What exactly is the fundamental impact of second-hand housing on new homes?
The second-hand housing track and the new housing track, currently in a state of differentiation, are about to enter a confrontation mode in the future. Therefore, we need to clearly understand the relationship between the two to figure out what ultimately sustains products of different dimensions.
Why are we talking about the confrontation between new and second-hand housing today? Essentially, starting from this year, for the first and thoroughly complete time in the entire real estate market, the de-stocking scale of second-hand housing has exceeded that of new housing. To a certain extent, second-hand housing will become increasingly mainstream, while brand new properties may gradually become a niche segment. In the past, under the market environment dominated by new housing, second-hand housing had always been a low-key, hidden niche track following a cost-effective route, and had no impact on the overall market at all. However, as the cycle reverses, we need to clarify what impact second-hand housing actually generates, how new properties can withstand the cycle, and what the best choice is for ordinary individuals. This is the core message this article aims to convey.
01
Why has the proportion of second-hand housing continued to rise over the years? A very important logic is that second-hand housing continuously delivers cost-effectiveness, which is a key force driving the expansion of this track at present. Thanks to the relatively free market pricing system and the varying degrees of urgency for funds among different individuals, second-hand housing has been gaining competitiveness through the strategy of trading price for volume in the past three years, and this trend is likely to continue in the future.
In addition, the ever-expanding scale of second-hand housing also points to a harsh reality: for any new property project, countless second-hand units in its surrounding area will impact the new housing market through cost-effective advantages in the future. This means that if new properties do not have quality advantages, the model of simply cutting prices to clear inventory will become less and less effective. Moreover, several long-standing pain points of second-hand housing, namely high taxes and fees as well as cumbersome transaction procedures, have been gradually alleviated along with recent policy trends. In other words, compared with new housing, the constraints on second-hand housing, whether in terms of down payment ratio or taxes and fees, will become fewer and fewer in the future.
Therefore, in essence, the hedging between new and second-hand housing is the hedging between cost-effectiveness and quality. If new properties fail to deliver superior quality, their advantages in this general trend will vanish completely. This can also be seen from the recent annual report of Beike: the new housing channel that was extremely prosperous in previous years also saw a decline in the first half of 2026. This means that neither simple price cuts nor reliance on sales channels can strongly solve the de-stocking problem of new properties. This is also why the new policies recently introduced in Shanghai, where the subsidy policies for areas outside the Outer Ring Road are all focused on new housing rather than second-hand housing, are largely intended for this purpose. The core test for new properties in suburban areas in the future lies not in investment decisions or regional judgments, but more in what kind of quality life the individual property can deliver.
02
Then, the second disturbing fact is that most of the customers who are still purchasing properties in the current market are pursuing cost-effectiveness. Because in the downward cycle of the real estate market, the most rational choice in essence is not to buy a house. This also determines that most customers entering the market are those who pursue cost-effectiveness to the extreme. The impact of new housing on second-hand housing by relying solely on price is getting weaker and weaker.
Of course, many people will quickly jump to a conclusion: in that case, instead of targeting demand for basic housing, new housing can focus on demand for improved housing, right? Indeed, that is the judgment of many people, and that is also the case in reality. All the way out for the new housing track in the future lies in improved housing. However, most real estate practitioners underestimate the connotation of "improved housing".
First of all, is there no improved housing in the second-hand housing segment? The answer is no. The supply of improved housing in the second-hand market is also very large. Especially in suburban areas, if most of the second-hand housing in the city center are old and small properties, most of the second-hand housing in the suburbs are relatively new properties. This means that while offering cost-effectiveness, they can also provide larger floor areas, better decoration standards and corresponding community quality. Therefore, if future new properties simply enter the market with larger floor areas and better decoration standards, that will undoubtedly be self-defeating.
The core point is that new housing cannot beat second-hand housing in terms of cost-effectiveness. Regarding the so-called improved housing, the individual standalone projects that have achieved breakthroughs this year do not focus on simply changing house types or upgrading decoration standards, but have gradually presented orientations of relaxation-oriented improvement, cultural improvement, and emotional value improvement... These seemingly intangible weak options are essentially the core of the so-called improved housing at present. The goal is to create perceptual value. Future improved housing will no longer be dominated by location improvement or floor area improvement, but more by human settlement improvement or emotional improvement.
When the industry begins to face overcapacity, vertical segmentation centered on people will give rise to more iterations of improved housing. At the same time, it should be noted that although this group of customers is smaller in proportion than cost-effectiveness-oriented customers, their pursuit of a better life is endless. This means that although the base number is small, as long as developers can find this group of customers, they can continuously do business with them. In addition, their social circles are more concentrated, so the effect of old customers referring new ones is also greater. This is what I call the "optimistic economics". Essentially, in the incremental market, our core is to find unmet demands; while in the stock market, we need to find continuously improving demands, and then sustainably do business for this group.
03
All current R&D ideas for new housing must seriously consider how to endow projects with the possibility of perceptual expression. This is a lesson that real estate practitioners have not completed in the past two decades. In the past, houses were assets, so it was enough to talk about rationality — how scarce the properties were, how they were in short supply, how their prices would rise... At that time, products also expressed rationality — how compact the layout was, how efficient the space utilization was, how flexible the house type was, how diverse the functions were. Such a context is no longer applicable now, and we must build perceptual expression in the product system. Although the final choice is definitely a comprehensive result of combining sensibility and rationality, if we lose the position of sensibility, we will lose the most important bargaining chip to compete with second-hand housing.
This is actually the important reason why we emphasize "standalone project doctrine" in the industry. This concept is by no means a so-called emotional slogan, but a real systematic methodology that aims to solve sales problems in a more advanced way. Only by implanting such a methodology can it be possible for new housing to achieve breakthroughs. What is the difficulty of improved housing? Different from the basic housing demand, where you can get one dollar back for every dollar you invest, for improved housing, you will not get one dollar of return even if you invest 100 dollars, until you invest the 101st dollar, then you can get 200 dollars of return. That is what we call the transformation from quantitative change to qualitative change. Only by completing the whole process of one thing can we possibly get results. However, most enterprises give up after spending 10 dollars and seeing no effect.
Of course, is this matter important for homebuyers? It is extremely important. Because the new property you buy will inevitably become a second-hand property in the future. What is the liquidity rule for second-hand housing? When the stock in the second-hand market becomes larger and larger, the liquidity in the second-hand market will also differentiate in the future, and those that are scarce on the supply side will naturally have liquidity.
Therefore, if we review all the second-hand housing in the market, all the supply before 2020, whether it is the compact layout for basic housing demand or the large floor area for improved housing demand, will lead to systematic homogenization. After the price declines to the bottom and stabilizes, it is no longer possible to create unlimited cost-effectiveness. The liquidity of the entire second-hand housing market in the future will depend on differentiation. No matter how much we emphasize emotional improvement today, such properties only account for a very small proportion in the entire second-hand housing stock, so there is no doubt that they will also have extremely strong liquidity in the future.
This is also the reason why I suggest everyone attach great importance to the selection of properties. The impact of second-hand housing on new housing is continuous and irreversible. If you choose the wrong new property at this time, whether it is the liquidity of the asset or the happiness of living in it, will drop sharply. However, a sufficiently precise improved property can quickly break this dilemma. The so-called "when one prospers, all prosper; when one suffers, all suffer" is exactly this case.
Therefore, what is the final outcome of the real estate market that we can predict? There are several core conclusions: First, the proportion of second-hand housing is getting larger and larger, and it becomes the mainstream through cost-effectiveness, while new housing will be a niche market in the future. Second, the only advantage for the niche market to fight against the mainstream is to achieve differentiation, which is the core of the "emotional improvement" I emphasized. Third, a community that can provide specific emotional value is of great significance no matter for future living or asset liquidity. Fourth, these three trends are irreversible.
The real estate industry has entered a stage of chaotic consensus. Even the issue of what "emotional improvement" means may not be able to reach a unified consensus among everyone. This may not be the process, but the result. The future real estate market will be like this: there is no industry-wide consensus, only consensus among specific groups of people. Birds of a feather flock together. You can only serve a specific track, and cannot satisfy the entire industry. The key is that we need to know which track we are in, whether we are enterprises, clients, or homebuyers.
This article is from the WeChat Official Account "Zhen Jialu Jun", Author: Zhen Jialu Jun, published with authorization from 36Kr.