Huang Yu, deputy dean of the China Index Academy, a Beijing-based real estate research institute, said on December 5 that China’s real estate market will face stronger downward pressure in 2020, though housing prices may rise slightly due to structural factors, while sales of floor space in the commercial residential building segment will likely decline.
According to the Summary of China's Real Estate Market for 2019 and Outlook for 2020 issued by the China Index Academy on the same day, sales of floor space in the real estate market in 2020 will indicate a year-on-year decline of 5.0-6.5 percent. However, continuous urbanization will still provide great support for the real estate market and so China’s real estate market is unlikely to see a dramatic drop. Fixed asset investment (FAI) in the real estate market will maintain low-to-medium growth in 2020, while developers will come under strong pressure from tightness of funds due to huge land purchase fees and big investments in construction.
Meanwhile, China Index Academy foresees that third and fourth-tier cities in China will likely see decline in housing prices, while more and more funds will be pushed into first and second-tier cities to buy houses as buyers seek access to better health and education opportunities. Accordingly, the average sales prices in houses in the first and second-tier cities are expected to rise by 4.0 percent year on year in 2020.