Recent data from the National Bureau of Statistics highlights a complex divergence in China’s urban housing markets. In February, new home prices in first-tier cities reached a state of equilibrium, staying flat compared to January. However, the resold or “second-hand” market in those same cities continued to edge down, albeit at a much slower pace than before.
In Beijing and Shanghai, the new home market actually saw growth of 0.2 percent, while the resold market in those cities rose by 0.3 percent and 0.2 percent, respectively. This suggests a robust appetite for property in China’s political and financial centers. Conversely, Shenzhen saw new home prices fall by 0.3 percent, indicating that the recovery is not yet universal across all major economic zones.
The performance of second and third-tier cities also showed a pattern of “narrowing declines.” For second-tier cities, new home prices fell 0.2 percent month-on-month, while third-tier cities fell 0.3 percent. These results represent a consistent 0.1 percentage-point improvement over the previous month’s data, suggesting that the national downward trend is losing speed.
On an annual basis, the pressure remains significant. Second-hand home prices in first-tier cities are currently 7.6 percent lower than they were in February of last year. This highlights the long-term correction that has taken place in the market. Year-on-year declines in second and third-tier cities remain similarly elevated, ranging between 6.2 and 6.3 percent for resold properties.
The government’s response, as detailed in the latest work report, is to move toward “city-specific” policies. This recognizes that a one-size-fits-all approach is no longer effective given the diverging trends between different urban centers. By empowering local governments to control supply and support first-time buyers, the central administration hopes to achieve a sustainable “soft landing” for the property sector.