School district housing supports sales

• Demand for housing in the school district remained steady in the quarter, supporting luxury apartment sales. A total of 919 luxury apartment units were sold in Q3 2024, up 42.9% q-o-q but down 35.4% y-o-y.
• Beijing’s home-buying policy remained largely unchanged in Q3 2024. But in late September, it was proposed that the distinction between “ordinary” and “non-ordinary” houses would be phased out at the appropriate time.

New supply hits a three-year low

• Luxury apartment supply shrank by 54.9% q-o-q in the quarter, with only one project launched for a total of 325 new units. Meanwhile, cumulative new supply for the year recorded 1,811 units, down 50.7% y-o-y.
• The land market supply edged upward in Q3 2024, with seven land plots transacted by mid-September. However, it is expected that only one plot will be developed into a high-end project. The scarcity of prime land plots will continue to limit new high-end supply.

Price trends in the Primary and Secondary markets diverge

• A high-priced new project drove up luxury apartment prices by 0.4% q-o-q. Under the pressure of oversupply, landlords further lowered the prices of secondary properties to facilitate transactions.
• Rents fell by 1.9% q-o-q. Given the weak leasing demand and increased supply, most landlords started to provide more flexible strategies to retain existing tenants in a competitive leasing market.

Outlook: Rebound in demand requires extra time

• Market sentiment is expected to stay soft in 2024 as most buyers are keeping a wait-and-see strategy. However, the implementation of the new policy proposed at the end of Q3 2024 is expected to promote stable high-end sales.
• Developers are expected to provide further price reductions to trigger transactions in the primary market, while ageing secondary properties in non-core areas will lead the decline in secondary prices.