China’s resale home transactions overtake new-home sales for first time

Why protecting home values is Beijing’s new priority

China’s housing market has entered a new phase, with resale transactions overtaking new-home sales in volume for the first time.

Resales move ahead of new homes

Official figures published by the National Bureau of Statistics in September show that transactions in the secondary housing market have surpassed new residential builds nationwide. Registered resales reached 549 million square metres, indicating that housing demand in China has not disappeared.

Instead, the source material points to a structural shift in where that demand is being expressed. Households are increasingly trading homes that already exist, rather than relying primarily on newly built properties.

That change makes stabilising the existing housing stock vital, as the centre of gravity in the market moves away from new construction.

The end of a high-velocity model

The shift marks a departure from the growth model that shaped China’s property market for a quarter of a century. After the end of the old welfare housing system in 1998, developers acquired municipal land, pre-sold unfinished apartments and collected buyer advances.

Those advances were then funnelled into the developers’ next projects, creating a high-velocity loop. Residential construction consequently became the country’s primary economic engine.

That engine is now losing momentum. The market that is emerging is not simply a smaller version of the old one, but a different market altogether.

The distinction is important: developers are no longer the only central force, with households trading existing homes becoming increasingly significant. Beijing’s priority, as framed by the development, is therefore tied to protecting the value and stability of the homes already in the market.

Source: South China Morning Post