Real estate market regulation takes effect! New home prices in 24 cities rose MoM in March, Q2 may usher in a policy window period.

"The newly released housing price data for 70 cities shows that whether it is first-tier cities or second- and third-tier cities, whether it is new homes or second-hand homes, the price changes have improved. From this perspective, the effect of real estate regulation policies is emerging, and there is no sign of a softening in the real estate market in March," said Sheng Laiyun, Deputy Director of the National Bureau of Statistics (NBS), at today's press conference of the State Council Information Office.

The housing price data for 70 cities released by the NBS today shows that in March 2025, the number of cities with MoM increases in new home prices was 24, up by 6 cities from the previous month; the number of cities with price declines was 41, down by 4 cities from the previous month. In terms of second-hand home prices, 10 cities saw MoM increases, up by 7 cities from the previous month; the number of cities with price declines was 56, down by 9 cities from the previous month.

In terms of transactions, from January to March this year, the sales volume of newly built commercial housing nationwide was 2,079.8 billion yuan, down 2.1% YoY, with the decline narrowing by 0.5 percentage points from the previous month; the sales area of newly built commercial housing was 218.69 million m², down 3.0% YoY, with the decline narrowing by 2.1 percentage points from January to February.

"The situation in China's real estate market improved significantly in Q1, and the policy effects promoting the stabilization of the real estate market continue to emerge. Overall, the current real estate market is still in the adjustment stage, real estate demand still needs to be released, China's consumption structure is still in the process of upgrading, urbanization is not yet complete, and the demand space in the real estate market, especially for good houses, is still relatively large," said Sheng Laiyun.

Increase in the Number of Cities with Rising Housing Prices

"The March housing price data reflects a structural recovery of the property market under policy support, verifying the actual effect of the policy bottom transmitting to the market bottom, but the fundamental improvement in the supply-demand relationship still takes time, and the differentiation between cities will persist for a long time," Zhang Bo, Dean of the 58 Anjuke Research Institute, told reporters.

NBS data shows that in terms of new homes, the MoM increase in the new residential price index in 70 cities nationwide was -0.1% in March, unchanged from the previous month. Among them, the MoM increases in the housing price indices for first-, second-, and third-tier cities were 0.1%, 0.0%, and -0.2%, respectively.

Specifically, cities such as Shanghai, Hangzhou, Ningbo, Nanjing, Hefei, Jinan, and Shenzhen led the increases. Among them, Shenzhen's new home prices have been rising for several consecutive months since October 2024, with active transactions of high-priced projects in the central urban area.

"New home prices in first-tier cities have rebounded MoM for four consecutive months, and the decline in second-tier cities has clearly stopped. This is mainly due to the launch of a large number of improvement projects in March, especially the high turnover rate of some good house projects, which has boosted market sentiment and also helped stabilize prices," said Li Yujia, Chief Researcher at the Guangdong Housing Policy Research Center.

In terms of second-hand home prices, the MoM increase in the second-hand residential price index in 70 cities was -0.2% in March. Among them, the MoM increases in the housing price indices for first-, second-, and third-tier cities were 0.3%, -0.2%, and -0.3%, respectively.

"In some cities with good new home transactions, the rise in transaction volume has objectively had a positive impact on improving the supply-demand relationship of second-hand homes, leading to signs of price increases," said a real estate industry analyst.

Zhang Bo believes that market confidence is indeed recovering, with the shortening of the second-hand home transaction cycle and the continuous pullback in listing duration, indicating that the pace of homebuyers entering the market has accelerated, driving prices to rebound from the bottom.

He introduced that in March, the proportion of people looking for second-hand homes online on Anjuke was 71%, remaining at a high level, with significant differences in market characteristics across different city tiers. In first-tier cities, the customer base is highly differentiated, with new homes mainly catering to high-end improvement needs and second-hand homes mainly for rigid demand, with relatively low customer overlap; while in third- and fourth-tier cities, there is homogeneous competition, with long and repeated decision-making cycles and high customer overlap.

Looking ahead, analysts from the China Index Academy believe that in Q2, with the accelerated implementation of policies on both the supply and demand sides of the real estate market, coupled with the increase in the supply of "good house" projects, the core city market is expected to continue to recover.

"The Real Estate Market Still Has Great Development Potential"

Analysts believe that Q2 may see a dense issuance of real estate policies.

On April 15, Li Qiang, Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, said during an inspection in Beijing, "The acquisition of existing commercial housing for use as affordable housing is an important measure to promote the stabilization of the real estate market and ensure and improve people's livelihoods. It is necessary to implement various relevant policies well, give city governments greater autonomy in terms of acquisition entities, prices, and uses, and promptly study and introduce new support measures. It is necessary to further promote urban renewal, intensify the implementation of urban village and dilapidated housing renovation, and revitalize existing stock and optimize incremental stock through various means. It is necessary to focus on the concerns of new urban residents and housing difficulties, adjust and improve relevant policies, and support residents' rigid and improvement housing needs."

Li Qiang emphasized that in the current and future period, China's real estate market still has great development potential, and it is necessary to further release market potential, focus on promoting the construction of "good houses," accelerate the construction of a new model of real estate development, and promote the stable and healthy development of the real estate market.

"The Premier's emphasis on the development potential of the real estate market further sets the tone for real estate, which helps boost market confidence," said Chen Wenjing, Director of Policy Research at the China Index Academy. Under the current goal of promoting consumption, expanding domestic demand, and strengthening the domestic cycle with greater efforts, it is expected that fully releasing the development potential of real estate will be a key focus, and there is a strong expectation for the landing of more supporting policies.

In terms of market size, China's urbanization rate of permanent residents was 67% in 2024, and the housing demand of urban migrants still exists, with significant space for improvement housing demand. According to estimates by the China Index Academy, the total urban housing demand during the "15th Five-Year Plan" period is expected to be about 5.06 billion m² (an average of about 1 billion m² per year). Considering that affordable housing and long-term rental apartments can meet part of the self-occupied demand, with a commercialization ratio of 70%-80%, the sales area of commercial residential housing nationwide during the "15th Five-Year Plan" period is expected to be about 3.54-4.05 billion m², with an average annual residential sales area of about 700-800 million m². Based on this, the average annual sales area of commercial housing is estimated to be about 850-950 million m².

Several analysts pointed out that the Premier's further emphasis on the importance of acquiring existing commercial housing for use as affordable housing, while proposing to implement relevant policies well, also called for timely research and introduction of new support measures. As a result, the market expects that more related supporting measures may already be on the way, and there is room for policy optimization in further expanding the scope of use and reducing capital costs.

In addition, the Premier emphasized the need to focus on the housing difficulties of new urban residents and the concerns of the people, adjust and improve relevant policies, and support residents' rigid and improvement housing needs. "This statement has strong signaling significance, and it is expected that local governments will further adjust and improve policies. Recently, Suzhou, Nanjing, and Wuxi have made innovations in policy adjustments, providing samples for reference," said Yan Yuejin, Deputy Director of the E-House Research Institute.

Some analysts believe that in supporting rigid and improvement housing demand, Beijing still has significant policy space, and there is an expectation for short-term optimization and adjustment of relevant policies, especially in reducing restrictive policies.

"Overall, promoting housing consumption is a key part of expanding domestic demand in 2025. Premier Li Qiang's further emphasis on the development potential of real estate has boosted market expectations and clarified multiple measures to promote housing consumption. In the future, support policies are expected to be implemented faster, and the space for Beijing to optimize and adjust real estate policies is also expected to gradually open, promoting further recovery of the real estate market," said Chen Wenjing.