The Straits Times: 

Last year, we saw the impact of real estate on the macroeconomy. Can the real estate market remain stable this year? Thank you.

Kang Yi:

Thank you for your question. The real estate sector has garnered widespread attention. At last year's press conference, I was asked about the trends and future development of the real estate industry. From our observations, the real estate market is undergoing a period of adjustment and transformation after more than 20 years of development. Under these circumstances, all regions and departments have made timely adjustments and optimized real estate policies in accordance with the new situation where the relationship between supply and demand in the real estate market has profoundly changed. Currently, the real estate market has seen positive changes in the following two aspects.

First, there was a decrease in the rate of decline for indicators such as real estate investment and sales. In 2023, investment in real estate development decreased 9.6%, narrowing by 0.4 percentage point from the previous year. The amount of funds raised by real estate developers in China fell 13.6% in 2023, with the rate of decline narrowing by 12.3 percentage points compared to the previous year. The decline in sales of commodity housing substantially narrowed as well. In 2023, the floor space of commercial buildings sold and the total sales in China declined 8.5% and 6.5% year on year, respectively. These decline rates narrowed by 15.8 and 20.2 percentage points, respectively. The number of online signings and registrations for newly built commercial residential buildings has increased since August, up 20.2 percentage points from August to December. In 70 large- and medium-sized cities, the transaction volume of new and secondhand homes achieved a gentle rise. Second, the completed area of housing increased rapidly. Efforts have been made to ensure the timely delivery of pre-sale housing, and the results have been positive. In 2023, the completed floor area by real estate developers increased by 17% from the previous year.

How do we foresee future trends in the real estate market? China's real estate market has a solid foundation for long-term and healthy development for these reasons:

Firstly, there is ample room for improvement in both the quantity and quality of urbanization. As we just reported, the urbanization rate in 2023 was 66.16%, which, compared to the approximately 80% in developed economies, indicates a potential improvement of over 10 percentage points. China's urbanization is still in continuous development, with an average annual increase of 0.93 percentage point over the past five years. With more than 10 million rural residents migrating to cities each year, the substantial influx of new citizens will create a significant demand for new housing. In terms of existing housing stock, while the per capita housing area in our country is already substantial, many houses have impractical functions and structures, leading to an urgent need for improved housing. This demand serves as a crucial driving force for the real estate market. The demand for improved housing is particularly apparent in the 70 major and medium-sized cities currently under observation. This is evidenced by the fact that the transaction volume of second-hand houses in these 70 cities has already exceeded that of new houses.

Secondly, there is enormous potential to establish a new model of real estate development. The active construction of a new model for real estate development currently offers a fundamental solution to address development challenges and promote the sector's healthy growth. Initiatives such as the construction of government-subsidized housing, the construction of dual-use public infrastructure for normal and emergency situations, and the rebuilding of villages in cities are progressing rapidly. These projects, as they advance vigorously and systematically, will not only address pressing housing and living concerns for the people but also stimulate investment and consumption related to real estate, fostering the sector's healthy development.