March China real estate price declines narrowed, with first-tier cities showing the clearest improvement

Overview

This is Goldman’s China real estate monthly tracking report. The key conclusion is that March showed marginal macro-level improvement in the industry: housing price declines narrowed for the third straight month, with especially strong performance in first-tier cities; national sales and secondary home transactions were better than expected; and land market activity and acquisition activity by some higher-credit developers recovered on a month-on-month basis. However, real estate development investment, new starts, and completions remain in a downtrend, indicating the industry has not yet completed a broad recovery.

Core views

Goldman expects March-to-April new-home and second-home ASP declines to continue to ease, and believes the momentum for recovery in first-tier cities is likely to persist month-on-month; new-home sales area versus year-over-year may turn positive, while sales value will likely be roughly flat year-over-year, supported by a stable start-of-month profile and a low base. Secondary home transaction volume is expected to improve to the low-single-digit year-over-year range as sentiment improves, listing pressure eases, and base effects are moderate. By contrast, the construction segment remains weak, with completions and new starts expected to stay down year-over-year.

Analysis framework

The report combines NBS 70-city price indices, national commodity home sales, land transactions, real estate development investment, new starts and completions data, as well as 15-city secondary market transaction volume, 100-city secondary market listings, online home-search activity, developer land-acquisition intensity, and financing data. It compares March actuals, Q1 cumulative results, Goldman expectations, and the outlook for April.

Methodology notes

• Industry monthly trackingChinese real estate monthly indicator tracking

  Use multidimensional indicators such as prices, sales, construction, land, and financing to assess where the real estate cycle is positioned.

  The report does not focus on a single sales metric alone; it combines new-home ASP, second-home ASP, transaction volume, listings, land deals, new starts, completions, developer financing, and policy variables to evaluate whether the sector can shift from localized improvement to broader positive feedback.

• City-tier analysisTier-1/Tier-2/Tier-3 city segmentation

  Differentiate by city tier for price resilience, supply-demand pressure, and policy sensitivity.

  The report highlights that price recovery is most pronounced in first-tier cities, and focuses on whether core cities such as Shanghai and Shenzhen can first produce clearer price stabilization or an inflection to the upside before other cities follow.

• Developer profit qualityLand reserve intensity and project GPM analysis

  Assess developer investment quality through land spend as a share of sales, city distribution, and project gross margin.

  The report shows land acquisition intensity for six covered stronger state-owned developers rose to around 31% in March, with project-level GPM near 25%, mostly concentrated in tier-1/2 and top-10 cities, reflecting geographic focus and profit orientation.

Asset mapping & comparison

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

• Chinese real estate developer equities

  Directly mapped asset for improved industry fundamentals

  Strengths

  Narrowing declines in sales and prices, marginal improvement in developer financing, and stronger land acquisition activity by higher-quality state-owned developers in higher-tier cities.

  Weaknesses

  The construction side is still weak, with new starts, completions, and development investment continuing to decline year-over-year; the industry has not fully recovered.

  Comparison

  Stronger-credit state-owned developers and those focused on tier-1 and tier-2 cities are relatively better positioned; weaker-credit or lower-tier city developers have higher pressure and vulnerability.

  Risks

  Price recovery not being sustained, insufficient policy support, slow inventory clearance, and volatile financing conditions.

• Chinese real estate bonds and developer financing instruments

  Affected by developer liquidity, financing channels, and policy support

  Strengths

  In March, developer new funding sources improved both year-over-year and month-over-month; the report notes white-list project lending, C-REITs, and commercial property REIT pilot programs may improve liquidity.

  Weaknesses

  Credit rehabilitation among private developers remains uneven, and sales cash flow and asset-disposition capacity remain key constraints.

  Comparison

  Domestic bond issuance improvement is more beneficial to higher-credit issuers, while weaker-credit participants still depend on policy and project-level financing support.

  Risks

  Debt refinancing pressure, insufficient project repayment, and slow policy execution.

• Land market and high-tier city land reserves

  Reflects developer confidence in future sales and profitability

  Strengths

  Land transaction area in March turned positive year-over-year, and covered developers’ land acquisitions were more concentrated in tier-1/tier-2 and top-10 cities, with project gross margins around 24%-25%.

  Weaknesses

  Land transaction value nationwide remains down year-over-year, so land market recovery is not uniform.

  Comparison

  Cities such as Hangzhou, Beijing, and Guangzhou have higher land-market focus, while land demand in lower-tier cities may remain weak.

  Risks

  Margin compression from high land prices, slow sales clearance, and disruptions in local land supply pacing.

Key data

• March national commodity housing sales area-7% yoyBetter than high-frequency tracking and prior Goldman expectations, around -10% yoy in 1Q26.
• March national commodity housing sales value-13% yoy1Q26 around -17% yoy.
• March blended ASP+1% mom / -6% yoy1Q26 ASP around -7% yoy.
• March 70-city new home ASP index-0.2% momFebruary was -0.3% mom; first-tier cities around -0.1% mom, while the summary text highlights first-tier new-home ASP averaging about +0.2% mom.
• March 70-city second-hand ASP index-0.2% momFebruary was -0.4% mom; first-tier cities’ second-hand ASP recovered to positive growth, around +0.4% mom.
• March 15-city second-hand transaction volume+112% mom / -8% yoy1Q26 around -8% yoy, and in first-tier cities about +2% yoy in March.
• March new start area-17% yoy1Q26 around -20% yoy.
• March completion area-19% yoy1Q26 around -25% yoy.
• March real estate development investment-11% yoy1Q26 around -11% yoy.
• March land transaction area/value+2% / -29% yoyImproved versus February’s -25% / -43% yoy; 1Q26 around -18% / -38% yoy.
• New sources of developer funding+48% mom / +14% yoyGoldman estimates March’s improvement was mainly driven by domestic bond issuance; 1Q26 around +7% yoy.
• March land acquisition intensity of six covered developersabout 31% of contract salesProject-level GPM around 25%, 98% allocated to tier-1 and tier-2 cities, 45% allocated to top-10 cities.

Impact & implications

The investment implication is more structural than full-cycle recovery: stronger price resilience in first-tier and core second-tier cities, easing secondary supply, improved rental yields, and policy support may help form positive feedback for price stabilization and buyer confidence; however, the construction chain, lower-tier city inventory, and private developer liquidity may still cap overall sector rebound. For developers, those with stronger credit, focus on higher-tier cities, and stricter land acquisition discipline are more likely to benefit.

Risks

• Price stabilization in first-tier cities does not persist, and other cities do not follow through with improvements.
• Secondary home listings rise again, creating renewed pricing pressure.
• Rental yield improvement is insufficient, and homeownership carrying costs remain a negative feedback.
• Policy support from housing provident fund reform, mortgage rate cuts, mortgage subsidies, and easing purchase restrictions is weaker than expected.
• New starts and completions remain weak, dragging demand across the real estate chain and developer cash flow.
• Developer liquidity improvement is slow, and progress on white-list project lending, C-REITs, or commercial property REITs is below expectations.
• Weak macroemployment and income expectations continue to suppress household home-buying demand.

What to watch

• Whether Shanghai, Shenzhen, and other core first-tier cities show clearer price stabilization or a clear inflection to the upside.
• Whether secondary listings in high-tier cities continue to decline.
• Whether rental yields and rents in high-tier cities improve further.
• Whether March new-home sales area in April turns positive year-over-year as expected and sales value remains roughly flat year-over-year.
• Whether April secondary 15-city transaction volume in second homes achieves low-single-digit year-over-year improvement.
• Progress on policy measures such as housing provident fund reform, broad mortgage-interest subsidy programs, and further cuts in commercial mortgage rates.
• The extent to which pilot commercial property REITs, C-REIT market development, and white-list project lending disbursement improve developer liquidity.
• Whether support for government land reserve purchases, urban village redevelopment, and urban renewal funding is implemented faster.