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ince the start of this year, China's central government has implemented a package of stimulus policies aimed at alleviating the fundamental weakness in its real estate market, but so far, it remains unresolved. According to data from the National Bureau of Statistics (NBS), sales area and value of newly built commercial housing nationwide have seen significant declines: 15.8% and 20.9%, respectively, over the first 10 months.

    The China Index Academy's data also shows that top 100 real estate enterprises saw a year-on-year decline of 32.9% in total sales for the first 11 months, with a narrowing decline compared to October. In November, their sales decreased by 9.46% year-on-year and 18.62% month-on-month, indicating little sign of recovery despite continuous policy stimuli.

    However, data released on December 16 showed that among 70 large and medium-sized cities, the number of cities where commercial residential property prices increased month-on-month rose in November. In first-tier cities, sales prices increased overall, while second- and third-tier cities saw a narrowing decline. The year-on-year price decrease across all tiers also narrowed for the first time this year.

    Researchers at ANBOUND believe that real estate has become a top priority for preventing risks next year due to its critical role in China's economy. From a policy perspective, the Central Economic Work Conference has emphasized stabilizing the real estate and stock markets as key tasks for next year. The conference also highlighted the importance of effectively preventing and resolving major economic and financial risks, with a focus on ensuring the stable development of the real estate market.

    The real estate sector is closely intertwined with local government debt and financial institutions, making it essential to address and mitigate real estate risks to maintain systemic financial stability. Notably, the Central Politburo meeting on December 9 emphasized that by 2025, the real estate market must be stabilized, reflecting a firmer stance from the central government.

    The real estate industry is also an important component of China's domestic demand and will continue to drive consumption in the medium to long term. Data shows that its added value was RMB 7.4 trillion in 2023, accounting for 5.9% of GDP. The sector drives dozens of upstream and downstream industrial chains, directly stimulating manufacturing sectors related to housing and significantly boosting finance and business services.

    Land revenue remains a core component of local government finances, with taxes and fees related to land and real estate constituting over 40% of total revenue. Without considering land financing, land finance contributed approximately 41.7% of local fiscal revenue in 2023. The collapse of the real estate sector would severely impact China's economy, employment, local government finances, and financial stability.

    Therefore, finding solutions to mitigate or slow down real estate risks will be a significant challenge that requires continued exploration and collaboration from all parties.