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A building is under construction in the central Huangpu District, Shanghai, China, January 17, 2025. /CFP
Editor's note: Wu Yuzhe is a professor and director of the Institute of Land Science and Property, Zhejiang University. This article reflects the author's opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.
In 2024, China's real estate market gradually showed signs of recovery. The Chinese government maintained the principle that "housing is for living in, not for speculation" and implemented targeted, precise policies tailored to local conditions.
On May 17 and October 17, new policies were introduced to stimulate the real estate market, including cutting minimum down payment ratios, lowering mortgage rates and optimizing housing provident fund policies. These measures significantly incentivized people to buy homes and increased investment in affordable rental housing, addressing the diverse housing needs of different groups and stabilizing market expectations.
Particularly, at the Central Economic Work Conference held December 11-12, it was proposed that it is essential to advance the renovation of shanty towns in cities and dilapidated houses and fully unleash the potential demand of people looking to buy their first homes or improving their housing conditions. It was announced that work would be done to reasonably control the supply of newly added real estate land, make good use of existing land resources as well as commercial and office properties, and advance the disposal of existing commodity housing.
As a result, the supply-demand relationship in the real estate market gradually balanced and housing prices remained relatively stable.
According to China Real Estate Information Corp. data, in December, the national transaction area of commodity housing in 30 key cities was 18.01 million square meters, a month-on-month increase of 15 percent and a year-on-year growth of 17 percent. The transaction volume also rose by 2 percent compared to December 2022, reaching the highest level for the same period in nearly three years. Additionally, data from the China Index Academy shows that in December 2024, the average price of newly built residential properties across 100 Chinese cities was 16,654 yuan (about $2,281) per square meter, a 0.37 percent increase month on month and a 2.68 percent growth year on year.
Workers atop the roof of a residential commercial building under construction in a housing area in Nanjing, Jiangsu Province, China, January 17, 2025. /CFP
Looking ahead, there is still considerable room for further recovery and development in China's real estate sector: First, the government's policy of repurchasing existing ordinary commercial housing and converting it into affordable housing still holds vast potential for improvement.
Shared-ownership housing is a form of affordable housing. In reality, in cities where the cycles for selling existing properties are long and population growth is stabilizing, housing consumption vouchers could be issued to groups such as young people and migrant workers to help with down payments on their first homes. The ownership of such properties could be shared between buyers and the government.
As the real estate situation improves in the future, homebuyers could opt to repay the value of the housing consumption voucher to the government, converting these affordable, shared-ownership homes into regular commodity housing that can be traded on the market.
Second, the renovation of shanty towns in cities and dilapidated houses not only improves living conditions but also adds new demand to the real estate market. With scientific and thoughtful planning and renovation, it is possible to create safe, comfortable and well-equipped living spaces with pleasant environments for residents. Meanwhile, through measures like demolition, exchanges and monetary compensation, this can transform potential demand into effective demand to invigorate the real estate market while providing residents with a sense of fulfillment.
Third, expanding the construction of improved housing will help restore market confidence and foster new growth drivers in the real estate industry. To release the demand potential for improved housing, the government could explore flexible land supply strategies, promoting low-density residential developments on mild slopes of low mountains and hills in the outskirts of large cities and county towns with convenient transportation. This would not only preserve arable land but also foster a modern form of harmonious coexistence between humans and nature.
Meanwhile, studying tax policies related to improved housing could further promote social equity. The market's confidence in the real estate sector is closely tied to the confidence in the broader macroeconomy. The stable and healthy development of the real estate market can have a positive feedback effect on the macroeconomy and drive the prosperity of related industries, thereby boosting employment and stimulating economic growth.
With ongoing policy optimization and further market recovery, China's real estate market is poised to usher in a healthier and more stable development prospect in the future.