Luxury apartment sales remain low

• A total of 643 luxury apartment units were sold in the quarter, basically flat q-o-q but down 68.6% y-o-y. There was a prevailing wait-and-see attitude among buyers, and supply shortfalls continued to suppress demand.
• In April, Beijing relaxed restrictions on home-buying outside the Fifth Ring Road, allowing eligible buyers to purchase one more home there. The policy boosted enquiries in the short term but had a limited impact on sales.

New supply shortages continue in the quarter

• Luxury apartment supply continued to be limited as slow destocking reduced developers’ willingness to launch new units. A total of 721 units were launched in Q2 2024, a decrease of 5.8% q-o-q.
• The land market cooled in the quarter, with four land plots transacted by mid-June. Most of these plots were taken at the base price. The drop in land transactions may cause the continuation of nominal high-end supply next year.

Promotional pricing becomes the main tool to stimulate sales

• With the arrival of the mid-year sprint, developers increased discounts, driving prices down 1.5% q-o-q. Some landlords reduced prices to complete transactions quickly, causing a further fall in Secondary prices.
• On the other hand, the continued decline in Secondary prices forced some sellers to change tactics and begin leasing, increasing supply in the leasing market. Soft leasing demand in the quarter drove rents down by 1.8% q-o-q.

Outlook: Pressure on prices to persist in the near term

• As the city with the strictest purchase restrictions, Beijing is expected to optimise home-buying policies later this year to stimulate potential buyers. Sales are predicted to remain stable for high-end projects in prime locations.
• It is expected that a promotions trend will continue during the market adjustment period. Limited new Prime supply may continue to transfer demand into the Secondary market, narrowing the decline in Secondary prices.