The View | Optimism in China’s property market is well-deserved, with caution

While the overall market has yet to bottom out and policies are needed to boost confidence, secondary market resilience offers some hope

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A woman walks past a housing complex under construction in Tianjin, on June 5, 2024. Photo: AFP

Published: 9:30am, 4 Mar 2025Updated: 10:41am, 4 Mar 2025

In its year-ahead outlook for China’s economy on November 15, Goldman Sachs was resolutely downbeat about the prospects for a stabilisation in the housing market, saying “there still appears to be no clear sign of a bottoming out despite continued easing efforts”. The Wall Street bank predicted the downturn in the residential property market would be “a multi-year growth drag for the Chinese economy”, shaving as much as two percentage points off growth this year, with the drag expected to “linger until 2030”.

Fast forward to today, and Goldman Sachs has changed its tune. In a report on February 20, it said it saw “incremental evidence [of a bottoming out in the housing market] in 2025”. The more forceful easing measures introduced by Beijing in September were quite effective in lifting sales of secondary and primary markets, compared to previous rounds of policy support after China’s economy reopened in January 2023.

In fact, it is not just Goldman Sachs that is more upbeat. Bank of America said investor sentiment towards the property market has improved. Societe Generale pointed to “green shoots in first-tier cities”, while HSBC said “the start of 2025 has brought unexpected optimism to China’s beleaguered property market”, marking “an inflection point”.

The dramatic rally in Chinese stocks this year undoubtedly contributed to the improvement in sentiment towards the property market. Investors who turned more bullish on China are attaching more importance to stronger – or at least stronger-than-expected – economic data. HSBC notes that while more than 50 per cent of the inflows into Chinese stocks this year have gone into the technology sector, “rallies like this tend to start in the tech sector and broaden out to consumer, property, and other areas”.

Yet it is the mounting evidence that parts of the housing market have stabilised that supports the case for optimism. Since November, new home sales have been growing on an annualised basis for the first time since the crisis erupted in June 2021, according to data from S&P Global Ratings.

A motorist drives by workers at a residential block construction site belonging to developer Greentown China, in 2021, in Nantong, Jiangsu province. Photo: VCG/Getty Images

More importantly, prices of new homes in a growing number of major cities have risen slightly on a monthly basis since September. In January, prices in the primary market in Shanghai and Shenzhen rose 0.6 per cent and 0.2 per cent respectively. Even prices in second-tier cities increased modestly for the first time since June 2023. According to JPMorgan, new home prices increased in 24 cities, fell in 42 and stayed the same in four.