Builders really don’t dare to build it! Residential construction starts plummeted 32%, and the number of residential applications fell sharply at the same time

The decline in the number of construction starts and construction permits is a phenomenon that is easy to occur during the economic correction process. Developers will first collect cash from pre-sales completed. Most medium and large developers have experience in the economic cycle and know how to maintain profitability. (Picture/Information photo)

Buying sentiment in the pre-sale market has cooled, and developers have become more cautious in promoting projects. According to the monthly statistical report of the Ministry of the Interior, the number of residential construction starts dropped to 65,000 units in the first three quarters of this year, a year-on-year decrease of 32%; the number of residential construction licenses issued also dropped to 78,000 units.

Zeng Jingde, project manager of the Xinyi Housing Real Estate Enterprise Research Office, said that before the third quarter of 2023~2024, the pre-sale market sales were booming. However, after the central bank's seventh wave of controls came into effect in the third quarter of 2024, the pre-sale market experienced a sharp contraction. The pre-sale market will freeze even more in 2025. The overall sales volume will be revealed in 2025. A reduction of about 70%. Faced with the sudden change in the economy, developers are not in a hurry to buy land and push forward projects. The city of Beizhou has been integrating more slowly. Land purchases in other areas have also slowed down. There is no rush to push projects online. There are also many unsold pre-sale projects. Therefore, statistics can find that the number of construction licenses issued has significantly decreased, and the number of construction starts has also dropped by nearly 30% year-on-year.

Statistics show that the number of construction starts in the first three quarters of 2023 to 2025 falls between 94,000 and 99,000 households, which mainly reflects the pre-sale market conditions from New Qing'an 2.0 to the seventh wave of control. When the pre-sales are successfully sold, the start-up process will begin, but market sales will be delayed after the seventh wave. In the first three quarters of this year, developers have slowed down their pace of project promotion. According to statistics, there are only 65,000 households under construction in the first three quarters of this year, a year-on-year decrease of 32%. The number of developers applying for licenses is only 78,000 in the first three quarters of this year. Compared with the same period in the past three years, there were nearly 110,000 households, which is a significant decrease.

Zeng Jingde said that the decline in the number of construction starts and building permits is a common phenomenon during the economic correction process. Developers will first collect cash after pre-sales are completed. Most medium and large developers have experience in the business cycle and know how to maintain profitability. They should be conservative when it is time to be conservative. At the same time, the reduction in supply will also help the long-term housing market supply and demand situation become healthier. In the short term, the housing market will remain a self-occupied market. Case conditions, payment methods, prices, etc., are all key factors that determine whether it can become a smooth-selling case.