China’s New Home Prices: A Mixed Bag of Declines and Signs of Recovery

Recent data regarding China’s new home prices reveals a complex and nuanced story. In March, the prices of new homes dropped by 0.08% month-over-month (m/m), although this decline is a marginal improvement from February’s decrease of 0.1%. On a year-over-year (y/y) basis, the prices saw a 4.6% reduction, narrowly outpacing the decline of 4.8% experienced the previous year. These figures highlight ongoing challenges in China’s property market while hinting at tentative signs of stability.

National Price Trends: The Long Road Ahead

The national trend of declining home prices demonstrates the broader issues impacting the property market across China. Notably, this decrease marks the 21st consecutive month during which home prices have fallen, illustrating how recovery remains elusive for most regions. Despite the continued downward trajectory in the national averages, the decline is less severe than in the past, suggesting a potential softening of the downturn that could lead to stabilization next. This situation aligns with China’s commitment to stabilize its economic landscape, as discussed in detail in a recent blog examining three strategic moves by China’s Xi.

Regional Variations: A Tale of Two Markets

In stark contrast to the overall national trend, certain regions, particularly high-end markets in major cities like Shanghai, are witnessing somewhat different dynamics. Reports indicate that there is a robust demand for luxury properties, with prices in these segments experiencing slight increases. This regional variation suggests that pockets of recovery might exist within China’s more affluent areas, possibly indicating a shift in consumer sentiment and investment trends among wealthier buyers. Such developments could ignite a more significant recovery trajectory in the long run if sustained.

Sales Performance: Resilience Amidst Challenges

Even amidst falling prices, some companies are reporting robust sales performance. For instance, Central China Real Estate has showcased resilience by achieving a sales growth rate of 21.2% in March 2025, despite the overall pressure on average home prices. This performance underscores a contrasting reality where demand persists, particularly in certain segments of the market, reflecting a complex interaction between pricing, supply, and consumer confidence.

Policy Supports: A Beacon of Hope

Compounding these trends, various government policies aimed at stabilizing the market have begun to take effect. Stimulus measures, coupled with tax breaks and relaxed credit conditions, are effectively addressing many of the challenges that buyers and developers face. Particularly in major cities, these measures appear to create an environment conducive to recovery, allowing some segments of the market to thrive despite the overarching trends of decline. Furthermore, these initiatives resonate with ongoing strategies emphasized by Xi Jinping to engage with global CEOs, reinforcing China’s role in global trade and investment.

In summary, while China’s property market is grappling with substantial challenges, the latest data showcases a mixture of declines in overall home prices alongside signs of stabilization in specific areas and property types. As the market breathes amid government supports and regional variations, stakeholders will be closely monitoring how these dynamics evolve in the coming months. The intricate balance of recovering high-end markets and national price retrenchments will be pivotal in determining the future landscape of China’s real estate sector.