Data from the National Bureau of Statistics released on March 16 show a small but significant reversal in the country’s longest-running residential price slump: new-home prices in China’s first-tier cities have stopped falling and begun to tick up, with Beijing and Shanghai among the core markets registering month-on-month gains. After nine consecutive months of declines, the modest recovery in both new and second‑hand housing prices in these cities has injected fresh confidence into investors and consumers, even as the broader market remains in adjustment.
The headline numbers are uneven. Among 70 large and medium-sized cities tracked by the bureau, only 10 saw month-on-month increases in new-home prices in February, up from five in January, while 53 cities continued to see declines. Beijing and Shanghai joined several others in posting 0.2–0.3% gains in new or second‑hand housing prices, but second‑ and third‑tier cities generally recorded smaller falls and a slower pace of decline, highlighting a widening divergence across city tiers.
Underlying activity tells a more cautious story. Sales volumes and values weakened sharply in January–February: new residential floor space sold fell 13.5% year-on-year and sales value declined 20.2%. New construction starts have been contracting for six consecutive years, and in the first two months of 2026 nationwide real-estate development investment was down 11.1% year-on-year, underscoring that supply-side contraction and weak demand are still weighing on the sector.
Financing strains remain acute for developers and buyers. Developers’ received funds fell 16.5% in January–February and home-purchase mortgage lending plunged, with personal mortgage flows down almost 42% year-on-year. Banks continue to temper credit to the sector, while developers show some improvement in self-raised financing but still face elevated liquidity stress that constrains new projects and sustains broader market caution.
Policy is steering supply and focusing support. The Ministry of Natural Resources and related agencies have tightened the link between new construction land supply and activation of stock land, effectively prioritizing land for major projects and public-need construction while discouraging an open tap of land for speculative or purely commercial housing. At the same time, central and local authorities remain committed to stabilising the property market and have signalled that targeted, city‑specific measures will be the primary tool rather than broad stimulative packages.
The practical effect is already visible in land and product strategies. Nationwide residential land transactions among 300 cities were down nearly 29% in January–February, yet first‑tier cities still saw heated bidding for prime plots, with an average land premium around 14.2%. Developers are shifting to a “shrink-to-improve” approach—fewer, higher‑quality projects in prime locations—while municipalities trim supply and reconfigure inventories toward homes that better match current demand.
What matters beyond the headlines is the shaping of a two-speed market. Core cities appear likely to experience a “point-like” spring of sales and price stabilisation driven by quality supply and restored buyer confidence, while lower-tier, inventory-heavy markets will continue to struggle under the twin pressures of weak demand and constrained financing. That divergence has implications for local government revenues, commodity demand, bank asset quality and the pace of China’s macroeconomic rebalancing.
For global observers, the current episode is a reminder that China’s property cycle is no longer a single national tide but a patchwork of recoveries and stresses. The stop to price falls in Beijing and Shanghai is important symbolically and economically, but the sector’s capacity to become a sustained engine of growth again depends on deeper fixes: better income and employment momentum, a loosening of credit for high-quality transactions, and continued, careful management of land supply to avoid reigniting speculative excesses.