- From a long-term perspective, we expect the real estate sector to strike a new balance between supply and demand that adapts to the current market scale, given the top-level policy guidance and actual market demand. The likelihood of new residential house sales resuming 18 trillion RMB is very low.
- In our view, 2024 should see the forming of property sales bottom and a decline of about 5% in residential house sales from 2023. The sales slippage is caused by the fact that the impact of sluggish demand in low-tier cities could not be counterbalanced by stabilized sales in high-tier cities, and that dented confidence and the population trend also put some pressure on housing sales.
- We expect construction and installation investment to continue the downward trend due to weak new starts. Land acquisitions would remain muted with increasing divergence across cities. Land demand in high-tier cities may stabilize first while land markets in low-tier cities continuously come under the strain.
- Developers with solid asset quality and land reserves concentrated in high-tier cities should enjoy greater market space and resilient creditworthiness.
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