Chinese real estate broker Beike expects housing demand to decline domestically over the next decade. Pictured here on June 28, 2022 is a new commercial housing complex in Nanning, Guangxi Zhuang Autonomous Region, China.
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Beijing — China’s huge residential real estate market, sales and leasing giant Beike predicts that demand will only decline over the next 15 years.
In a report shared with CNBC, the company’s research department states that new demand for housing by floor space is expected to decline by 2.5% annually between 2021 and 2035. Beike Owns and operates Lianjia, one of the largest housing brokers in China.
According to the report, the main reason for the decline is the aging of China.
According to Beike’s report, China’s population dependence approval rating peaked in 2010, comparing the working population between the ages of 15 and 64 with the total number of people younger or older than that age range. Reached.
Three or four years after Japan and South Korea reached similar peaks, their housing demand declined, the authors said.
According to Moody’s, real estate as a whole and related industries make up more than a quarter of China’s economy. Most household assets are tied to real estate. Over the past few years, Beijing has sought to limit developer debt heavy use and buyer speculation.
However, Beike expects transaction value to increase by an average of 1.8% annually through 2035, at which point its annual value will reach 29.2 trillion yuan ($ 4.36 trillion).
Despite declining floor space demand, the report predicts that the 2035 level will still be as high as 1.33 billion square meters (14.32 billion square feet).
For comparison, last year, a new single-family home of about 2.2 billion square feet was completed in the United States, according to the US Census Bureau.
Beike said in a report that much of China’s new housing demand over the next few years is likely to be met by renovating or rebuilding existing properties rather than new developments.
Tang Xuan, senior analyst at Beike’s institute, said housing demand also varies from region to region, with more people interested in moving to major metropolitan areas such as Shanghai, Beijing and Shenzhen.