The Real Estate Market in 2024 Shows a “Low in the First Half, High in the Second Half” Trend, with Gradual Warming Under the Drive of Intensive Policies, and Homebuyers’ Expectations for Property Purchases Improve Significantly. Can the “Spring Upswing” Arrive Early in the Year of the Snake? What Will Happen to Housing Prices in the First Quarter of 2025? Can Returning Home to Purchase Properties Reignite Vitality in Third- and Fourth-Tier Cities?

On the evening of January 20th, the fifth episode of the “Real Estate Insights” live broadcast series, jointly launched by Everyday Economics Real Estate and Tencent Real Estate, featured Zhang Bo, Dean of the 58 Anjuke Research Institute, Li Yujia, Chief Researcher at the Housing Policy Research Center of the Guangdong Urban and Rural Planning Institute, and Si Zhi, Producer of Fan’s Home Selection (in no particular order), as guests in the studio.

A “Spring Upswing” After the Spring Festival is No Problem

“In terms of transaction volume, the trend of recovery is very clear. The fourth quarter of 2024 saw a certain increase compared to 2023, with the overall transaction amount and area of commercial housing exceeding market expectations,” Zhang Bo said. “Although total indicators in 2024 are still relatively low, the obvious recovery trend in the fourth quarter will lead to further stabilization in 2025.”

“In 2025, looking at transaction volume first, even if the average data may be lower than that of the fourth quarter of 2024, it will still exceed the level before the new policies. From this perspective, stabilization has actually been achieved. The next step mainly depends on whether incremental policies can be implemented. If they are, there will be more optimistic changes,” Li Yujia believes. “It’s worth noting that according to the data for December 2024 released by the National Bureau of Statistics for 70 cities, the price index for first-tier cities rose from flat in November to 0.2% in December, and new home prices in second-tier cities shifted from a decline to flat, which is not easy.”

Based on the situation in Beijing, Si Zhi analyzed, “In the fourth quarter of last year, Beijing saw online signing volumes approaching or exceeding 20,000 units for three consecutive months, which hasn’t happened for many years. Starting from January 2025, real-time transactions are still increasing year-on-year, although the growth rate is gradually slowing due to the Spring Festival. With this momentum, it is expected that a ‘spring upswing’ will occur after the Spring Festival this year without a doubt.”

Return to Home-Buying Demand for Those Returning Home?

Due to the continuous and profound adjustments in the real estate industry, home-buying for those returning home has almost been forgotten. However, in 2025, against the backdrop of stabilization, third- and fourth-tier cities are expected to seize this opportunity to rejuvenate.

Li Yujia believes that now is the time for all regions to once again pay attention to home-buying for those returning home.

“But this group has different characteristics, and supply should be determined based on their needs. The first group is the first generation of migrant workers, the second is young entrepreneurs returning home, and the third is those purchasing homes for marriage. These three groups have lived in cities, especially developed areas, for a long time and have been exposed to high-quality and superior products,” Li Yujia said.

“What do they pay more attention to when buying homes? One is cost-effectiveness, and the other is high-quality properties. Third- and fourth-tier cities should understand changes in the outside world. Currently, the supply-side products in high-energy cities are iterating very quickly, so it’s easy to benchmark good homes and products. Both governments and developers should fully understand the pain points of home buyers – having amenities, quality, school districts, and job opportunities. Attracting home buyers from a demand perspective is what governments and developers should do. Using the old price promotion methods is unlikely to impress home buyers,” he added.

In terms of willingness to purchase, Si Zhi suggested that home-buying for those returning home has always been a key area, mainly determined by two factors. Firstly, housing prices in Beijing, Shanghai, Guangzhou, and Shenzhen are too high, so they choose to buy in their hometowns. Secondly, with the adjustment of home loan recognition policies in first-tier cities, buying property in another location no longer affects the recognition of first and second homes in their city of residence. Surveys this year show that many people’s willingness to buy property in their hometowns is significantly higher than in the previous two years.

However, in terms of actual home purchases, doubts seem to persist. “Third- and fourth-tier cities are highly differentiated, and although buyers want to buy, they don’t know how to make a choice. Therefore, they are hesitant at this stage. Although the willingness to buy property in hometowns is stronger this year than last, it’s not easy to make a profound judgment on whether they will actually spend money,” Si Zhi said.