Beijing, January 2, 2025 – China’s real estate sector is showing signs of recovery, following a comprehensive suite of policy initiatives designed to stabilize the market after years of downturn. The series of reforms, which span national and local levels, have rekindled investor confidence and generated renewed demand in key regional markets.
The government’s 2024 policy package, a blend of easing restrictions and introducing stimulus measures, addresses both the demand and supply sides of the market. Key adjustments have included changes to mortgage rates, transaction taxes, down payment requirements, and housing purchase regulations.
A landmark policy shift took place in late September when the Political Bureau of the Communist Party of China Central Committee convened a crucial meeting, underscoring the importance of stabilizing the property market. This moment is widely regarded by industry experts as a significant turning point, signaling a shift toward a more relaxed policy stance. Following a year of unprecedented policy interventions, the real estate sector is now experiencing what many are calling its most flexible environment in years.
Policy Measures Drive Recovery
The 2024 policy measures have been felt across the country, particularly in second-tier cities such as Suzhou, Hangzhou, Chengdu, and Xi’an, which lifted home purchase restrictions earlier in the year. As the year progressed, major cities like Beijing, Shanghai, Guangzhou, and Shenzhen followed suit, easing policies that had been in place to temper rapid market growth.
In Guangzhou, the full abolition of home purchase restrictions stands out, while Beijing, Shanghai, and Shenzhen have relaxed residency requirements for non-local residents. These changes have contributed to a marked shift in market dynamics, with many cities now operating under far less restrictive conditions.
One of the most significant measures has been the adjustment of mortgage policies. In May, the People’s Bank of China (PBOC) and the National Financial Regulatory Administration reduced the minimum down payment ratio for first-home purchases to just 15 percent, the lowest level in history. By September, this policy was extended to second-home purchases, further reducing barriers to homeownership.
Tax policy changes have also played a role in boosting market confidence. In November, the Ministry of Finance, the State Tax Administration, and the Ministry of Housing and Urban-Rural Development announced tax optimizations, including a broader application of deed tax and value-added tax (VAT) exemptions. For properties under 140 square meters, the deed tax rate remains at a favorable 1 percent, and homes held for over two years are now exempt from VAT nationwide.
These combined measures have sparked a wave of action, with over 700 policy changes introduced in more than 300 cities from January to November 2024. As a result, the market is already showing signs of recovery.
Market Indicators Show Positive Trends
Recent data from the National Bureau of Statistics reveals that the price decline in commercial residential properties across 70 major cities has slowed, marking a clear shift towards stabilization. Home transactions also saw a reversal of a 15-month slump, with new home transactions increasing by 0.9 percent year-on-year in October. The total transactions for both new and second-hand homes rose by 3.9 percent in the same month, indicating a broader recovery.
Industry experts, such as Yan Yuejin, Deputy Director at E-house China R&D Institute, point to November’s housing price index as a clear signal that the national property market is turning a corner. “There was a notable narrowing in the decline of month-on-month indicators, suggesting that the market is bottoming out,” he said.
Market Sentiment Shifts Toward Optimism
In Beijing, the mood on the ground reflects these positive trends. Real estate brokers and potential homebuyers are seeing a swift recovery. Huo Peng, a manager at Lianjia’s Chaoyang District office, explained that brokers are now updating listings every two days instead of weekly to keep pace with the rapidly changing market. “The past two months have been the busiest in a year,” Huo said, noting that online inquiries at his office have surged by over 50 percent, with many deals closing quickly after just a few property viewings.
The policy changes have made it easier for non-local residents to purchase homes in key areas, such as Beijing’s fifth ring road. Huo’s client, Zhang Qiang, who recently purchased a 60-square-meter apartment for about 2 million yuan ($278,226), credits the relaxed eligibility criteria for his decision.
Data from Beijing’s Lianjia Research Institute further corroborates the recovery. In the first half of December, sales of second-hand homes surged by 11.7 percent compared to the same period in November, highlighting a clear rebound in the capital’s property market.
Analysts like Xu Yuejin from the China Index Academy emphasize that the combination of policy changes and the availability of lower-priced properties in key cities will continue to support market growth. As confidence in the sector grows, homebuyers are less inclined to negotiate prices in the second-hand market, which may stabilize prices in the coming months.
Developer Confidence Returns
Shanghai’s real estate market is also experiencing a renewed sense of optimism, particularly among developers. By the end of November, the city’s seventh round of land auctions brought in over 30.7 billion yuan in transactions, with many parcels achieving premiums of 11 to 20 percent above their reserve prices. One particularly sought-after parcel in Pudong saw a premium rate of 40 percent, signaling strong demand for residential land in this prime area.
Poly Developments and Holdings Group, one of China’s largest property developers, acquired multiple land parcels in Shanghai, underscoring its confidence in the city’s long-term growth prospects. “We have observed strong sales performance in nearby projects, and future development plans for the area only strengthen our confidence,” said Yu Tian, the company’s marketing manager.
As China’s real estate market continues to stabilize, these policy measures, combined with renewed consumer confidence, are paving the way for a more resilient and balanced property market in the years to come.
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