China’s Property Market Continues to Slide in February Despite Stimulus

China’s property market continued to decline in February despite government measures and promises of more stimulus, with official data showing slides continuing in housing prices, sales and investment.

Prices of non-subsidized homes in 70 cities surveyed fell slightly compared with January, said Wang Zhonghua, chief statistician of the Urban Department at the National Bureau of Statistics of China. On a year-on-year basis, the decline of home prices “continued to narrow” across all cities, he said.

New home prices in the 70 cities declined 0.14 percent month on month, compared with a 0.07 percent slide in January. Second-hand home prices fell 0.34 percent in February, the same decline as in January, according to figures from European Bank ING.

“Overall, prices are now down 9.8 percent and 16.9 percent from the peak for new home and existing homes, respectively. But the pace of decline has slowed noticeably in the past few months,” said Lynn Song, chief economist for Greater China at ING.

“February’s data showed that it would be wise for officials not to take their foot off the pedal in terms of policy support,” he said.

Tier One Cities Stabilise

New home prices in China’s tier one cities, Beijing, Shanghai, Guangzhou and Shenzhen, edged up 0.1 percent month-on-month, with the same increase as in January, official data showed. New home prices in tier two cities remained flat and those in tier three cities declined 0.3 percent.

The second-hand home market remained sluggish, with price declines across the top three city tiers from January.

On a year-on-year basis, prices of new and second-hand homes continued to decline in nearly all cities surveyed, but at a slower rate than in earlier months, apart from Shanghai and the Shanxi provincial capital of Taiyuan which recorded price increases of 5.6 percent and 1.2 percent respectively.

“The stabilisation of the market is starting with the tier one and two cities, where there is a stronger demand backdrop to underpin the recovery,” said Song. “We expect prices will indeed find a trough in 2025, though an L-shaped recovery is more likely than a U or V-shaped recovery,” he added.

Property Slump Persists

China’s property slump traces back to 2021 when Beijing’s “three red lines” deleveraging policy triggered a liquidity crisis, leaving projects unfinished and buyers wary. The pandemic further compounded the challenges.

To shore up the economy, the Chinese government last September pledged to put an end to the property slump and introduced measures including lowering mortgage rates and reducing down payment requirements for purchases of homes beyond a buyer’s primary residence.

In its annual work report unveiled earlier this month, Beijing pointed to stabilising the property market as a priority, urging city-specific measures to ease home-buying curbs and stimulate demand for first homes and home upgrades. The policymakers also said they will control the supply of new land and revitalize existing sites and commercial spaces.

In the January to February period, investment in property development fell 9.8 percent year-on-year to RMB 1.07 trillion ($150 billion) while the total area of construction declined 9.1 percent to 6.06 billion square metres (65 billion square feet). New construction starts plummeted 29.6 percent following a 23.0 percent drop in 2024.

Sales also continued to slide, with the value of homes sold declining by 2.6 percent to RMB 1.03 trillion.

“Other than seeing prices bottom out, we also likely need to see inventories normalise before property developers begin to ramp up new investment again. This process will likely be rather uneven, as developers will likely be more selective in where to build,” said Song.

Top Developers Struggle

Total sales of China’s top 100 developers slid 5.9 percent year-on-year in the two months of this year, albeit improving from a 60 percent decline in the same period of 2024, according to data from CBRE.

Country Garden, China’s largest property developer by sales in from 2017 through 2022, does not expect its business to normalize until next year.

At the developer’s annual work conference last month, Country Garden chair Yang Huiyan named “delivering unfinished homes” as the developer’s top priority in the first half of this year, with growth targets added to its focus only in the second half. The defaulted company, ranked only 16th by sales in 2024 and has vowed to “strictly control all spending”, and “widen and elevate sources of income” to support its business.

Country Garden’s contracted sales for February plunged 38.2 percent from a year earlier to RMB 2.3 billion, while rising 1.8 percent from January.