SCIO press conference on national economic performance in H1 2023

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Market News International:

The growth rate of real estate development investment declined recently. With the continuous relaxation of real estate policies, what is the trend of real estate investment in the second half of the year?

Fu Linghui:

Thank you for your question. The real estate market is an area that people are concerned about. Since the beginning of this year, all localities and government departments have followed the principle that houses are for living in, not for speculation, and implemented city-specific policies to support the rigid and upgraded demand for housing. We have actively worked to ensure the delivery of presold housing, people's livelihoods and stability. The backlog of demand for house purchases in the first quarter was released, which led to an improvement in the real estate market. In the second quarter, the real estate market gradually returned to normal operation. In the first half of the year, the overall real estate market showed a trend of stabilization. The major indicators such as real estate market sales, development investment, and in-place funds for real estate development enterprises have all improved compared to last year. In the first half of the year, the country's commercial housing sales decreased 5.3% year on year in terms of floor area, and grew 1.1% in terms of value, both significantly better than the whole of last year. The decline in sales area was significantly smaller, and the sales revenue turned from a decrease to an increase. In the first half of the year, real estate development investment decreased 7.9% year on year, and the in-place funds of real estate development enterprises fell 9.8% compared to last year, with the decline narrowing to varying degrees compared with the whole of last year.

The trend shows that as the economy sees an overall recovery and the policies for the healthy development of the real estate market take effect, this sector will gradually stabilize. On the demand side, thanks to the policy that houses are for living in, not for speculation, speculative demand for housing has been gradually repressed, while inelastic demand and demand for upgraded housing have been released in an orderly manner, which will continue to drive the development of the real estate sector. On the supply side, the business models of some real estate companies based on high leverage, high debt and high turnover are unsustainable, and supply in the real estate market is undergoing temporary adjustments. As the adjustments gradually take effect, market supply will also gradually tend toward stability. From a medium to long-term perspective, China's real estate market is transitioning from rapid development in the past to stable development, which is determined by changes in the development stages of the real estate market and adjustments to market supply and demand.

In the next stage, we must adhere to the principle that houses are for living in, not for speculation. We need to accelerate the establishment of a housing system with multiple types of suppliers and support channels that encourages both renting and buying. We will implement a long-term mechanism to promote the stable and healthy development of the real estate market, continue to support the rigid and upgraded demand for housing, regulate the development of the housing rental market, promote stability in the real estate market, and ensure people's livelihood needs are met.

Regarding your concerns about real estate investment, currently, the sector still sees a decline in the gross floor area of new projects and an increase in completed real estate space, resulting in an overall decrease in construction area. Going forward, real estate investment is expected to remain at a low level. However, as the real estate market gradually adjusts, we anticipate that real estate investment will gradually return to a reasonable level. Thank you.

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