Beijing: China’s troubled property market showed tentative signs of stabilization in January as average new-home prices across major cities posted a modest increase following months of weakness, a private sector survey revealed on Sunday. The data, seen as an early indicator of sentiment in the world’s second-largest real estate sector, came against a backdrop of evolving government policy aimed at supporting the struggling market.
According to the China Index Academy, a leading private property research firm, the average price of newly built homes across 100 Chinese cities rose 0.18 percent month-on-month in January, easing from a 0.28 percent gain in December. Market analysts said this gain, though modest, marks a rare positive read in an environment where property demand has been under sustained pressure.
The January improvement was uneven across city tiers. First- and second-tier cities such as Chengdu, Shanghai and Hangzhou saw stronger pricing trends, buoyed by the launch of high-end and upgraded residential projects that attracted buyers in urban cores. These premium developments helped lift prices both on a monthly and annual basis in China’s most dynamic property markets.
In contrast, third- and fourth-tier cities continued to grapple with excess inventory and weak demand, with prices in these lower-tier markets still slipping on both a monthly and year-on-year basis. This divergence highlights the uneven recovery within the broader property sector, where smaller cities remain burdened by oversupply and weaker local economies.
Alongside new-home pricing, conditions in the secondary (resale) housing market showed slight improvement. Resale prices fell 0.85 percent in January; a narrower decline compared with the 0.97 percent drop in December. While still negative, the softened pace of decline suggests that broader downward pressures in the resale segment may be gradually easing.
China’s property market has contended with prolonged distress since 2021, when tighter regulatory measures, including the so-called “three red lines” policy on developer leverage, triggered a liquidity crunch and a wave of defaults among major developers. The lingering effects have depressed market confidence and curtailed new investment.
Recent shifts in policy indicate a softening stance by authorities. Local media reports suggest that developers are no longer required to submit monthly financial reports under the three red lines regime, a move interpreted by analysts as an effort to reduce regulatory strain on beleaguered property firms.
Further underscoring the policy shift, Qiushi, the official journal of the Communist Party, described the property sector as undergoing a “profound adjustment” and urged policymakers to shorten the adjustment period, smooth out market volatility and provide comprehensive support rather than piecemeal interventions. Such language from the party’s flagship publication signals Beijing’s intent to reinforce market stability.
Market participants noted that housing sales activity is likely to moderate in February due to the Spring Festival holiday, a period traditionally associated with reduced transactions as buyers and sellers observe the national holiday. Yet analysts expect demand could rebound in March, particularly as fresh land offerings in core cities and enhanced promotional incentives by developers draw buyers back into the market.
Despite the slight price uptick, China’s property sector remains fragile and highly sensitive to policy signals. The contrast between stronger performance in top-tier cities and continued softness in smaller markets underscores the complexity of the recovery. Continued government support, structural reforms and rebuilding of buyer confidence will be critical to sustaining any broader turnaround in the months ahead.