If you look at US new home inventory, it shall take about 9 month to clear, as of Apr 2024 (see previous post).
What’s the number in China?
[The following numbers apply to 100 cities in China; source: https://mp.weixin.qq.com/s/BKnnF9QJTkYnAb1u0ip3Sw]
More than 2 years – 26.5 month to clear as of Apr 2024.
For lower tier cities (green line), the month to clear can be more than 30 months, or 2.5 years.
What’s would be the normalized rate of demand?
[Note the difference between 100 cities the the entire country]
Assuming future China has 7 million couples per year and new home demand is ~1/3 of that, it would be ~2.3mn new home demand.
Assuming new home is ~85 sqm, (2 x 42 sqm per person), it’s roughly 200mn sqm per year.
If every couple buys a new home, it would be ~600mn sqm.
There are other demand such as replacements. But just look at the US, which records less than 700k new home sales per year currently. China has 4x the population, so eventually new demand might come to 2.8mn, which translates to 280mn sqm if average is 100 mn per home.
This assumes new homes can sustain long enough.
There might be other renovation demand that can be recorded as new home sales, but real new demand could be lower than people think.
As of Apr 2024, reported inventory of new homes for 100 cities stood at ~500mn sqm.
In 2023, new home supply for 100 cities is ~291.1 mn sqm while sqm sold is ~316.5 mn.
In gov’s report, 2023 new residential sold was 948 mn sqm in 2023. So these 100 cities accounts for ~1/3 of total demand.
