The decline in China’s 70-city primary home prices narrowed in April, but the overall property market has still not clearly strengthened

Overview

This report tracks China’s National Bureau of Statistics (NBS) 70-city home price data and Goldman Sachs’s seasonal adjustment calculations. The key conclusion is that the pace of price declines in the primary home market slowed in April, especially in first-tier cities, which continued to post month-on-month gains. However, prices remained negative on a year-on-year basis nationwide, second- and third-tier cities remained in decline, and the secondary home market saw deeper falls, indicating that the real estate price recovery remains uneven.

Core views

The report argues that marginal pressure on China’s new home prices has eased: the annualized month-on-month decline in the weighted average primary home price across 70 cities narrowed to 3.0% in April from 4.0% in March. First-tier cities continued to improve, with Shanghai leading gains, while Shenzhen and Guangzhou further relaxed housing policies, including easing purchase restrictions in core areas and raising housing provident fund loan limits. However, the overall market has not yet formed a broad-based recovery. Second- and third-tier cities are still declining, and secondary home prices have fallen 5% to 15% over the past year, indicating that household expectations and the existing-home market remain weak.

Analysis framework

The report primarily uses NBS 70-city primary home price data and applies Goldman Sachs’s population weighting and seasonal adjustment; it also references NBS and third-party platform secondary home price indicators, high-frequency 30-city new home transaction volumes, and months of inventory in major cities to assess marginal changes in prices, transactions, and inventory.

Methodology notes

• Price index trackingWeighted average primary home price in 70 cities

  Population-weighted changes in new home prices across 70 cities

  Goldman Sachs population-weights changes in primary home prices across 70 cities, so the result may differ from a simple average. Month-on-month changes in the report use Goldman Sachs seasonal adjustment.

• City-tier analysisNBS city-tier classification

  Grouping of first-tier, second-tier, and third-tier cities

  The report divides the 70 cities into different tiers according to NBS definitions and compares annualized month-on-month home price changes across each tier.

• Market segmentation analysisPrimary vs. secondary homes

  Separating new home transaction prices from existing home prices

  The report emphasizes that the 70-city data only covers primary home transactions; secondary home prices must be referenced using NBS and third-party platform data, with secondary home prices down about 5% to 15% over the past year.

• High-frequency tracking30-city new home transactions and inventory months

  Transaction volume and inventory absorption pressure

  The report uses 30-city new home transaction volume and months of inventory in major cities to assess demand and supply pressure. In April and early May, transaction volumes were roughly in line with the same period last year, and inventory months fell to 28.9 in May.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China real estate market

  Core coverage object of the report

  Strengths

  In April, the annualized month-on-month decline in primary home prices narrowed, 30-city new home transactions were roughly in line with the same period last year, and months of inventory edged lower.

  Weaknesses

  70-city new home prices still declined year on year, secondary home prices fell more sharply over the past year, and the share of cities with price gains remained low.

  Comparison

  Marginal improvement in primary home data is better than in secondary homes; first-tier cities outperform second- and third-tier cities.

  Risks

  If transactions do not continue to improve or secondary homes keep falling, price expectations could weaken again.

• First-tier city home prices

  Relatively strong sub-segment

  Strengths

  Annualized month-on-month growth reached 0.4% in April, Shanghai rose 2.0%, and Shenzhen and Guangzhou further relaxed housing policies.

  Weaknesses

  The improvement is concentrated in only a few cities, and the overall gain remains modest.

  Comparison

  Clearly stronger than second-tier cities at -2.8% and third-tier cities at -4.6%.

  Risks

  If policy easing does not bring sustained demand, the price improvement may not last.

• Second- and third-tier city home prices

  Main drag

  Strengths

  Both tiers saw narrower declines in April compared with March.

  Weaknesses

  Second-tier cities still fell 2.8%, third-tier cities still fell 4.6%, and prices have not yet turned positive.

  Comparison

  Weaker than first-tier cities, with third-tier cities seeing larger declines than second-tier cities.

  Risks

  Inventory pressure and insufficient demand may continue to weigh on prices.

• Secondary home market

  Risk watch item

  Strengths

  Some indicators suggest a slight improvement from very low levels.

  Weaknesses

  NBS and third-party platforms show that secondary home prices fell about 5% to 15% over the past year, weaker than the primary home market.

  Comparison

  Secondary home price indicators better reflect pressure in existing-home transactions than new home data, and current performance is weaker.

  Risks

  Further declines in secondary home prices could suppress upgrade demand and the household wealth effect.

Key data

• April annualized month-on-month change in the weighted average primary home price across 70 cities-3.0%After Goldman Sachs seasonal adjustment, the decline narrowed from -4.0% in March.
• April year-on-year change in 70-city new home prices-3.6%The year-on-year decline widened slightly from -3.5% in March.
• April annualized month-on-month change in first-tier city home prices+0.4%March was +0.3%, with Shanghai performing the strongest.
• April annualized month-on-month change in Shanghai home prices+2.0%March was -0.9%, and Shanghai was the strongest performer among first-tier cities in April.
• Year-on-year change in Shanghai new home prices+3.7%The report says some cities still posted year-on-year gains.
• Year-on-year change in Hangzhou new home prices+2.3%The report says Hangzhou, like Shanghai, still posted year-on-year gains.
• April annualized month-on-month change in second-tier city home prices-2.8%March was -4.6%, and the decline narrowed.
• April annualized month-on-month change in third-tier city home prices-4.6%March was -5.0%, and the decline narrowed slightly.
• Secondary home price decline over the past yearabout 5% to 15%Based on NBS and some third-party platform data, weaker than the primary home market.
• Months of inventory in major cities28.9 monthsIn May, this fell from 29.3 months in April, mainly driven by second-tier cities.

Impact & implications

A narrower home price decline helps ease downward pressure on the real estate sector and may improve the short-term market assessment of policy easing. However, nationwide prices are still falling year on year, secondary home price declines are deeper, and the share of cities with rising prices remains low, indicating that the property market has not yet entered a full recovery phase. On the macro side, real estate may still weigh on household wealth, consumer confidence, local government finances, and related industrial chains. Going forward, the key question is whether policy easing can translate into more stable transactions and inventory digestion.

Risks

• The 70-city data only covers primary home transactions and may understate pressure in the secondary home market and the true prices of existing homes.
• Nationwide new home prices are still declining year on year, indicating that marginal improvement has not fully reversed the trend.
• Second- and third-tier cities remain in decline, and divergence across cities may continue.
• If policy easing fails to drive a sustained rebound in transactions, home price declines could widen again.
• Months of inventory remain close to 29 months, indicating that supply pressure is still high.

What to watch

• Whether the annualized month-on-month decline in 70-city primary home prices continues to narrow and eventually turns positive.
• Whether transaction and price momentum can be sustained after policy easing in first-tier cities, especially Shanghai, Shenzhen, and Guangzhou.
• Whether months of inventory in second-tier cities keep declining and help drive price improvement.
• Whether the secondary home price index stops falling, especially indicators from NBS, Centaline, Zhuge, and Beike.
• Whether 30-city new home transaction volumes move from roughly in line with last year to year-on-year growth.