BEIJING: Prices of China’s new homes remained in contraction in February, official data showed on Monday, indicating the troubled property sector is still far from recovery even as the country’s biggest cities registered some improvement.
Home prices dropped 3.2% on an annual basis, steeper than January’s 3.1% slide and the sharpest year-on-year decline in eight months, according to Reuters calculations based on data released by the National Bureau of Statistics.
On a monthly basis, prices fell 0.3%, moderating slightly from the 0.4% drop in January.
“The slower monthly decline is a positive sign, but the market is still in an adjustment phase,” said Zhang Dawei, an analyst at Centaline Property.
The recovery remained uneven, with prime projects in major cities showing greater resilience, while lower-tier cities continued to struggle with weak demand and excess inventory, Zhang added.
Almost five years into the crisis, China’s real estate sector continued to be a drag on the economy as sliding prices discourage household spending and dampen confidence.
The downturn complicates policymakers’ efforts to rebalance the economy and cushion it against external shocks stemming from trading partners’ protectionist measures and the fallout from the Middle East war.
The property market slump, which was triggered by government moves since 2020 to limit real estate firms’ borrowing, squeezed developers’ liquidity and left many unable to service their debts or complete projects to deliver presold homes.
Among the 70 cities surveyed by the NBS, 53 reported monthly price declines in February, compared with 62 in January.
Beijing and Shanghai were among the few cities to register gains, with prices in both rising 0.2% from the previous month, suggesting a degree of resilience in top-tier markets.
The resale home market remained weak across the board, with prices falling in tier-one, tier-two and tier-three cities in both monthly and annual terms.
After multiple rounds of supportive policy rollouts in previous years, the government still pledges to stabilise the property market to curb risks, but has in recent months refrained from releasing new nationwide policies to arrest the downturn.
Policymakers also seem determined to prevent the sector from falling back into its old model of debt-fueled expansion.
China’s 15th five-year plan – a development roadmap for the period from 2026 to 2030 unveiled in early March – outlined government goals to improve the systems for property development, financing and sales. It pledged to support the “reasonable financing need” in the sector, orderly promote the sales of completed housing projects and coordinate land supply with home inventory and demographic changes.
“The market is still in a destocking phase,” said Huang Yu, an analyst at the China Index Academy, adding that a sustained recovery would require firmer secondary-home prices in core cities and an improvement in employment and income expectations.
Home prices are expected to fall at a faster pace than was previously forecast before stabilising in 2027, a quarterly Reuters poll showed on Friday, as the property sector continues to grapple with high inventories.
The Reuters poll also showed that property investment and sales are expected to remain weak this year, with investment forecast to fall 10.3% and sales down 6.5%.
Separate government data on Monday showed property investment fell 11.1% in the first two months of 2026 year-on-year and sales by floor area dropped 13.5%.
