Housing market slows down amid economic uncertainty

• The primary high-end residential market was mainly driven by demand from home upgrades. Due to the slowdown in the secondary market, some potential home upgraders found it difficult to exit their existing properties, which slowed housing demand in the primary high-end market as well. 
• In the secondary high-end market, many units in good location were snapped up in the previous quarter, leaving fewer appealing options in the market. Furthermore, some potential buyers took a wait-and-see attitude amid the relatively weak market sentiment. Hence, the secondary housing market witnessed weakening demand in 2Q23.

One project launches in 2Q23

• Only one new high-end project, namely Poly Tianrui in Tianhe, entered the market in the quarter. Together with the latest launches from existing projects, the number of newly-launched units reached 1,200. 
• Three high-end projects were completed in the quarter, adding 2,015 units to total stock.

Capital value growth decelerates due to weak demand

• Very few developers offered discounts as project sales were slower than expected during 2Q23, while the price of other projects remained broadly stable. In the secondary market, sellers were cautious about raising their housing prices, owing to the decreasing number of viewings. As a result, primary capital values dropped slightly by 0.1% q-o-q, and secondary capital values edged up by 0.7% q-o-q.
• In the leasing market, Zhujiang New Town (ZJNT) continued to lead rental growth, but at a slower pace due to the relatively weaker demand in the quarter, whereas rents in most other areas remained stable. 

Outlook: Residential market heading to moderate recovery

• The central bank cut the loan prime rate by ten basis points in June. The state council is considering various macroeconomic policies to prop up the economy, which may expand the housing demand and stabilise the property market. However, it will likely still take time to regain confidence in the overall housing market. 
• Given the gradual recovery of housing demand, primary high-end capital values are expected to stabilise in the short term. For high-end secondary capital values, divergent performances across submarkets may persist. ZJNT capital values will likely continue to trend upward, while other submarkets may still lack growth momentum.