they offer high product quality and have a strong reputation, leading to excellent sales performance; and third, they are priced more competitively than their alternatives.

For example, the Zhuhai Shunchang Jiuqili project is the first low-density product in the entire New World area, located in the core area of Shanghai with a richer history, north of Xintiandi and east of Laochengxian. According to the plan, the project includes three high-rise residential buildings, about 30 townhouses, and historic buildings for cultural heritage protection. The Jiuqili project is the first release of low-density products in the entire Xintiandi region, an area in Shanghai's core that has been in short supply for products of this type for a long time. At the same time, there is a considerable portion of the population in Shanghai with sufficient budgets and buying power that has been in a wait-and-see mode for many years. Another example is the Zhonghai Shenzhen Bay Jiu sequence project located in Hongshuwan, Nanshan District. This project is the first residential development project in 22 years in the Shenzhen Bay Super Headquarter base, and achieved a sales volume of 10 billion yuan within the first three hours of its launch on June 28.

Secondly, the product has strong power and the brand is appealing. Some projects have strong product power, such as Beijing Guoxianfu, which has a near 3000 square meter lake view garden landscape. In terms of unit types, it has created low-density villas in the main area of ​​100-180 square meters, with a floor height generally reaching 3-3.3 meters. The 100 square meter large three-bedroom unit has added width to the master bedroom and living room, and designed a large independent housekeeping room to meet the storage needs of first-time homebuyers. The 125 square meter unit was upgraded to a 5.4-meter large living room, surpassing the scale of the market for large flats. The four-bedroom unit with a construction area of ​​about 143 square meters has ten large lighting surfaces, with a south-facing width of 14.8 meters, and the master bedroom is designed with a 270-degree IMAX-level wide-angle corner window, and the master bathroom has double-sided lighting. The wide-angle U-shaped kitchen with a width of about 4.5 meters can meet the functional needs of families in different periods.

Thirdly, there is a price advantage. For example, in terms of price, Shenzhen Xinyi Jinyu Banshan Phase 5 has a comprehensive discount of 10% at the opening, and customers who subscribe on the day of opening can enjoy a two-year property management fee reduction. On the day of opening, discounts of 0.05 million yuan for three-bedroom units and 0.06 million yuan for four-bedroom units were offered. In addition, the project focuses on high-giveaway and high-utilization rate, and the 74-square-meter unit can also have a three-bedroom design, with a utilization rate of 91%, and the overall cost-effectiveness is highlighted.

Of course, high sales are not just due to a single factor, and composite advantage-type projects are also popular among homebuyers. For example, the Zhuhai Lingdi Jiuxu project opened in Shanghai is called "Sun Light," and it took less than 90 minutes during the turnover process. The average price of the project is 0.1461 million yuan/square meter. On the one hand, this is because the project is located in the Xuhui Riverside area of ​​Shanghai, and the supply in this sector is very scarce. On the other hand, there is obvious price inversion with surrounding projects, such as the Yunjin Dongfang project in the same area, which currently has a second-hand housing listing price of around 0.2 million yuan/square meter, and the inversion price is as much as 0.05 million yuan/square meter.

2. Second-hand housing: the areas of Beijing and Shanghai, etc. for suburban new and old dilapidated houses are selling well, and Tianjin's school district houses have high popularity.

Who is buying: demands for self-use products and cost-effectiveness lead in Beijing, Shanghai, Guangzhou, and Shenzhen, while needs for stabilizing demand lead in Tianjin, Wuhan, and Zhengzhou.

(1) The client groups of new and second-hand housing are different. New housing mainly targets improvement clients, while second-hand housing focuses on demand from first-time homebuyers.

1. Second-hand housing is characterized by large supply, greater price adjustments, and more mature supporting facilities, thus continuing to drive the demand for first-time homebuyers' improvements.

At present, the price sensitivity of the first-time homebuyer group is relatively high, as on the one hand, compared with new housing, second-hand housing owners have an increasing amount of listings, and the number of listings for second-hand housing has remained at 2 million units per year. On the other hand, second-hand housing prices are much lower than those of new housing. According to CRIC's monitoring data, the price difference between new and second-hand housing in 14 core cities has expanded to over 0.01 million yuan/square meter by the end of June 2024, and the drop in second-hand housing prices is significantly higher than that of new housing. Customers therefore have a greater range of choices with second-hand housing. At the same time, second-hand housing has advantages such as "what you see is what you get," and supporting facilities have become relatively mature and complete, and thus first-time homebuyers are increasingly favoring second-hand housing.

2. Due to the small supply of new housing and focus on middle and high-end areas, the innovation advantages of products are used to attract middle and high-end improvement customers.

(2) Three types of cities: Beijing, Shanghai, and Shenzhen focus on high-end areas while maintaining steady demand, Hangzhou and Nanjing focus on improvement needs, and Tianjin, Wuhan, and Zhengzhou focus on the needs of first-time homebuyers.

Based on the motivations and purchasing power of residents in different cities, homebuyers can be divided into the following categories: first, the group of first-time homebuyers, whose main purpose is to get married, settle down, and own a home, have relatively lower purchasing power, and are easily directed to the second-hand housing market. Second, the group of improvement customers, who mainly focus on size and function improvement, prefer new and old houses in the near and far suburbs of the city. Third, the group of middle and high-end improvement customers, who choose upgrades mainly for the purpose of improving the layout and property supporting facilities and pay attention to quality of life, mainly choose new houses. Fourth, the group of luxury home customers, who possess high payment ability and scarce resources, mainly prefer new houses.

These homebuyer categories are suitable for most cities. However, when it is refined to a single city, there are still some differentiated features:

1. The active capacity of first-time homebuyer clients in the second-hand housing market has increased in cities such as Beijing, Shanghai, and Shenzhen, while the capacity of high-end improvement clients in the new housing market remains stable.

The first category is represented by Beijing, Shanghai, and Shenzhen, where the active capacity of first-time homebuyer clients has increased, while the capacity of high-end improvement clients remains relatively stable.

(1) First-time homebuyers mainly stem from the expansion of the customer base after purchase restriction adjustments. They are more prominent in the second-hand market.

For example, in Beijing, the group of active buyers of second-hand housing mainly includes first-time homebuyers and those who intend to improve their house or living environment, which account for 75% of buyers in total. The second-largest group is the first improvement group, accounting for 22%. With the implementation of the new policy on June 30, 2024, the enthusiasm and active capacity of the first-time homebuyer group has increased. Customers with a budget below 3 million yuan account for three percentage points higher, and those who choose houses smaller than 60 square meters account for two percentage points higher.

Another example is Shanghai, where according to the crossover analysis of second-hand housing showing and total price range after the new housing policy was issued on May 27, 2024, the customer activity of 2-6 million price range was relatively high, accounting for 57% of house showings. And about half of them focused on new housing with first-time homebuyer characteristics.

From the perspective of the transaction structure, first-time home buyers will mainly choose the following two types of products: First, the five new cities, because of their planning and price advantages, remain the mainstream choice for first-time homebuyers. Second, the "old and shabby" apartments in the core areas can achieve a balance of work and life. Especially in areas such as the World Expo and Lujiazui, where the surrounding industries are gathering, the more mature areas with old and shoddy apartments are the preferred option for those with low budgets.

(2) The capacity of the high-end improvement group is relatively stable and mainly concentrated in the new housing market. On the one hand, with the impact of the supply structure of new housing, the upgrade of high-quality products and the scarcity of supply, there is often a higher premium space for high-end improvement products, making them a key factor for developers to push stocks. On the other hand, high-end improvement customers have strong risk resistance, and combined with the fact that the housing prices in Beijing, Shanghai, and Shenzhen remain high, they still have certain market appeal to some high-net-worth clients. Therefore, high-end housing demand is relatively stable.

(3) Tianjin's school district housing has high popularity, while in Wuhan, Zhengzhou and other places, first-time homebuyers are the main focus, and Hangzhou and Nanjing are mainly focused on improving needs.

Taking Beijing as an example, in the first half of 2024, the active buyers in the new property market who are interested in buying three-bedroom products account for 50% of the first upgraders, while the second group is those who want to buy four-bedroom or larger products, accounting for 29%. Only 15% of them are target customers for their first purchase or upgrading. Thus, it can be seen that in the context of the improving housing market in Beijing, the buyers actively participating in the current property market are generally upgraders.

For example, in Shenzhen, the proportion of high-net-worth clients has increased, and the proportion of upgrading customers has risen from 15.4% in 2020 to 30% in 2024. Among them, the proportion of luxury house clients has increased to 6.16%.

2. In Hangzhou and Xi'an, residents' property purchase demand is dominated by upgrading requirements, and the demand for upgrading properties is still relatively abundant.

The second category, represented by typical examples like Hangzhou and Xi'an, is dominated by residents who want to upgrade their property purchase demand, and the demand for upgrading properties is still relatively abundant.

Hangzhou's current market returns to rationality with the fading of investment demand, and it is dominated by self-occupancy demand. According to CRIC's survey, the current property buyers in Hangzhou are mainly divided into four categories: new buyers entering the city (improvement in location) + local upgraders (improvement in area) + local households (improvement in functionality) + ultimate upgraders with multiple properties (combining investment and self-occupancy).

In Xi'an, the new property market also shows that there has been a contraction in the target customers for their first purchase, while the proportion of upgrading customers is rising and the increase in the proportion of secondary upgraders is significant. According to the classification of the total transaction price of the Xi'an market, the proportion of target customers for their first purchase accounts for 28% in 2024, a decrease of 9pcts compared to that of 2023; the proportion of first upgraders accounts for 43%, a slight increase of 1 pcts compared to that of 2023; the proportion of secondary upgraders accounts for 18%, an increase of 5 pcts compared to that of 2023; and the proportion of luxury upgraders accounts for 11%, an increase of 3 pcts compared to that of 2023.

It is worth noting that in the core areas, due to the scarce supply and the inverted bonus, the demand for upgrading properties will remain strong. Taking Hangzhou as an example, on the one hand, from the overall decline in the market in the second half of 2023, based on the liquidation and allotment of high-upgrade products, most high-end real estate projects priced above 50,000 RMB can still maintain a 'sold out' state, with a low allotment rate, even triggering 'restricted sales.' On the other hand, the supply of high-upgrade products is in short supply. Benefitting from the supply control in Hangzhou's core areas, a very healthy inventory is formed, with a broad range of liquidation cycles taking only 11 months.

3. In Tianjin, Wuhan and Zhengzhou, residents' property purchases are dominated by target customers for their first purchase, and therefore, the overall second-hand property market is more resilient than the new property market. Small-sized, low-priced houses continue to be popular.

The second category, represented by typical examples like Tianjin, Wuhan and Zhengzhou, is dominated by residents who are target customers for their first purchase, and thus, shows that the overall second-hand property market is more resilient than the new property market. Small-sized and low-priced houses continue to be popular.

The new property buyers in Tianjin can be generally divided into the following categories: first, the proportion of target customers for their first purchase accounts for 70%, and these are mostly (1) new Tianjin people who have moved to the city and are interested in low-priced properties, accounting for approximately 28% but showing a recent trend of decline; (2) those who want to buy houses for their children's education guided by effective school district policies, accounting for approximately 20%; and (3) locals who are interested in high-performance ratio properties for their first purchase, accounting for approximately 22%. Second, upgrading customers mainly have requirements for upgrading the area and functions, accounting for approximately 27%. Third, the proportion of clients for luxury houses accounts for only 3%.

Apart from that, the sales of new properties in Wuhan are falling behind second-hand properties, and there is a decline in the new properties' target customers for their first purchase in the block of affordable houses, as the second-hand properties have been sold in large quantities with clear signs of a reduction in prices. Secondary upgraders see a fierce competition inside the block of affordable houses, resulting in their internal diversion. Specifically, the target customers for their first purchase and those in the block of affordable houses are clearly separated from secondary upgraders in the second-hand market, and the difference in the average usable area per unit is only about 6 square meters. Moreover, there also appears to be an increase in the number of second-hand properties in the old or outdated block of upgrading properties that are sold at a discount, taking over potential new property clients on the periphery. The floor area difference between the new properties in the block of mid- to high-end properties and that of the second-hand properties shows a huge disparity, with many old and small-sized second-hand properties being sold at a discount, while the average usable area per unit is shrinking in the mid-range new properties and expanding in the high-end new properties. The properties sitting at the entry-level and the top-end segments of the real estate market all have better sales performance than those in the mid-range segment.

In Zhengzhou, customers aged between 25 and 34 have dominated the real estate market in Henan's provincial and municipal cities for the past five years. However, the number of local clients has declined significantly for the first time this year, with the proportion of clients aged 25 to 34 completing transactions falling to 23.64% from around 30% five years ago. The proportion of clients in the urban area and suburban areas has not increased significantly either, which directly causes the sluggishness of the market.

Single people tend to buy their properties in West District blocks such as the High-tech Development Zone and Changqing District West Lake, while already-married and those with children prefer the well-equipped core areas of the old city such as Sanquan Country Base, Zhengxin Road and Yunhe New City. Those who live with three generations in the same household tend to choose more diversified areas.

Currently, the market is dominated by target customers for their first purchase, especially for those who prefer the triple-ring area in Beijing. However, upgrading properties are more dependent on location. They are more popular in planned and well-defined areas, such as the Binhe New City and Beilong Lake, while the properties for luxury house clients are much more concentrated, especially in the Beilong Lake block.

Purchasing power: Mutual complementarity in Beijing, Shanghai, Shenzhen and Hangzhou; mutual comparability in Tianjin, Wuhan and Zhengzhou between the sales of new and second-hand properties.

Focusing on typical cities, due to the significant differences between the groups of clients for new and second-hand properties, the purchasing power is also different and generally shows that the main price range of new properties is significantly higher than that of second-hand properties. By comparing the main price ranges of new and second-hand properties sold, we can divide the eight typical cities into the following categories:

(1) Complementarity: In Beijing, Shanghai, Shenzhen, and Hangzhou, second-hand properties have fully taken over target customers for their first purchase, while the demand for upgrading properties and those for high-end purchasers are still waiting to be released.

In complementary cities, new and second-hand properties have completely different clienteles. As the typical examples like Beijing, Shanghai, Shenzhen and Hangzhou, new property buyers focus on upgrading, while second-hand property buyers are mostly target customers for their first purchase. Hence, the main price range of second-hand properties is significantly lower than that of new properties. For this type of city, promoting the sales of second-hand properties may stimulate some upgrading and high-end demand from those customers 'selling old to buy new,' thus transferring market heat from the second-hand property market to the new property market gradually.

Block orders focused on the new housing market in Peking, Shanghai, Shenzhen, and Hangzhou for improvement and high-end customers. The total transaction price for improvement customers is mainly concentrated in the 5-7 million yuan range, while the purchasing power of high-end customers can reach tens of millions of yuan. The main force of demand for affordable housing is concentrated in the second-hand housing market, with the majority of total transaction prices being below 3.5 million yuan.

(2) Interchangeability: Tianjin, Wuhan, Zhengzhou have weak replacement efficiency, and the total transaction price for both first and second-hand housing markets is concentrated below 2 million yuan.

Interchangeable cities refer to the similarity in transaction structure between second-hand and new housing markets, presenting interchangeable characteristics in terms of total and area price range. Customers may be pushed to the second-hand housing market due to limited short-term supply of new houses or doubts about the safety of new house delivery. If the supply of new houses increases or the confidence of customers is built, the overall transaction volume of new houses still has the possibility to increase.

Typical representatives are Tianjin, Wuhan, and Zhengzhou. The main total transaction price range for both first-hand and second-hand housing markets is concentrated below 2 million yuan, and the proportion of transactions is more than 50%.

However, there are still significant differences in the main area ranges between new and second-hand housing markets in these three cities. In Tianjin's second-hand housing market, small-sized houses are dominant, with the proportion of below 70 square meters being 32%, while the main area range for new houses is 80-120 square meters. The main area range for new and second-hand housing markets in Wuhan is basically the same, which is 80-140 square meters. For Zhengzhou's second-hand housing market, the total transaction price is mainly below 90 square meters, while the main area range for new houses shows a "two-peak" trend, which is 100-120 square meters and below 70 square meters.

Summary and prediction: The new housing market in Peking, Shanghai, Shenzhen, Hangzhou, and other cities is waiting for further improvement demands to be released. The competition in the first and second-hand housing markets in Tianjin, Wuhan, and Zhengzhou has intensified.

(1) Large-scale new houses and improvement customers dominate; second-hand housing s total price falls, and affordable housing dominates.

(2) The complementary properties between new and second-hand housing markets in Peking, Shanghai, Shenzhen, Hangzhou, and other cities are stronger. Further improvement demands need to be released.

For markets like Peking, Shanghai, Shenzhen, Hangzhou, and Xi'an, there is a significant difference in transaction structure between the second-hand housing and new housing markets, with stronger complementarity. As house prices continue to rise, the second-hand market undertakes more affordable housing, and the new housing market enters an era of improvement. On the one hand, there is a significant difference in the purchase power of first and second-hand housing, and the main total transaction price range in the second-hand market is significantly lower than that in the new housing market. On the other hand, in terms of transaction area range, the area range in the second-hand market tends to be smaller, and the overall main force area range is also lower than that in the new housing market, which also reflects that the customer group of the second-hand market is different from that of the new housing market.

Currently, the activity of the second-hand housing market in these cities is higher than that of the new housing market. It is expected that some replacement demands will be shifted to the new housing market in the future, and the release of further improvement demands will help stabilize and rebound the new housing market in the future. Especially for first-tier cities like Peking, Shanghai, and Shenzhen, the capacity for high-end customers with purchasing power of more than ten million yuan is stable, and there is still room for short-term release.

(3) The main total price ranges for first and second-hand housing markets in Tianjin, Wuhan, and Zhengzhou tend to be similar, and the competition between the two markets is intensifying.

For Tianjin, Wuhan, and Zhengzhou, the purchasing power of the new and second-hand housing markets tends to be similar, with a high degree of similarity in the main total price range and no significant difference in customer groups, all driven by the purchasing power of affordable housing needs.

Based on this, it can be predicted that the trend of "This reduces as that increases" between the first and second-hand housing markets will continue in the future, and competition will intensify. The second-hand housing market will continue to attract affordable housing customers due to its advantages such as a wide selection, low prices, and high safety, while the new housing market also has some structural opportunities. As long as the supply of small-sized new houses increases, various promotional methods of real estate developers are upgraded, and innovative house designs are developed, the confidence of home buyers will gradually recover, and a surge of new housing transactions will be triggered.