Top cities signal easing to support property market

Recent policy adjustments in major Chinese cities are fueling expectations that more policy fine-tuning and easing measures are likely in the coming months to support the real estate sector's steady recovery, experts said on Monday.

Beijing on Friday announced a relaxation of housing purchase restrictions in areas outside the Fifth Ring Road, allowing more residents to qualify as first-home buyers and access favorable mortgage terms. The policy aims to boost suburban demand while maintaining market stability, analysts said.

Experts said that while China's real estate sector is undergoing structural transformation, there are policy tools available to manage the transition. The central government has emphasized the importance of meeting housing demand and preventing systemic risks — a dual focus that is likely to shape upcoming policy moves across major cities.

They added that the latest development may point to a trend of calibrated policy easing, especially in top-tier cities, and demonstrate stronger policy objective to stabilize the country's property market.

Cao Jingjing, general manager of research at the China Index Academy, said Beijing's fine-tuning measures signal that optimizing home purchase policies can boost market expectations and unleash demand.

"The optimization has eased restrictions on the number of apartments outside the Fifth Ring Road, allowing eligible families to enter the market. In addition, it has kept housing policies stable within the Fifth Ring Road," said Cao.

Data from the China Index Academy showed that from January to July, over 80 percent of Beijing's new-home sales and more than half of secondhand transactions occurred outside the Fifth Ring Road, making it the market's key area.

Shanghai's housing market also showed signs of recovery. Newly-built home prices averaged 71,353 yuan ($9,931) per square meter in July, up 7.2 percent year-on-year, albeit with a soft decline month-on-month, according to property consultancy Centaline Shanghai.

Shaun Brodie, head of research content in China at Cushman & Wakefield, a global real estate services company, said, "It is possible that Shanghai, Shenzhen and Guangzhou may also adjust measures to sustain market activity."

Lu Wenxi, market analyst at Centaline Shanghai, said the slight dip in Shanghai aligns with July's typical low season for home sales. Stronger activity is expected in September and October, Lu said.

According to Brodie, major cities will need a mix of strategies to further optimize real estate markets. Expanding affordable housing through public rental programs and incentives for mixed-income developments will be crucial.

Luo Zhiheng, chief economist at Yuekai Securities, said, "The central government could put in place a real estate stabilization fund with an initial size of around 2 trillion yuan, dedicated to completing unfinished projects, acquiring existing housing inventory and purchasing real estate developers' idle land."

Luo noted that policymakers could also guide the over-five-year loan prime rate further downward — which will result in lower mortgage rates for homebuyers — reduce taxes and fees associated with home purchases and alleviate the financial burden on homeowners.

Experts said the nation's four first-tier cities — Beijing, Shanghai, Guangzhou and Shenzhen — will lead the market stabilization and bottoming-out process.

Yao Yao, head of research for JLL China, said that in the first half of 2025, new home sales in the four first-tier cities totaled 11.4 million square meters, up 13.8 percent year-on-year. The recovery has been uneven, with high-quality projects in prime locations seeing stronger demand, contrasting with sluggish sales in those outside the outer ring.

"First-tier cities' residential markets are likely to move toward further stability. While broader market challenges persist, current measures and demand fundamentals suggest a gradual, steady growth momentum trajectory," Brodie of Cushman & Wakefield said.

Contact the writers at wang_ying@chinadaily.com.cn