China’s Property Market Stabilizes in Major Cities

China’s real estate market has maintained an overall stable trajectory through mid-2026, with official data revealing a narrowing of declines in transaction volumes and a modest price recovery in first-tier cities. According to a comprehensive analysis published by Economic Daily, the market is exhibiting signs of bottoming out in major urban centers even as smaller cities continue to face headwinds.

Market Data Points to Stabilization

From January to May 2026, total new and second-hand home transaction volume nationwide fell 2.1% year-on-year — a significant improvement from the first quarter, with the decline narrowing by 2.7 percentage points. Crucially, April and May recorded consecutive year-on-year growth in total transactions. In May alone, 191 cities saw year-on-year growth, with 77 cities including Wuhan, Zhengzhou, and Ningbo reporting increases exceeding 20%.

The National Bureau of Statistics reported that the national average selling price of new commercial housing reached 10,500 yuan per square meter in May, up 5.0% year-on-year. For new commercial residential housing specifically, the average price stood at 11,067 yuan per square meter, a 4.3% increase from the previous year.

First-Tier Cities Lead the Recovery

A clear K-shaped recovery is emerging, with first-tier cities showing the strongest signs of rebound. According to CCTV News, NBS Senior Statistician Yang Caifang noted that in May 2026, among 70 large and medium-sized cities, commercial housing sales prices in first-tier cities rose month-on-month, while second- and third-tier cities experienced declines.

First-tier city new home prices rose 0.2% month-on-month, accelerating by 0.1 percentage point from April. Second-hand home prices in these cities climbed 0.4% month-on-month. Year-on-year declines narrowed across all tiers, signaling that the worst of the downturn may be passing.

Second-hand home markets in China’s largest cities have been particularly active. Beijing recorded 15,974 second-hand home online-signings in May — the highest for that month in nearly five years. Shanghai saw 28,023 second-hand units signed, up approximately 31% year-on-year and marking the highest May figure in nearly six years. Shenzhen recorded 5,534 second-hand residential online-signings, up 18.1% year-on-year, exceeding the 5,000-unit “boom-bust line” for three consecutive months.

Inventory Reduction Gains Traction

Efforts to clear housing inventory are showing measurable results. New listings of second-hand homes have been declining since March. According to the China Index Academy, May saw 120,000 new second-hand listings across 25 key cities, down roughly 41% year-on-year. The commercial housing unsold area fell 0.4% year-on-year at the end of May — the first year-on-year decline since July 2021, now sustained for three consecutive months.

The Divergence Challenge

Despite the encouraging data from major cities, the market continues to exhibit significant divergence. As China Daily Brief noted in its analysis, the May 2026 data confirms a “K-shaped” recovery in Chinese real estate, with capital and confidence concentrating in top-tier metros while oversupplied hinterlands continue to struggle.

Economic Daily reporter Kang Shu emphasized that the divergence should be viewed objectively, noting that the market shows differentiation between cities, regions, sectors, and products. While first-tier cities and some regional hubs are bottoming out, some third- and fourth-tier cities face longer adjustment periods.

Outlook and Implications

The stabilization in first-tier cities reflects the gradual impact of government stimulus measures implemented over the past two years, including the lifting of purchase restrictions, mortgage rate reductions, and government buy-back schemes for unsold inventory. However, the broader economic transition away from real estate dependence continues, with the sector still acting as a drag on overall GDP growth.

Looking ahead, the key question remains whether the recovery in major cities can be sustained or whether it represents a temporary bounce driven by policy stimulus. The persistent weakness in smaller cities, combined with long-term demographic headwinds, suggests that China’s property market is undergoing a structural transformation rather than a cyclical recovery. The coming months will test whether the stabilization in first-tier cities can broaden into a more inclusive market recovery.