Where Is the Real Estate Market Heading in First-Tier Cities? (AI Translation)

一线城市房地产市场怎么走

The real estate market in first-tier cities, such as Beijing, Shanghai, Guangzhou, and Shenzhen, is showing resilience and hints of stabilization as 2025 commences. These cities serve as key indicators for the broader market due to their economic strength, talent attraction, and technological innovation capabilities. By stabilizing the frontline, the entire nation typically follows suit. [para. 1]

In January 2025, the new housing market in these cities recorded a transaction volume of 2.88 million square meters, marking a 16% year-on-year growth when adjusted for the Lunar New Year holiday. Shanghai led with 1.08 million square meters sold, while Beijing, Guangzhou, and Shenzhen followed. However, in February, the transaction area fell 10% compared to 2024, affected by the Lunar New Year holiday. Despite this, Shenzhen and Shanghai presented increases of 37% and 4%, respectively, whereas Beijing and Guangzhou saw decreases. [para. 2][para. 3]

The second-hand housing market has continued to improve, surpassing the performance of the new housing market. In January, it achieved a year-on-year transaction area increase of 45%, notably led by Shenzhen with an 89% increase. After the New Year, activity in this market remained robust, maintaining a 27% increase year-on-year for Beijing, Shanghai, and Shenzhen. [para. 4]

Housing prices in first-tier cities demonstrate gradual stabilization. In January 2025, the month-on-month increase for new residential properties was 0.1%, with Shenzhen and Shanghai seeing rises, while Beijing experienced a decline, and Guangzhou stayed stable. Similarly, prices for second-hand properties rose slightly, continuing a four-month positive trend. [para. 5]

Purchasing demand is closely tied to qualification, capabilities, and willingness. Relaxations in purchase restrictions have significantly enhanced buying conditions, particularly evident in Guangzhou, which has removed restrictions. Shanghai and Shenzhen have eased requirements related to social security contributions. Mortgage conditions have also become more favorable, with reduced down payment ratios and lower interest rates. [para. 6][para. 7]

Buyers' confidence is buoyed by stable price trends, timely pre-sale home deliveries, and improved housing quality. Positive developments in residential design guidelines across these cities have further boosted expectations. This confidence manifests in a growing preference for new homes driven by improved design and construction standards. [para. 8][para. 9]

The demand is structured such that new home purchases are driven by improving living standards and predominantly involve units between 90 to 120 square meters. Meanwhile, the second-hand market is dominated by first-time buyers, especially in smaller units, highlighting their persistent demand amid high prices. [para. 9]

The total new home supply is expected to decrease due to reduced land availability and completions. In 2024, the land supply in these cities fell by 20.5%, significantly impacting future availability. Efforts are underway to boost supply by accelerating land auctions, increasing affordable housing, and enhancing high-quality housing. [para. 10][para. 11]

Despite a decline in the number of second-hand listings due to market conditions, a slight rebound occurred thanks to increased willingness to exchange properties. This adjustment coincides with the heightened transaction activity witnessed since early 2025. [para. 11][para. 12]

Looking forward, the "Little Spring" represents a seasonal boost, driven by the increased activity post-Lunar New Year and seasonal sales peaks in March. First-tier cities remain essential in leading this recovery, supported by further policy relaxations and tax adjustments that stimulate demand. Loosening purchase restrictions and reducing transaction taxes can foster further growth, particularly important for supporting market health and meeting diverse housing needs. [para. 13][para. 14][para. 15]