What happened to the 80% drop in real estate transaction volume? What was the real estate transaction volume in February?

Recently, CRIC Research Center released the February real estate market monthly report. The report shows that in February, new housing supply was reduced in more than half of the cities, and the overall transaction area in 27 cities dropped by about 80% year-on-year and month-on-month, and second-hand housing transactions in most cities were almost "empty." In addition, the volume of transactions in the national land market fell to the lowest level in nearly a year in February.

The decline in supply area in second- and third-tier cities has widened, with more than half of cities experiencing zero supply

According to the report, the new supply area in 27 key cities in February was 850,000 square meters, a sharp drop of 92% month-on-month and 85% year-on-year. The report said that mainly due to the impact of the COVID-19 epidemic, sales offices in many places were forced to suspend sales activities during the Spring Festival. In addition, the core first- and second-tier cities generally postponed the resumption of work. According to CRIC's monitoring, half of the real estate companies only began to resume work on February 17, which also led to a cliff-like decline in overall supply.

Specifically, the newly added supply area of ​​commercial housing in first-tier cities was 180,000 square meters, down 81% and 86% year-on-year and month-on-month respectively. There was zero supply in Beijing, Shanghai and Shenzhen. The new supply was mainly concentrated in Guangzhou, but Guangzhou's launch performance was still not as good as the same period last year, down 44% year-on-year, and the supply rhythm slowed down significantly. Currently, the resumption rate of work in Beijing, Shanghai and Guangzhou has basically reached more than 50%, and it is expected that the supply in first-tier cities will gradually recover in March.

In addition, the new supply area in second- and third-tier cities this month was 680,000 square meters, a 93% decrease from the previous month and 85% decrease from the previous year, with the decline significantly widening compared with January. More than half of the cities have zero supply, and Fuzhou, which has the largest supply, has no more than 150,000 square meters. At present, the cities that still have supply in February are mainly concentrated in the Pearl River Delta and Yangtze River Delta regions, with typical cities including Fuzhou, Foshan, Changzhou, Dongguan, etc. The report pointed out that the epidemic situation in these cities is basically under control at present, and the peak period for real estate companies to resume work is in mid-February, so a small amount of supply can be guaranteed. The report predicts that by March, the supply in central cities such as Wuhan, Changsha, and Zhengzhou, where the epidemic is more severe, will remain bleak, while the supply in other regions is expected to increase steadily as the resumption rate of work increases.

The transaction volume dropped by about 80% year-on-year and month-on-month

The report pointed out that due to the significant reduction in supply and the spread of panic caused by the epidemic, real estate transactions continued to decline in February. The overall transaction volume in 27 key cities was 2.4 million square meters, a month-on-month decrease of 83% and a year-on-year decrease of 77%, significantly lower than the monthly average level in 2019.

The total transaction volume in first-tier cities was only 290,000 square meters, a decrease of 82% month-on-month and 73% year-on-year. The four cities of Beijing, Shanghai, Guangzhou and Shenzhen all saw declines both on a month-on-month and year-on-year basis, with most of the declines exceeding 50%. Among them, Guangzhou had the most significant decline. Although the supply increased slightly, due to the concentrated release of demand at the end of last year and the impact of the epidemic, the transaction volume fell by 90% both year-on-year and month-on-month.

The total transaction volume in second- and third-tier cities was 2.11 million square meters, down 78% and 84% year-on-year and month-on-month respectively. From the perspective of absolute quantity, only Chengdu, Nanjing and Zhengzhou had transaction volumes exceeding 200,000 square meters, while the transaction volumes in most cities in February were less than 100,000 square meters. The report indicated that especially in places like Ningbo, Chongqing and Wuhan, there was little willingness to buy houses, and coupled with the poor opening conditions of sales offices, there were zero transactions in February.

From a regional perspective, cities in central and western China such as Chengdu and Zhengzhou saw an increase in transaction volume. In February, the cumulative transaction volume of the two cities was 670,000 square meters, accounting for 28% of the total transaction volume. Although prices in all cities have fallen, the situation in the southeast coastal areas is generally better than that in inland cities such as Suzhou, Wuxi, Changzhou, Fuzhou and Hefei. The transaction volume can still be maintained at around 100,000 square meters, and the demand for housing is released slowly and relatively steadily.
Inventory in most cities remained the same as last month, and the digestion cycle in nearly 40% of cities exceeded 18 months

The report shows that in February, the new supply of new houses in many parts of the country was zero, causing the supply-demand ratio in nearly 60% of key cities to drop to zero. As both supply and demand are running at extremely low levels, and the existence of factors such as delayed filing that cause data distortion, the supply-demand ratio in February is difficult to reflect the actual supply and demand situation in the market. In terms of inventory, the inventory levels in most cities were basically the same as last month, while the inventory levels in Chengdu, Nanjing and other cities shrank slightly.

The report pointed out that due to the market shutdown and transaction decline caused by the epidemic, the digestion cycle in most key cities has been significantly lengthened. The digestion cycle of 10 cities has jumped above the warning line of 18 months, and Beijing, Dalian, Changchun and Xiamen have further risen to a high of over 30 months. However, as sales offices across the country gradually resumed opening and transactions gradually picked up in March, it is expected that the digestion cycle in most cities will return to normal next month.

The proportion of mid- to high-end transactions increased, while the proportion of products above 200 square meters decreased

According to the report, in terms of price distribution, the transaction share of low-end products in Beijing and Shanghai in February was the same as the previous month, with Shenzhen falling back by 7 percentage points; the share of mid- and low-end products in Shanghai fell by 10 percentage points; the share of mid- and high-end products in Beijing and Shanghai rose by 18 and 11 percentage points respectively; the share of high-end products in Beijing fell by 12 percentage points, and in Shenzhen it rose by 7 percentage points.

From the perspective of area distribution, in February, the proportion of products below 90 square meters in Beijing and Shanghai fell by 10 percentage points, while Shenzhen rose by 12 percentage points; the proportion of products between 90 and 120 square meters in Shanghai and Beijing rose by 9 and 6 percentage points respectively; the proportion of products between 144 and 200 square meters increased across the board, with Beijing rising by 8 percentage points; the overall transaction volume of large-sized products over 200 square meters declined, with Beijing falling by 12 percentage points.

Second-hand housing transactions in 7 cities fell 81% month-on-month

The report shows that due to the suspension of offline property viewing services by real estate agencies in many core cities for a whole month, the transaction volume in most cities in February was almost "empty". Overall, the transaction volume of second-hand houses in seven key cities across the country in February was only 710,000 square meters, a sharp drop of 81% month-on-month and a decrease of 63% year-on-year.

Judging from the daily transaction data, the transaction area of ​​all second-tier cities among key cities is less than 100,000 square meters, and most of them are delayed online signings of previously sold properties. It is expected that as the epidemic is brought under control, core cities may gradually allow offline intermediary activities in March, and the urban second-hand housing market will gradually recover its vitality.