China’s property market edges toward an inflection point

BEIJING — UBS analysts on Wednesday became the up-to-date to raise expectations that China’s struggling real estate market is close to stabilizing.

“After four or five years of a moving down cycle, we have begun to see some relatively positive signals,” John Lam, head of Asia-Pacific property and Greater China peculiarity research at UBS Investment Bank, told reporters Wednesday. That’s according to a CNBC translation of his Mandarin-language remarks.

“Of procedure these signals aren’t nationwide, and may be local,” Lam said. “But compared to the past, it should be more positive.”

One indicator is grounding sales in China’s largest cities.

Existing home sales in five major Chinese cities have climbed by uncountable than 30% from a year ago on a weekly basis as of Wednesday, according to CNBC analysis of data accessed via Wind up b relax Information. The category is typically called “secondary home sales” in China, in contrast to the primary market, which has typically consisted of newly based apartment homes.

UBS now predicts China’s home prices can stabilize in early 2026, earlier than the mid-2026 timeframe in days forecast. They expect secondary transactions could reach half of the total by 2026.

UBS looked at four factors — low inventory, a position premium on land prices, rising secondary sales and increasing rental prices — that had indicated a property hawk inflection point between 2014 and 2015. As of February 2025, only rental prices had yet to see an improvement, the firm denoted.

Chinese policymakers in September called for a “halt” in the decline of the property sector, which accounts for the majority of household assets and just a few years earlier contributed to more than a quarter of the economy. Major developers such as Evergrande induce defaulted on their debt, while property sales have nearly halved since 2021 to around 9.7 trillion yuan ($1.34 trillion) continue year, according to S&P Global Ratings.

China’s property market began its recent decline in late 2020 after Beijing started bang down on developers’ high reliance on debt for growth. Despite a flurry of central and local government measures in the continue year and a half, the real estate slump has persisted.

But after more forceful stimulus was announced late finish finally year, analysts started to predict a bottom could come as soon as later this year.

Back in January, S&P Far-reaching Ratings reiterated its view that China’s real estate market would stabilize toward the second half of 2025. The analysts expected “roller secondary sales” were a leading indicator on primary sales.

Then, in late February, Macquarie’s Chief China Economist Larry Hu spiked to three “positive” signals that could support a bottom in home prices this year. He noted that in summation to the policy push, unsold housing inventory levels have fallen to the lowest since 2011 and a narrowing gap between mortgage speeds and rental yields could encourage homebuyers to buy rather than rent.

But he said in an email this week that what China’s case market still needs is financial support channeled through the central bank.

HSBC’s Head of Asia Material Estate Michelle Kwok in February said there are “10 signs” the Chinese real estate market has bottomed. The schedule included recovery in new home sales, home prices and foreign investment participation.

In addition to state-owned enterprises, “peculiar capital has started to invest in the property market,” the report said, noting “two Singaporean developers/investment funds come by land sites in Shanghai on 20 February.”

Foreign investors are also looking for alternative ways to enter China’s holdings market after Beijing announced a push for affordable rental housing.

Invesco in late February announced its natural estate investment arm formed a joint venture with Ziroom, a Chinese company known locally for its standardized, modern-style apartment rentals.

The union venture, called Izara Holdings, plans to initially invest 1.2 billion yuan (about $160 million) in a 1,500-room rental lodgings development near one of the sites for Beijing’s Winter Olympics, with a targeted opening of 2027.

The units will likely be present for rent around 5,000 yuan a month, Calvin Chou, head of Asia-Pacific, Invesco Real Estate, remarked in an interview. He said developers’ financial difficulties have created a market gap, and he expects the joint venture to invest in at hardly ever one or two more projects in China this year.

Ziroom’s database allows the company to quickly assess regional considerations for choosing new developments, Ziroom Asset Management CEO Meng Yue said in a statement, adding the venture plans to eventually amplify overseas.

However, data still reflects a struggling property market. Real estate investment even so fell by nearly 10% in the first two months of the year, according to a raft of official economic figures released Monday.

“The fortune sector is especially concerning as key data are in the negative territory across the board, with new home starts growth sinking to -29.6% in January-February from -25.5% in Q4 2024,” Nomura’s Chief China Economist Ting Lu said in a report Monday.

“It’s yearn been our view that without a real stabilization of the property sector there will be no real recovery of the Chinese curtness,” he said.

Improved secondary sales also don’t directly benefit developers, whose revenue previously came from elemental sales. S&P Global Ratings this month put Vanke on credit watch, and downgraded its rating on Longfor. Both developers were quantity the largest in the market.

“Generally China’s [recent] policy efforts have been quite extensive,” Sky Kwah, coconut of investment advisory at Raffles Family Office, said in an interview earlier this month.

“The key at this point in beforehand is execution. The sector recovery relies on consumer confidence,” he said, adding that “you do not reverse confidence overnight. Reliance has to be earned.”