Editor's note: The Central Urban Work Conference has been held again after ten years, focusing on urbanization development and adjustments to real estate policies, drawing market attention. Data shows that China's urbanization rate has increased from 57% in 2015 to 67% in 2024. The urban development goals have shifted from "scale expansion" to "quality improvement," introducing several new dimensions.
【Anchor】Hello everyone, welcome to DDN Business Insider. I am Yunfei Zhang. Over the past week, mainland China has released several important data points, including GDP, social financing, and trade figures for the first half of the year. At the same time, the Central Urban Work Conference has been convened again after ten years, which the market believes will significantly influence urban development and real estate issues. To discuss these topics, we have invited Yan Yuejin, Deputy Director of the E-House China R&D Institute, and Lu Wenxi, Market Analyst at Shanghai Zhongyuan Real Estate Brokerage Co., Ltd, to provide their insights. Hello, everyone!
First, we want to focus on the Central Urban Work Conference. Compared to the regular economic data releases, this conference has not been held since 2015. Mr. Lu, could you share what information this conference conveys, given that it has been ten years since the last one?
【Lu】In this era, I believe there are significant differences that have led to subtle changes in positioning. Before 2015, urbanization was characterized by rapid growth. From 2015 to 2024, it has been a period of steady growth. Over these ten years, the urbanization level has increased by about 10%, which translates to an annual growth rate of approximately 1%. This growth has been relatively stable. By 2024, the urbanization level is expected to reach around 67%, indicating a relatively high level. Therefore, the pace of subsequent urbanization is not as rapid as it once was, necessitating a shift in development philosophy.
This time, the goal of urban development has been articulated as building innovative, livable, beautiful, resilient, civilized, and smart modern cities for the people. Compared to 2015, we notice the addition of three new dimensions: innovation, beauty, and civilization. This suggests that the framework and objectives for urban development will be further refined and improved. Additionally, we observe a slight shift in the strategic direction of development.
The 2025 conference has established intrinsic urban development as a central theme. It clearly emphasizes promoting urban renewal as an important focus. Previously, there was a greater emphasis on scale and quantity, where quality now takes precedence over quantity.
【Anchor】What specific policy changes might this bring about?
【Lu】From the perspective of civilization, there will be a focus on preserving historical and cultural heritage and enhancing the soft power of citizen quality.
In urban renewal processes, there will be a strong emphasis on historical preservation. A direct example is that in recent years, the common terms used in urban renewal were "demolish, renovate, and preserve," with "demolish" coming first. However, in the past two years, many cities have shifted this thinking to "preserve, renovate, and demolish," placing preservation first. This shift highlights the importance of ensuring that historical elements are retained for cultural continuity.
【Anchor】Thank you. Mr. Yan, following the convening of this Central Urban Work Conference, the statements regarding the real estate market are seen as having a direct impact on the future development of the mainland real estate market. In your opinion, what specific aspects will this impact? Particularly, how do you see the relationship between changes in urbanization development models and real estate development?
【Yan】From the perspective of real estate, it emphasizes using urban renewal as a key focus. This will provide important insights for our future work approaches. Urban renewal will become a significant focus in the real estate sector, highlighting the need for local governments to pay attention to various aspects of urban renewal, including the transformation of urban villages and the renovation of old residential areas.
【Anchor】Compared to the statements made during the Central Urban Work Conference in 2015, what are the essential difference s in how the current conference positions the real estate market?
【Yan】From the recent Central Urban Work Conference compared to the one in 2015, there are some notable differences in how we understand the real estate market. Essentially, the positioning of cities has undergone significant changes. In particular, it has been emphasized that urban development has reached a relatively mature stage, and the growth pace differs significantly from the past. This is a crucial aspect to consider when analyzing the real estate market. It has also been mentioned that we are transitioning from a growth market to an inventory market, which has clear implications for the entire real estate sector.
Mr. Lu, what new requirements do you think will be placed on the real estate industry and enterprises going forward?
【Lu】The 2025 conference has established intrinsic urban development as a central theme. It clearly emphasizes promoting urban renewal as an important focus. Previously, there was a greater emphasis on scale and quantity, where quality now takes precedence over quantity.
【Anchor】Speaking of the real estate industry, last week, the National Bureau of Statistics released relevant data. It showed that from January to June this year, the sales area of newly built commercial housing decreased by 3.5% year-on-year, with residential sales dropping by 3.7%. The sales value of newly built commercial housing was 4.424 trillion yuan, down 5.5%, with residential sales down 5.2%. Meanwhile, the price decline in various cities has narrowed. Mr. Yan, how do you evaluate the current development status of the mainland real estate market? Is it already "stabilizing," or does it still need time to bottom out?
【Yan】Based on the real estate market data from the first half of the year, we can say that overall, the market is still in an adjustment phase and in the process of bottoming out. Therefore, it will still take some time to reach the bottom. This situation also requires local governments to prioritize efforts to stabilize the market. In the second half of the year, it is essential to introduce a series of more effective policy measures to promote stabilization in the real estate sector.
【Anchor】Now, Mr. Lu, how do you assess the current state of the mainland real estate market based on the data released by the National Bureau of Statistics?
【Lu】We should also look for positive signals within this decline. For instance, we have seen a continuous decrease in the inventory of newly built commercial residential properties for four consecutive months. Additionally, while the second quarter typically experiences seasonal fluctuations in transactions, we observed that although sales in April and May were down, June's sales showed an increase. This indicates that the market is in a gradual bottoming process.
After observing such data in the overall market, we can clearly see some differentiation emerging. For example, first-tier cities like Shanghai, as well as strong second-tier cities such as Hangzhou and Chongqing, are beginning to show improved data. Thus, amid these market changes, certain segments are showing signs of bottoming out ahead of the overall market, indicating the potential success of short-term stabilization.
【Anchor】The Deputy Director of the National Bureau of Statistics, Sheng Laiyun, pointed out that fluctuations during the phase of bottoming out and transformation in the real estate sector are normal. He also stated that greater efforts are needed to promote stabilization in the real estate market. Mr. Lu, what expectations do you have for stronger policy measures in the future?
【Lu】I believe that looking ahead, for the overall market, we can see that many policy measures have already been introduced on the demand side. In the second half of the year, I think we can particularly look forward to financial policies. Nationwide, it is very likely that interest rates in the 2% range will become the mainstream in the market. This would further reduce the overall cost of home purchases for buyers. On the other hand, I think we should pay more attention to the supply side, as many places are implementing land acquisition policies. For example, in Shanghai, we see certain districts experimenting with land acquisition and project development. From this perspective, in areas and cities with high inventory, the pressure of inventory will further ease in the second half of the year. Additionally, regarding real estate companies, I believe that for some private enterprises, especially those with good fundamentals, there may be some relaxation in financing under conditions that ensure safety. This is also good news for real estate companies.
【Anchor】Alright, Mr. Yan, what are your thoughts?
【Yan】Moving forward, it is essential to continue advancing related work in the transformation of urban villages. This includes a series of initiatives in urban villages that can stimulate more consumer demand, which will have a significant impact on the overall development of the real estate market. Additionally, restrictive policies—including those related to the acquisition of existing homes and land—need to be further refined to better promote the supply-demand relationship and move toward a more balanced and equitable direction.
【Anchor】Additionally, in the past week, several economic data points were released in mainland China, including a GDP growth rate of 5.3% for the first half of the year. Mr. Lu, based on these data, what key issues do you think the Chinese economy should focus on in the second half of the year?
【Lu】We can see that the GDP growth rate is 5.3%. Many economic institutions had previously predicted around 5.1% or 5.2%, so this 5.3% figure is above market expectations. This indicates some strength and resilience in our economy. Among the three drivers of economic growth—consumption, investment, and exports—consumption is, overall, showing outstanding performance. Therefore, I believe consumption will remain an important focus in the second half of the year.
Of course, consumption encompasses many aspects, so the overall market will adopt more measures to boost people's desire and confidence in spending. Thus, I think consumption will continue to be a very important focus in the second half of the year. However, we cannot deny that certain real estate data may have a drag on investment. So, in the second half, we can look forward to the possibility that if timely policies are implemented in the real estate sector, they could have a noticeable stimulating effect on investment, which is also worth everyone's anticipation and observation.
【Anchor】OK, thank you. That's all for this episode. Remember to follow us on YouTube or download our APP. I'm Yunfei Zhang, thanks for watching, and see you next time.
Anchor: Laura Cheung | Edited: Kelly Yang, Laura Cheung, Rachel Liu | Translate: Kato Ip | Proofread: Chris Liu
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