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Demand for residential properties in China declined in 2021 and will continue falling through 2035 as the demographic dividend wanes, according to Beike Research Institute.
Home demand will drop by an average 2.5% a year from 2021 to 2035 and annual demand for new housing will decline to 1.3 billion square meters by 2035, from an average of 1.9 billion square meters between 2016 and 2020, it said.
The value of housing transactions will continue to rise each year though, as house prices will increase at a moderate pace, the report said. Based on annual price gains of 4.3%, the transactions will grow by 1.8% annual to reach 29.2 trillion yuan ($4.3 trillion) by 2035.
Despite the weakening trend, home demand will exceed 20 billion sqm by 2035, it said, adding that the real estate market will not see a sharp drop.
Looking ahead, home demand will mainly include urban residents’ needs to upgrade housing conditions which makes up 54% of the demand; rebuilding following urban demolitions, which will make up 28%; and the migration of population to urban from rural areas, which will account for just 18%, as urbanization has entered its middle and late stage, it said.