Signs of Stabilization in China’s Real Estate Market: UBS Analysis
As of March 2025, analysts at UBS have noted an uptick in positive signals regarding the stabilization of China’s real estate sector, which has faced significant challenges over the past several years. This assessment comes amid increased sales activity in major urban centers across the country.
Market Insights from UBS
John Lam, the head of Asia-Pacific property research at UBS Investment Bank, shared insights indicating that after several years of decline, there are indications of recovery within the market. “After four or five years of a downward cycle, we have begun to see some relatively positive signals,” Lam stated.
These signals, however, are not uniform across the nation. “Of course these signals aren’t nationwide, and may be local,” he added, emphasizing that the recovery phase may vary by region.
Rising Sales in Major Cities
Recent data highlights that secondary home sales in five of China’s largest cities have surged, reporting an increase of over 30% year-over-year on a weekly basis. This uptick in sales indicates a shift in consumer confidence, particularly in the secondary market, which comprises existing homes.
Revised Forecasts for Home Prices
UBS now projects that home prices in China could stabilize as early as 2026, revising their previous estimate of mid-2026. They anticipate that secondary transactions might account for half of all sales by that time.
Indicators of Market Recovery
UBS has identified four key indicators to gauge market recovery: low inventory levels, rising land prices, increased secondary home sales, and climbing rental prices. However, as of February 2025, improvements in rental prices had yet to emerge.
Government Policy and Industry Challenges
In September, Chinese policymakers urged for a cessation of the declining trend in the real estate sector, recognizing its significance as the backbone of household wealth and a major contributor to the economy. Despite these efforts, significant challenges remain. Major property developers, including Evergrande, face financial distress, and property sales have plummeted since their peak in 2021.
Economic Outlook
China’s property market began its downturn in late 2020, following government measures aimed at reducing developers’ debt dependence. Although interventions from both central and local governments have been implemented over the past year and a half, the slump continues. Nevertheless, some analysts believe that with formidable financial stimulus enacted late last year, the market is set to reach a bottom soon.
For instance, S&P Global Ratings has asserted expectations for the market to stabilize in the latter half of 2025, linking increased secondary sales to a revival in primary sales. In early 2024, comments from Macquarie’s Chief China Economist underlined that the narrowing gap between mortgage rates and rental yields, alongside a dwindling unsold housing inventory, could incentivize buyers.
Foreign Investment Resurgence
The re-entry of foreign capital into China’s property market signals renewed interest from international investors. Recent transactions include land acquisitions by Singaporean firms, indicating a shift in investment strategies targeting affordable housing development.
Continuing Challenges Ahead
Despite the rising sales figures, the overall property market remains tenuous, with real estate investments dropping nearly 10% during the first two months of the year. Key sectors reflect negative growth, including new home construction starts, which fell significantly compared to the previous quarter.
As experts like Nomura’s Chief China Economist emphasize, substantive recovery in the property sector is crucial for an overall economic revival — consumer trust must be restored for a sustained market comeback.
Conclusion
While emerging data points to early signs of recovery in China’s housing market, uncertainties remain. Analysts and policymakers alike underscore the need for effective financial support measures and consumer confidence to ensure a stable recovery moving forward.