New purchasing policies show initial effectiveness

• The new policies announced at the end of September 2023 have had a positive impact on market enquiries. The overall Primary market transaction of units in 4Q23 was 10.5% higher than that of 3Q23. 
• However, uncertainties such as an economic slowdown and income contractions have led many potential buyers to adopt a wait-and-see attitude towards the residential market.

Fewer new launches compared to previous quarters

• Three new high-end projects, namely Elegant Mansion in Baiyun, Wooded Hill Mansion and Guanchen Mansion in Panyu, entered the market in the quarter. Plus, with the latest launches from existing projects, the sum of newly-launched units was 677, about half the number compared to earlier quarters in 2023.
• Four high-end projects were completed in the quarter, adding 548 units to the total stock.

Capital value experiences an accelerated decline in 4Q23

• As some new residences with high utilisation rates entered the Primary market and developers were willing to offer larger discounts to reduce unsold units, potential buyers were increasingly inclined to consider Primary properties. The Secondary market experienced a bigger downturn in the quarter.
• Leasing demand was still weak. In order to prevent prolonged vacancies, especially with the upcoming extended Chinese New Year holiday next quarter, some responsive landlords were willing to proactively lower rents, resulting in a rent decline of 1.4% q-o-q.

Outlook: Market recovery to require some time

• As purchase restrictions are gradually relaxed, coupled with the anticipated loosening of monetary policies, it is expected that demand from potential homebuyers previously constrained by these policies will be gradually released, strengthening confidence in the high-end residential sector.
• Due to the prolonged market downturn, developers and existing homeowners are expected to seize the opportunity of a market recovery by selling properties at discounted prices to meet the anticipated sales demand. A marginal decline in capital values may persist in the next 12 months.