China’s First-Tier Cities See Housing Market Recovery

China’s four first-tier cities — Beijing, Shanghai, Guangzhou, and Shenzhen — are experiencing a clear and broadening recovery in their housing markets, driven by aggressive government stimulus measures and improving buyer sentiment after a prolonged four-year downturn. Data from the National Bureau of Statistics, the China Index Academy, and local government briefings all point to a market that has decisively turned a corner in early 2026.

According to People’s Daily, Guangzhou city officials announced at a May 26 press conference that the local market is showing “quantity-price stabilization, structural optimization, and inventory reduction” — a characterization echoed by analysts tracking the broader first-tier landscape.

Price Stabilization Across All Four Cities

March 2026 marked a significant inflection point. For the first time since May 2025, all four first-tier cities recorded month-on-month price increases simultaneously. National Bureau of Statistics data showed first-tier new commercial housing prices rose 0.1% month-on-month in April, while second-hand housing prices climbed 0.4% — ending what had been an extended period of contraction.

Shanghai led the recovery in new home prices, posting a 3.7% year-on-year increase in March. Analysts at the China Index Academy noted that the “spring rally” had extended well into April and May, with transaction volumes accelerating rather than fading.

Transaction Volumes Surge

The volume data tells an even more compelling story. In March, Shanghai recorded approximately 31,000 second-hand home transactions — a five-year high — while Beijing hit 19,886 units, its strongest month in 15 months. Guangzhou and Shenzhen saw month-on-month transaction increases exceeding 110% during the same period.

Securities Daily reported that the momentum has continued into May. Between May 1 and May 24, Beijing’s second-hand housing transaction volume rose 15% year-on-year, while Shanghai surged 29%. On May 10 alone, Shanghai recorded 1,664 online signings, setting a new five-year single-day record.

“Overall, since April, the second-hand housing market in key cities has continued its spring active trend,” said Cao Jingjing, General Manager of the Index Research Department at the China Index Academy. “In May, Beijing and Shanghai’s market heat has not diminished, with transaction volume year-on-year growth further expanding.”

Policy Stimulus Driving the Recovery

The recovery has been carefully engineered through a series of policy interventions. On April 28, the Politburo shifted its language from “strive to stabilize” (着力稳定) to “work hard to stabilize” (努力稳定) the real estate market — a subtle but significant change that analysts interpreted as a signal of sustained commitment without rigid targets.

Shenzhen followed on April 29 with optimized housing purchase restriction policies. Guangzhou released its comprehensive “Sui Eight Measures” (穗八条) on April 30, targeting consumption stimulation, supply control, and inventory reduction. The results were immediate: key first-hand projects in Guangzhou saw weekly visits up 26.9%, subscriptions up 36.9%, and online signings up 11.4%.

Structural Shift: Second-Hand Homes Lead the Way

A distinctive feature of this recovery is that it is being led by the second-hand market rather than new home sales. “The market shows a distinctive characteristic of first-tier cities leading, with second-hand outperforming new homes,” noted Zhang Bo, Dean of the 58 Anjuke Research Institute.

Low-price, small-unit second-hand homes are driving the initial rebound, reflecting price-sensitive demand from first-time buyers. Analysts expect this momentum to gradually spread to larger and higher-priced segments.

Government Buyback Programs Add Further Support

Both Guangzhou and Shanghai have launched innovative “sell old, buy new” pilot programs, where state-owned enterprises purchase aging second-hand homes at market prices for conversion into subsidized rental housing. Guangzhou’s pilot, run by the Guangzhou Anju Group, targets units priced under 3 million yuan (approximately $415,000) and under 70 square meters within the city’s inner ring road.

Li Yujia, Chief Researcher at the Guangdong Provincial Housing Policy Research Center, explained that these programs serve a dual purpose: they improve the “rental suitability” of older homes through renovation while also “smoothing the replacement cycle” for residents looking to upgrade.

Outlook: A Narrow but Meaningful Recovery

Goldman Sachs has revised its China housing forecast, predicting that Shanghai and Shenzhen will bottom out around end-2026, with cumulative price appreciation of approximately 15% from end-2025 through end-2028. The investment bank expects these two cities to lead other Chinese markets by 6 to 24 months.

However, analysts caution that the recovery remains narrow in scope. Higher-end and suburban markets continue to struggle, and structural challenges — including an aging population, declining birth rates, and income pressures — will limit the pace of long-term growth. Yan Yuejin, Vice President of the Shanghai E-House Real Estate Research Institute, described the current trend as a “spring rally” that has created a “better foundation for stable improvement in Q2,” but stopped short of predicting a sustained boom.

For now, China’s first-tier cities have achieved what many thought unlikely just six months ago: a genuine, data-backed recovery in housing market activity. The question that remains is whether it can be sustained without continuous policy support.