Positive Signal! First-Tier City New Home Prices Stop Declining First

Positive signals.

On March 16, the National Bureau of Statistics released the latest data showing that in February, the month-over-month decline in housing prices in 70 large and medium-sized cities continued to narrow. The number of cities where new home prices increased month-over-month also grew, with first-tier cities’ new home prices remaining flat after a 0.3% decrease last month.

Notably, both Beijing and Shanghai saw increases in new and second-hand home prices month-over-month.

Industry experts believe that the continued narrowing of month-over-month declines in housing prices in February, the first-tier cities’ lead in stabilizing after nine months of decline, and the overall improvement in housing price indices across all city tiers are clear signs of market warming. The increase in the number of cities experiencing price rises further confirms positive signals of market recovery.

First-tier cities’ new home prices stabilize

Data from the National Bureau of Statistics show that in February, the decline in housing prices in 70 large and medium-sized cities continued to narrow. The total number of cities where new home prices rose or remained flat reached 17, an increase of 9 compared to last month.

Specifically, in February, first-tier cities’ new home prices remained flat after a 0.3% decrease last month. Beijing and Shanghai both rose by 0.2%, Guangzhou remained unchanged, and Shenzhen fell by 0.3%. In second- and third-tier cities, new home prices declined by 0.2% and 0.3% respectively, with the declines narrowing by 0.1 percentage points.

Looking at cities with rising prices, in February, 10 cities saw new home prices increase month-over-month, up 5 from the previous month. Among them, Changchun, Nanjing, and Yichang rose by 0.3%, tying for first place; Beijing, Shenyang, Shanghai, and Hangzhou rose by 0.2%, tied for second; Dalian, Xiamen, and Wuhan increased by 0.1%, tied for third.

Regarding second-hand homes, in February, prices in first-tier cities declined by 0.1% month-over-month, a narrower decline of 0.4 percentage points from last month. Beijing and Shanghai increased by 0.3% and 0.2%, respectively, while Guangzhou and Shenzhen fell by 0.5% and 0.4%. In second- and third-tier cities, second-hand home prices declined by 0.4% and 0.5%, with declines narrowing by 0.1 percentage points.

Year-over-year, in February, housing prices in first-tier cities fell by 2.2%, an increase of 0.1 percentage points in the decline. Shanghai rose by 4.2%, while Beijing, Guangzhou, and Shenzhen declined by 2.3%, 5.1%, and 5.5%, respectively. In second- and third-tier cities, new home prices fell by 3.1% and 4.0%, with the declines expanding by 0.2 and 0.1 percentage points.

For second-hand homes, year-over-year, prices in first-tier cities declined by 7.6%, the same as last month. Beijing, Shanghai, Guangzhou, and Shenzhen declined by 8.4%, 6.2%, 8.5%, and 7.1%, respectively. Second-hand home prices in second-tier cities fell by 6.2%, unchanged from last month. In third-tier cities, the decline was 6.3%, an expansion of 0.2 percentage points.

Signs of market recovery

Regarding the current market situation, Yan Yuejin, Deputy Director of the Shanghai E-House Research Institute, believes that the data on new home prices show a positive trend: first, the price index decline has narrowed for four consecutive months; second, first-tier cities, after nine months of decline, have led the stabilization; third, housing price indices across all city tiers are improving; and fourth, the number of cities experiencing price increases has significantly grown. Overall, the signals of price stabilization are strengthening. Coupled with recent positive signs such as increased viewing activity in key cities, this will further promote the formation of a “small spring” market.

Zhang Dawei, Chief Analyst at Centaline Property, also notes that the continued narrowing of the month-over-month decline in new home prices in February, with first-tier cities leading the stabilization, directly reflects the market warming. Beijing and Shanghai both rose by 0.2%, becoming the core drivers of market stabilization. Notably, among the 70 large and medium-sized cities, 17 cities saw new home prices rise or stay flat, an increase of 9 from last month. The expansion of the number of rising cities further confirms positive signals of market recovery.

In the second-hand market, Yan Yuejin points out that the decline in second-hand home price indices has narrowed for two consecutive months, especially in first-tier cities, with Beijing and Shanghai showing price increases, indicating that large cities are experiencing a clear turning point in prices.

Regarding the reasons for the phased stabilization of housing prices, Zhang Dawei attributes it mainly to the “small spring” effect, policies, and previous overselling. He emphasizes that targeted policy measures are the core driver of marginal market improvement. In February, real estate policies continued the coordinated approach of “central government setting the tone, local implementation,” maintaining a generally loose stance. Local governments actively introduced supportive policies. For example, Shanghai’s new “Seven Measures” shortened the social security period for non-Shanghai residents to buy homes, increased the housing provident fund loan limit, and became a benchmark for relaxed policies in first-tier cities. These measures have helped optimize restrictions on purchases and loans, increased housing subsidies, and deepened the reform of the housing provident fund, effectively activating rigid and improved housing demand. The implementation of these policies has alleviated buyers’ financial pressures, gradually restored market confidence, and narrowed the decline in housing prices.

It is worth noting that in February, both Beijing and Shanghai saw increases in new and second-hand home prices.

Regarding the reasons for Beijing’s price increase, Gao Yuan, Director of the Beijing Lianjia Research Institute, told reporters that from the perspective of first-tier markets, the rise in new home prices is due to three factors: first, recent market activity has indeed increased; after the Spring Festival resumption, the market entered a peak sales period in March and April, with heightened viewing and transaction activity. Second, from the supply side, early in the year, new home supply was relatively tight, making the supply-demand relationship more favorable to sellers. Third, some developers canceled discount measures, leading to higher actual selling prices. Overall, the current price rise results from strong demand, a temporary reduction in supply, and strategic adjustments by developers. Regarding second-hand homes, the new policies at the end of last year favored first-time homebuyers, many of whom purchased in plains and sub-centers, leading to sustained transaction growth in those areas. With high market activity, owners’ expectations have also improved, increasing the proportion of price increases and raising transaction prices year-over-year.

“Currently, both new and second-hand home transactions in Beijing are showing a slight increase in prices, consistent with seasonal market patterns and regulations, and are also the result of earlier policies and improved buyer expectations,” Gao Yuan said.

For Shanghai, Li Gen, Head of the Shanghai Lianjia Research Institute, explained that the upward trend in housing prices is supported by continuous population inflow and improved demand. Additionally, at the end of February, five departments in Shanghai jointly issued the new “Seven Measures,” optimizing restrictions and housing provident fund policies, which helped release some demand early and provided policy support for price stability. As these policies continue to be implemented, reasonable housing demand will further be released, and the market is expected to maintain stable operation.

Looking ahead, Li Yujia, Chief Researcher at the Guangdong Housing Policy Research Center, believes that March will feature a prominent “small spring” market. Developers and local governments are both eager for a “good start,” increasing supply of high-cost-performance new homes and offering attractive promotions. This not only stimulates replacement demand but also promotes circulation between new and second-hand homes, helping stabilize prices. Additionally, the increase in high-quality new homes is beneficial for maintaining stable prices. Overall, the short-term trend of housing price stability is quite clear.

Proofreader: Zhao Yan