China’s housing demand set to fall, real estate broker predicts

Chinese real estate broker Beike expects housing demand to decline nationwide over the next decade. Pictured on June 28, 2022 is a new commercial residential complex in Nanning, Guangxi Zhuang Autonomous Region, China.

Edition of the future | Edition of the future | Getty Images

BEIJING — China’s huge residential real estate market will only see demand fall over the next 15 years, sales and rental giant Beike predicts.

New housing demand by floor space is expected to fall 2.5% per year between 2021 and 2035, the company’s research arm said in a report shared with CNBC. Beike owns and operates Lianjia, one of the largest housing brokerage companies in China.

The main reason for the decline is China’s aging population, according to the report.

China’s population dependency support ratio – which compares the working population aged 15 to 64 with the sum of people younger or older than that age bracket – peaked in 2010, the report said. by Beike.

Three or four years after Japan and Korea hit a similar peak, their housing demand has declined, the authors said.

Overall real estate and related industries make up more than a quarter of China’s economy, according to Moody’s. The bulk of household wealth is tied to real estate. In recent years, Beijing has tried to rein in developers’ high debt reliance and buyers’ speculation.

Another giant market

However, Beike expects deal value to grow slightly, by an average of 1.8% per year until 2035, bringing the annual value to 29.2 trillion yuan ($4.36 trillion) by this time. the.

Even with declining demand for floor space, the 2035 level will still remain at 1.33 billion square meters (14.32 billion square feet), the report predicts.

By comparison, about 2.2 billion square feet of new single-family homes were completed in the United States last year, according to the US Census Bureau.

Much of China’s new housing demand in the coming years is likely to be met by renovating or rebuilding existing properties, rather than new developments, Beike said in his report.

Housing demand will also vary by region, with more people interested in moving to major metropolitan areas such as those around Shanghai, Beijing and Shenzhen, said Tang Xuan, a senior analyst at the Beike Research Institute.

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