Summary of Key Points
In the first half of 2026, the Chinese housing market was generally in a “bottoming-out” phase, with no significant drops or substantial increases. There was a slight improvement starting from the second quarter, but there were clear differences between new and used homes, as well as among different cities: used home sales were active, and prices in some key cities stopped falling; however, only properties in first-tier cities and high-quality projects in other cities saw a recovery. The market will continue to struggle at its lowest level in the second half of the year, with even more pronounced differentiation. Prices of used homes are expected to remain stable with minor fluctuations, while the decline in new home sales will slow, but a full recovery is still far off. In the long term, the new home market is not expected to truly emerge from its downturn until the middle of the 14th Five-Year Plan period (around 2028-2029). The recovery process will begin with stabilization of used home prices, followed by an improvement in new home sales, which will then stimulate developers to invest and start construction.
Housing Market in the First Half of the Year: Local Recovery While Overall Conditions Remained Weak
Although the market was still at a low level, there were some positive developments in the second quarter. However, the performance of new and used homes was very different:
- Used Homes: Sales were strong, and price declines were less significant.
The pent-up demand for housing from last year gradually emerged, coupled with policy easing in key cities, leading to active sales of used homes after the Spring Festival. For example, 960,000 used homes were sold in the top 30 cities, a 6% increase from the previous year, with Beijing and Shanghai even reaching nearly five-year highs. In Shenzhen, policy relaxation at the end of April led to a more than 10% increase in sales from May to June. Overall, prices of used homes in 100 cities fell by 2.9%, but less than in the second half of last year. Shanghai saw consecutive months of price increases, and Shenzhen also began to see price gains in June, indicating that prices in some key cities have stabilized.
- New Homes: There was significant differentiation, with only high-quality properties selling well.
New home sales were not as strong as those of used homes. Only high-quality, well-positioned properties in first-tier cities and certain core second-tier cities performed well; sales in other areas remained sluggish. Sales of new homes in the top 100 cities decreased by 12% year-on-year. However, in first-tier cities, due to an abundance of high-quality listings and strong demand, sales turned positive. Prices of new homes in 100 cities increased by 0.59% structurally—this means not all properties saw price increases, but only the better projects in key cities.
Trends for the Second Half of the Year: Continuing Bottoming Out, with Stabilized Used Homes and Waiting for New Home Recovery
The market will not improve significantly in the second half of the year; it will continue to fluctuate at its lowest level, with even more pronounced differentiation:
- Used Homes: Price fluctuations will become smaller, and sales will remain stable.
Sales volume of used homes in key cities is expected to stabilize, and the number of listings will not increase sharply. The supply-demand balance will gradually improve, leading to more stable prices with minimal fluctuations.
- New Homes: The decline in sales will slow, but a full recovery is still difficult.
Due to the low base of new home sales last year, the year-on-year decline will gradually narrow in the second half of this year. However, a full recovery will take time. On one hand, key cities will continue to launch high-quality projects, and housing provident fund policies will provide support. On the other hand, developers are reluctant to build many new homes to reduce inventory, so the market will still rely on high-quality properties for partial improvement.
Long-Term Outlook: New Home Market Recovery Expected by the Middle of the 14th Five-Year Plan Period
The China Index Academy predicts that total new home sales this year will be around 810 million square meters, a 7.8% decrease from last year. Developer activity and investment will remain low due to limited land acquisition and construction. When will the new home market truly recover? This is not expected until the middle of the 14th Five-Year Plan period (around 2028-2029). The recovery process will follow this sequence: stabilization of used home prices, improvement in new home sales, and then a willingness among developers to invest and start construction.
Key Cities Play a Crucial Role, but Residents’ Expectations Have Not Fully Improved
- Key Cities Stabilize the Market
First-tier cities and certain core second-tier cities act as stabilizers for the housing market. Active sales of used homes and the effectiveness of policy easing (such as new measures in Shenzhen) are evident in these areas.
- Residents’ Expectations Remain Cautious
Although the desire to buy homes has improved in first-tier cities, residents generally expect prices to remain stable rather than rise significantly. This cautious attitude prevents them from making purchases. For a true market recovery, both sales to continue to improve and residents’ incomes to gradually increase are necessary.
In summary, the housing market is still in a period of adjustment at its lowest level. Those looking to buy homes should consider used homes in key cities (with stable prices) or high-quality new homes (in good locations with excellent quality). However, significant price increases are not expected in the short term. Developers will need to focus on producing high-quality properties to survive in this market. A full recovery will take several years.