China's Property Market Nears a Tipping Point

• On Wednesday, UBS analysts were among the most recent to increase anticipation that China's beleaguered property sector may be nearing stabilization.
• As of Wednesday, existing home sales in five key Chinese cities have risen by over 30% compared to the previous year on a weekly basis, according to an analysis conducted using data obtained through Wind Information.

BEIJING — Analysts from UBS raised their projections on Wednesday, becoming the most recent to suggest that China’s faltering property market might be nearing stabilization.

"Following a four-to-five-year downturn, we've started noticing several fairly encouraging indicators," said John Lam, who leads Asia-Pacific property and Greater China property research at UBS Investment Bank, during a press briefing on Wednesday. This statement reflects what he conveyed in Chinese during the interview.

Certainly, these signals might not be widespread; they could be localized," Lam stated. "However, when contrasted with earlier times, they appear to be more optimistic.

An indication of progress is the boost in sales within China's major urban centers.

Sales of previously owned homes in five key Chinese cities have increased by over 30% compared to last year, based on weekly figures up until Wednesday, as per an analysis conducted using data obtained through Wind Information. In China, this segment is commonly referred to as "secondary home sales," distinguishing it from the primary market, where new apartments usually dominate transactions.

UBS currently anticipates that China's housing prices might stabilize in early 2026, which is sooner than their previous prediction of mid-2026. The firm also forecasts that secondary transactions could account for about half of all transactions by that year.

UBS examined four indicators — low inventory, growing premiums for land values, escalating secondary sales figures, and climbing rent costs — which historically signaled a shift in the real estate market from 2014 to 2015. By February 2025, according to UBS, these metrics showed signs of change except for rental prices, which remained unimproved.

Chinese officials in September urged for a "reverse" the downturn in the property sector This represents most of the household wealth and was responsible for over a quarter of the economy not too long ago. Key developers like Evergrande have defaulted on their debt While property sales have decreased by almost half since 2021, reaching approximately 9.7 trillion yuan ($1.34 trillion) last year, as reported by S&P Global Ratings.

China’s property market entered a downturn towards the end of 2020 when Beijing initiated strict actions against developers heavily dependent on borrowing to expand. Even though both national and regional governments have implemented numerous policies over the past one and a half years, the decline in the housing sector continues unabated.

However, following a stronger stimulus announcement towards the end of last year, experts began forecasting that a recovery might be seen as early as later this year.

Back in January, S&P Global Ratings reiterated its see China's property market stabilizing by late 2025 The analysts anticipated that "booming resale activity" would be a key predictor of primary sales.

In late February, Macquarie’s lead economist for China, Larry Hu, highlighted three “optimistic” indicators that might help stabilize property prices this year. Besides the governmental measures, he mentioned that unsold residential stock has dropped to its lowest point since 2011, and with mortgage rates becoming closer to rental yields, potential buyers may be more inclined to purchase homes instead of renting them.

However, he stated in an email earlier this week that what China’s property sector still requires is financial assistance funneled through the central bank.

In February, Michelle Kwok, who leads HSBC’s Asian real estate division, stated that there were “10 indicators” suggesting the Chinese property market had stabilized. These signals encompassed improvements such as an uptick in the sale of new homes, increases in housing prices, and greater involvement from overseas investors.

The report also mentioned that "foreign investment in the real estate sector has begun," highlighting that "on February 20th, two investors from Singapore purchased land plots in Shanghai."

International investors are similarly seeking alternate methods to access China's real estate sector following actions taken by Beijing. launched an initiative for accessible rental homes .

In late February, Invesco disclosed that its real estate investments division had entered into a partnership with Ziroom, a Chinese firm recognized domestically for offering standardized, contemporary-styled rental apartments.

Izara Holdings, the collaborative enterprise, intends to make an initial investment of 1.2 billion yuan ($160 million) in a large-scale lodging project comprising 1,500 rooms close to one of the venues for the Beijing Winter Olympic Games, aiming for a launch in 2027.

Calvin Chou, who leads the Asia-Pacific division at Invesco Real Estate, mentioned during an interview that these units would probably be leased out for approximately 5,000 yuan per month. According to him, the financial struggles faced by developers have resulted in a market void, and he anticipates that their partnership plans to pour resources into another one or two initiatives within China before the end of the year.

Ziroom's database enables the firm to swiftly evaluate local conditions when selecting sites for new projects, according to an announcement from Ziroom Asset Management CEO Meng Yue. The executive also mentioned that the company intends to broaden its reach internationally over time.

Still not out of the clear

Nevertheless, the data indicates a troubled real estate sector. Official economic statistics published Monday reveal that real estate investments declined by approximately 10 percent during the initial two months of the year.

"Ting Lu, Nomura’s Chief China Economist, highlighted in a report Monday that the real estate sector is particularly worrying, as major indicators have all fallen into negative territory. The pace of growth for new housing commencements deteriorated further to -29.6% in January-February from -25.5% in the fourth quarter of 2024," he stated.

"It's long been our view that without a real stabilization of the property sector there will be no real recovery of the Chinese economy," he said.

Enhanced resale profits do not directly advantage developers, who formerly earned income through initial sales. This month, S&P Global Ratings placed Vanke under credit observation and lowered its assessment of Longfor. These two developers were amongst the biggest players in the market.

"China’s recent policy initiatives have been rather comprehensive," Sky Kwah, who leads the investment advisory division at Raffles Family Office, stated during an interview earlier this month.

At this juncture, the crucial aspect is implementation. The revival of the sector depends on consumer trust," he stated, further noting that "consumer faith cannot be restored quickly. It requires consistent effort to build up again.