In recent months, China’s real estate market has shown promising signs of recovery after facing significant challenges earlier this year. Back in April, the sector struggled with low transaction volumes and record-high unsold inventory, with 746 million square meters of ordinary commodity housing remaining unsold—surpassing a decade-old peak. Additionally, second-hand home prices in major cities like Beijing, Shanghai, Guangzhou, and Shenzhen reverted to 2016 levels, reflecting a drop in buyer confidence.
Policy Interventions Drive Recovery
In response, the Chinese government introduced a series of strategic measures to stabilize the real estate market. Starting on May 17, the People’s Bank of China, alongside other financial institutions, enacted policies aimed at revitalizing the sector. Further enhancements were announced on October 17, focusing on stable and sustainable market growth, reducing new housing supply, and optimizing existing inventory.
On September 26, a key meeting of the Political Bureau of the Central Committee of the Communist Party of China emphasized these strategies, with particular focus on improving the quality of construction and promoting new models for real estate development.
Positive Trends in Land Acquisitions and Transactions
Recent data highlights encouraging trends. According to E&H Consulting, urban residential land transactions increased significantly, with a year-on-year rise of 31.6% and a month-on-month growth of 25.9% as of September. Active land auctions were observed in cities like Guangzhou, Shenzhen, and Chengdu, with premiums exceeding 30%, indicating renewed developer confidence.
The National Day holiday period also saw a surge in new housing project sales across 23 key cities, with a 77% month-on-month and 65% year-on-year increase. First-tier cities experienced a notable 102% growth compared to the same period last year. Second-hand housing transactions have been on a steady rise, doubling both month-on-month and year-on-year in mid-October, with Shenzhen and Hangzhou reporting record-high weekly sales volumes.
Policy Relaxation Fuels Market Optimism
New policies introduced on October 17 have further relaxed restrictions, including the lifting of controls on housing purchases, sales, and price caps. These changes are expected to invigorate the market by attracting more participants, helping to reduce the existing stock of unsold homes.
Additionally, the government plans to renovate an additional 1 million housing units in urban villages, with monetary compensation to residents, which is likely to facilitate destocking. Measures such as removing the distinction between ordinary and non-ordinary residential properties are geared towards streamlining housing supply and fostering market stability.
Future Outlook
Although housing prices in key cities have experienced further declines, this adjustment appears to be a cyclical correction, paving the way for stabilization and gradual price recovery. Recent policy changes and increased transaction activity suggest a brighter outlook for China’s real estate market, pointing towards a future of sustainable growth and innovation.
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