Abstract: To observe the low point of China's current real estate cycle, we start from the demand for new housing. Suppose China has entered the " Existing Home Era," under relatively conservative assumptions, we estimate that China's demand for new housing is about 600 million square meters. Since in this "Existing Home Era", there are only renewal demands and a small amount of improvement demands, the demand for new housing will be very low at this time. We tend to believe that the level of 600 million square meters is close to the physical bottom of the demand for new housing and will be a very strong support for the demand for new housing. Cross-country comparisons also corroborate this point.
If we accept that the demand for new housing of 600 million square meters is the physical bottom, it means that the speed and amplitude of current China's real estate adjustment cycle are both greater than the typical real estate crises internationally. Given that the economic cycles driven by the real estate cycle internationally, the macroeconomy is expected to stabilize and rebound earlier than the real estate industry itself. If the adjustment in China's real estate market is nearing its bottom, it suggests that the macroeconomy is expected to show a more obvious recovery in the near future. However, there is still a significant difference between the cyclical stabilization and the long-term robust recovery, and we must still pay close attention to the long-tail effects of the real estate cycle.
