Top cities signal easing to support property market
Beijing relaxed housing purchase restrictions outside the Fifth Ring Road to boost suburban demand, while Shanghai’s property market showed signs of recovery with a 7.2% year-on-year price increase in July. Experts predict further policy easing in top-tier cities like Shanghai, Shenzhen, and Guangzhou to stabilize the market, including potential mortgage rate cuts and a 2 trillion yuan stabilization fund for unfinished projects.
China’s major cities are introducing policy adjustments to support the struggling real estate sector. Beijing announced on Friday that it would relax housing purchase restrictions in areas outside the Fifth Ring Road, allowing more residents to qualify as first-home buyers and access favorable mortgage terms. This move aims to stimulate suburban demand while maintaining market stability, according to analysts. Data from the China Index Academy shows that over 80% of Beijing’s new-home sales and more than half of secondhand transactions from January to July occurred outside the Fifth Ring Road, making it the focal point for market activity. Shanghai’s housing market also reflects cautious optimism, with newly-built home prices averaging 71,353 yuan ($9,931) per square meter in July, up 7.2% year-on-year despite a slight month-on-month decline. Experts attribute the dip to seasonal trends, expecting stronger sales in September and October. Shaun Brodie, head of research at Cushman & Wakefield, suggested that Shanghai, Shenzhen, and Guangzhou may follow Beijing’s lead with further policy adjustments to sustain market activity. Analysts emphasize the need for a multi-pronged approach to stabilize the sector. Luo Zhiheng, chief economist at Yuekai Securities, proposed establishing a 2 trillion yuan real estate stabilization fund to complete unfinished projects, acquire existing housing inventory, and purchase idle land from developers. He also recommended lowering the over-five-year loan prime rate to reduce mortgage costs for homebuyers and cutting taxes and fees associated with home purchases. The four first-tier cities—Beijing, Shanghai, Guangzhou, and Shenzhen—are leading the recovery, with new home sales in these cities totaling 11.4 million square meters in the first half of 2025, a 13.8% increase from the previous year. However, demand remains uneven, with high-quality projects in prime locations performing better than those in less desirable areas. Yao Yao, head of research for JLL China, noted that while recovery is underway, further policy fine-tuning will be critical to ensure a steady market bottoming-out process.
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