BEIJING: China‘s new home prices fell at a slightly faster pace in May, official data showed on Tuesday, as the crisis-hit property sector continued to grapple with fragile demand, even as larger cities showed tentative signs of stabilisation.
New home prices dipped 0.2% in May from the previous month, steepening from a 0.1% decline in April, according to Reuters calculations based on National Bureau of Statistics data.
On an annual basis, prices in May fell 3.5%, matching the decline in April.
The price falls dampened hopes that the real estate sector, which accounted for around a quarter of the economy at its peak, is close to bottoming out after a nearly five-year slump.
The slump has not only crippled some of China’s biggest property firms, but also turned a once key economic growth driver into a drag and weighed on overall household appetite for consumption.
But Zhang Dawei, analyst at Centaline Property, said that the period of steep home price declines across China had passed and the market was not at risk of a rapid downturn.
Zhang said the property market would continue to be characterised by “resilience in tier-one cities, divergence in tier-two cities and pressure in tier-three cities”.
Property sales, investment, new construction and funds raised by developers all fell more sharply in January-May, official data showed.
An index tracking China’s real estate stocks fell 1.2% in morning trading, while an index for Hong Kong-listed mainland property developers slumped around 3%.
However, prices in major cities showed tentative signs of stabilising, while local governments have stepped up efforts to shore up sales.
Prices in the country’s largest cities rose 0.2% in May after a 0.1% gain in April, with Shanghai, Shenzhen and Guangzhou posting increases. Prices in smaller tier-three cities extended their declines in May.
Home prices are expected to fall at a slower pace than forecast in a March survey this year and edge up in 2027, according to a Reuters housing market poll conducted May 18 to 28.
Guangzhou released fresh homebuying incentives in late April, offering subsidies to residents who upgrade their homes by buying a new one and selling an old one, while encouraging state-owned firms to buy second-hand homes.
Resale home prices showed some improvement in the biggest cities, rising in May for a third straight month. However, resale home prices fell in smaller cities from a month earlier and declined across all city tiers from a year earlier.
Second-hand home supply is shaped by household expectations. Except for a slight decline in early 2026, listings had been rising, according to a research note published by CITIC Securities this week.
New home supply, by contrast, is determined by the land auction market. Under strict supply-control measures, new home supply has already fallen to a relatively low level, the note said.
“As expectations among most households remain weak, second-hand housing supply remains elevated,” it added.
Second-hand homes in tier-two and tier-three cities face longer destocking cycles, with prices likely to remain at low levels until inventories are effectively absorbed, Zhang said.
