BEIJING – Back in mid-2024, instead of selling her 180 sq m home in Beijing at a loss of 100,000 yuan (S$18,400), communication manager Emily Wang decided to rent it out.
“At that time, the resale housing market was declining month by month, and the price that the unit could fetch was lower than expected and kept dropping, so I thought it was not worthwhile to sell,” she told The Straits Times.
Instead, the 34-year-old collects 11,000 yuan monthly for renting out the unit. She has bought another apartment to live in.
These days, Ms Wang thinks her patience might be paying off, as the value of the unit she rented out is no longer tumbling. Her next hope is that prices will start picking up.
In large cities like Beijing, the price decline in China’s resale housing market has slowed, and new home prices have picked up in recent months. This has sparked optimism among Chinese officials and some analysts that China’s beleaguered property sector may be on the path to recovery.
But given China’s vast and fragmented real estate market, other analysts caution that early signs of a rebound in some big cities may not translate into a broad recovery. Even as the market shows short-term improvements, there remain structural challenges, such as China’s shrinking population, that could hinder a full recovery.
China has been grappling with a property slump, which is now in its fifth year. In 2021, a regulatory crackdown on high leverage among property developers led to a housing market crash, leaving a trail of uncompleted homes after some developers defaulted on their debts.
It also contributed to a slowdown in the economy, given that at its peak in 2021, the property sector, together with related industries, accounted for an estimated 25 per cent of China’s gross domestic product (GDP). Since then, China has been trying to wean itself off its heavy reliance on the property sector by stimulating broader, more sustainable economic growth.
In September 2024, around the time when new home sales were down about 50 per cent from their 2021 peak and consumer confidence was at a historic low, the Chinese government launched its most concerted effort to rescue the market, cutting mortgage rates and down payments.
On March 9, Housing Minister Ni Hong, speaking on the sidelines of China’s annual parliamentary meetings, also known as the Two Sessions, struck an optimistic tone, saying the property market is showing signs of stabilisation in the first two months of 2025.
In January 2025, resale home prices increased by 0.1 per cent, the fourth consecutive month of growth, data from the National Bureau of Statistics showed. New home prices also edged up by 0.1 per cent. February data is not yet publicly available.
“With the joint efforts from various stakeholders, market confidence has been effectively boosted and positive changes have emerged in the real estate market,” said Mr Ni, who stressed that the Chinese government will combine short-term and long-term measures to ensure market stability.
This is in stark contrast with his comments at the 2024 parliamentary meetings, where he said the task of stabilising the market was “still very difficult”.
Economist Tommy Xie, who heads Greater China research at OCBC Bank, said he started 2025 pessimistic about the outlook for China’s property market but changed his mind after noting an increased emphasis on stabilising the sector at the Feb 28 meeting of the Politburo, the top decision-making body of the Communist Party.
Coupled with the inclusion of stabilising the property and equity markets as a priority in the 2025 government work report delivered by Chinese Premier Li Qiang at the March 5 opening of the National People’s Congress, the Chinese Parliament, Mr Xie said there is a heightened level of government awareness that the property sector is the root cause of the nation’s economic woes.
The central government’s call for local governments to buy up unsold housing stock to convert into affordable housing has also been given a push, as Mr Li also announced that local officials will now be granted greater autonomy to formulate region-specific policies that will help rebalance supply and demand, said Mr Xie.
At the Two Sessions, China also increased its focus on providing quality homes.
It rolled out guidelines to improve the liveability of existing homes and new buildings, to shore up future sales prospects, as owners looking to upgrade to higher-quality homes may form a greater proportion of future buyers.
Mr Xu Tianchen, a senior economist at consultancy Economist Intelligence Unit (EIU) in Beijing, said China’s geographical divide means that improvements are largely concentrated in first- and second-tier cities, while less-developed areas are still falling behind.
The recovery among property developers is also uneven, with state-owned enterprises outperforming private firms, he said.
Major Chinese private developers such as Sunac and China Vanke are still facing a multitude of problems, from liquidation petitions to sliding share prices and overwhelming debt.
Property agent Fred Wang, 39, who has been in the industry since 2008, said he is not optimistic about market prospects, at least in the resale home segment.
“The policies now are mostly to support the new home segment, so those are selling quite well. But if people are buying new homes, that means fewer buyers for second-hand properties and existing home values are still depressed,” he said.
Lifting all purchasing curbs on real estate, instead of doing so in piecemeal fashion, may be one way to see a real rebound, said Mr Wang, echoing what some economists have long suggested.
Mr Carlos Casanova, senior Asia economist at Swiss private bank Union Bancaire Privee, believes more needs to be done to help the housing sector recover if the government wants to boost consumption as a way to grow the economy. This is because Chinese households’ wealth is largely tied up in real estate.
One way could be the easing of the hukou, or household registration, system to advance urban migration and stimulate the property market, he said.
Monetary policy easing and fiscal spending can only go so far to prop up the real estate market, said Mr Casanova, pointing out that China fundamentally needs to reduce its reliance on real estate investment.
Whether the property market will reach a floor in 2025 is still too early to call, barely three months into the year, analysts said.
A Moody’s Ratings report released in February said that key indicators such as household income expectations, property prices and inventory levels do not yet point to a bottom.
The market might be closer to a trough if the Chinese government continues to roll out more policies to support the sector, but much depends on how effectively these are implemented to ensure a sustained impact on the market, said the report.
EIU’s Mr Xu said China’s housing sector is going through a profound change, from a market dominated by new homes to one dominated by existing homes, as a shrinking population means there are fewer young people buying new homes.
“The old driver of the Chinese economy – developers acquiring land en masse, constructing homes, selling them to buyers and using the money to acquire more land – is definitely gone,” he said.
- Michelle Ng is China Correspondent at The Straits Times. She is interested in Chinese foreign policies, property trends, demographics, education and rural issues.
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