China’s First-Tier Housing Markets Show Stabilization Signs
China’s first-tier city real estate markets are flashing increasingly positive signals, with official data showing four consecutive months of price growth in May 2026 — an encouraging development for a sector that has been in a deep downturn since 2022. The sustained recovery, extending well beyond the traditional spring selling season, suggests that a comprehensive policy push may finally be gaining traction.
Prices Turning a Corner
According to the National Bureau of Statistics, new home prices in first-tier cities — Beijing, Shanghai, Guangzhou, and Shenzhen — rose 0.2% month-on-month in May, expanding 0.1 percentage points from April and marking the fourth straight month of positive growth. Existing home (secondary) prices climbed 0.4% month-on-month, with all four cities recording gains, as Xinhua News reported.
Year-on-year comparisons remain negative — first-tier new home prices are still down 1.7% and secondary homes down 5.8% — but the pace of decline is narrowing significantly. The NBS data, detailed by China News Service, also showed that 16 of 70 major cities saw month-on-month new home price increases in May, up from 14 in April, with Hangzhou leading at 0.5%.
“From various indicators including new and secondary homes, month-on-month and year-on-year data, first-tier city housing prices have reached an inflection point,” said Yan Yuejin, Vice President of the Shanghai E-House Real Estate Research Institute. “The momentum for turning from decline to increase is continuously strengthening.”
Sales Volumes Surge
The price data is backed by robust transaction volumes. The China Index Academy reported that the top 100 real estate enterprises achieved total sales of 328.78 billion yuan in May, up 17.59% month-on-month. In Shenzhen and Shanghai, multiple developer projects sold out entirely on opening day.
Secondary market activity was equally strong. Beijing recorded 16,000 existing home sales in May, up 12.1% year-on-year, while Shanghai saw 28,000 secondary home transactions, a 30.9% year-on-year surge. Both cities set five-year highs for the same period for two consecutive months, as Workers’ Daily reported.
Policy Accumulation Driving Recovery
The market improvement is widely attributed to an unprecedented wave of policy support. At the national level, two landmark measures stand out. On May 28, China released the “15th Five-Year Plan for Urban Renewal” — the country’s first national-level special plan for urban renewal, which integrates new real estate development models and “good housing” construction. On June 5, the Ministry of Housing and Urban-Rural Development published revised draft regulations for the Housing Provident Fund, broadening withdrawal and use scope while expanding coverage.
At the local level, over 430 real estate policies were issued nationwide in the first five months of 2026, covering purchase restriction optimization, housing provident fund loan adjustments, purchase subsidies, and urban renewal support. Shanghai’s “Seven Measures” package, implemented in February, has shown sustained effects. Shenzhen further optimized purchase restrictions in April, while Guangzhou rolled out what analysts describe as the most aggressive policy package nationally.
“From purchase restriction optimization and financial support to ‘good housing’ construction, the cumulative effect of systematic policies is the key driving force behind price stabilization and recovery,” Yan Yuejin told Workers’ Daily.
The ‘Good Housing’ Factor
A notable feature of the current recovery is the role of product quality. The “good housing” (好房子) policy push is changing what developers are offering — better layouts, higher efficiency ratios, improved supporting facilities, and smarter homes. According to Wang Lin, Research Director at the China Index Academy, hot-selling projects in May generally implemented “good housing” standards and were mostly developed by brand-name builders with complete school, metro, and commercial facilities.
“Currently, homebuyers’ understanding of real estate projects, beyond product quality, is increasingly turning toward the overall living environment and atmosphere within the area,” noted Li Yujia, Chief Researcher at the Housing Policy Research Center of the Guangdong Provincial Urban and Rural Planning Institute.
Cautious Optimism
Despite the encouraging data, analysts urge caution. Zhang Bo, President of the 58 Anjuke Research Institute, described the recovery as still in its early stages. “Homebuyers’ expectation recovery still needs time, and the full release of policy effects requires further observation. But the turnaround from decline to increase itself is a positive signal, injecting confidence into the market.”
Year-on-year prices remain in negative territory, and the recovery is highly concentrated in first-tier and select strong second-tier cities. Lower-tier cities continue to face headwinds from oversupply and demographic decline. The long-term structural challenges — including China’s shrinking population and the fundamental economic shift away from real estate-led growth — remain unresolved.
What to Watch
As the mid-year sales season approaches, developers are accelerating project launches and increasing promotional efforts. The second half of 2026 will be critical in determining whether the recovery has genuine staying power. Key questions include whether the rebound can spread to second- and third-tier cities, and how external factors such as global trade tensions might affect buyer confidence.
“Overall, the real estate market is transitioning from deep adjustment to stabilization and recovery,” Yan Yuejin concluded. “The second half of the year is expected to see more positive signals.”
For now, China’s first-tier cities — the traditional bellwethers of the national housing market — are offering the clearest indication yet that the worst of the downturn may be over.