China property price declines continued to narrow in March, with the most evident improvement in tier-1 cities

Overview

This report tracks the performance of China's real estate market in March 2026 and looks ahead to April trends. The core judgment is that prices have shown continued improvement, especially with clear month-over-month recovery in average prices of both new homes and existing homes in tier-1 cities; sales declines were better than expected and are likely to improve further in April on a low base; however, the construction side remains weak, and although the year-over-year declines in new starts and completions have narrowed, they have not yet reversed.

Core views

Goldman Sachs believes China's housing market is seeking a new equilibrium. Short-term positive signals come from month-over-month price gains in tier-1 cities, a year-over-year decline in listed supply of existing homes, improvement in online home-search activity and transaction turnover, and a recovery in land acquisition by strong state-owned developers. Constraints remain in supply-chain indicators such as completions, new starts, and building materials demand, suggesting that the recovery in development investment and construction activity is lagging.

Analysis framework

The report combines the NBS 70-city housing price index, nationwide sales and construction data, high-frequency data from China Index Academy, CRIC, Centaline, and 58 Anjuke, and Goldman Sachs' forecasting framework for April sales, prices, construction, and existing home transactions, comparing actual March performance with Goldman Sachs' previous expectations.

Methodology notes

• Market Tracking70-city ASP Index

  Month-over-month changes in average prices of new homes and existing homes

  Use the average selling price indices of new homes and existing homes in 70 cities to observe whether price declines are narrowing, and compare differences among tier-1, tier-2, and tier-3 cities by city tier.

• High-Frequency ForecastingGS Property Completion tracker

  Completion forecast tracking

  Estimate year-over-year completion trends through high-frequency property supply-chain and project activity indicators, to verify whether NBS completion data is in line with expectations.

• Existing Home Market15-city transaction and 100-city listing tracker

  Existing home transactions, listings, and sentiment indicators

  Use existing home transaction volume in 15 key cities, listing volume in 100 cities, online home-search activity, and turnover speed to measure supply-demand conditions and market sentiment in the existing home market.

• Developer InvestmentLand bank intensity and project GPM

  Land acquisition spending as a share of sales and project gross margin

  Track land acquisition spending by covered developers, city distribution, and project-level gross margins to assess developers' replenishment discipline and earnings quality.

Asset mapping & comparison

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

• China property developers

  Assets directly benefiting or under pressure

  Strengths

  Sales declines are narrowing, financing is improving, and high-quality state-owned developers are more active in land acquisition and focused on higher-tier cities.

  Weaknesses

  New starts and completions are still in year-over-year decline, and the recovery in overall industry investment and cash flow is not yet solid.

  Comparison

  Strong state-owned developers are better positioned than private developers to replenish land banks in core cities.

  Risks

  If sales improvement does not continue, the recovery in land acquisition may increase funding pressure.

• Tier-1 city housing market

  Leading observation indicator

  Strengths

  Average prices of both new homes and existing homes show the clearest month-over-month improvement, with core cities such as Shanghai and Shenzhen highlighted as key observation targets.

  Weaknesses

  It remains to be verified whether the improvement can spread to other cities.

  Comparison

  Tier-1 cities are performing better than tier-2 and tier-3 cities.

  Risks

  If listed supply rises again or policy support falls short of expectations, price stabilization may be interrupted.

• Property supply chain

  Lagging recovery asset

  Strengths

  A low base helps the year-over-year declines in completions and new starts continue to narrow.

  Weaknesses

  Indicators such as glass, capacity, inventories, and cement shipments show momentum remains mild and relatively weak.

  Comparison

  Improvement in sales and prices is faster than on the construction side.

  Risks

  Persistently weak construction activity may weigh on demand in building materials and engineering supply chains.

• Commercial real estate REITs and developer financing instruments

  Potential liquidity support

  Strengths

  Commercial property REIT pilots, whitelist project loans, and local government special bonds may improve developers' funding conditions.

  Weaknesses

  The pace and scale of policy implementation remain uncertain.

  Comparison

  Financing support is more critical for developers under liquidity pressure.

  Risks

  If policy transmission is insufficient, market confidence and financing recovery may fall short of expectations.

Key data

• March average new home prices in 70 cities-0.2% month-over-monthFebruary was -0.3% month-over-month, with the decline narrowing.
• March average existing home prices in 70 cities-0.2% month-over-monthFebruary was -0.4% month-over-month, with the decline narrowing significantly.
• Average new home prices in tier-1 cities+0.2% month-over-monthThe strongest month-over-month performance since May 2023.
• Average existing home prices in tier-1 cities+0.4% month-over-monthThe first positive month-over-month reading since March 2025.
• March nationwide commercial housing salesValue -7% year-over-year, area -13% year-over-yearBetter than Goldman Sachs' high-frequency tracking and previous expectations.
• 1Q26 nationwide commercial housing salesArea -10% year-over-year, value -17% year-over-yearResidential sales area and value were -13% and -18% year-over-year, respectively.
• March new starts-17% year-over-yearNarrowed from -23% in January-February.
• March completions-19% year-over-yearNarrowed from -28% in January-February, but still weak.
• Existing home transaction volume in 15 cities+112% month-over-month in March, -8% year-over-yearBetter than Goldman Sachs' previous expectation of a high-single-digit year-over-year decline.
• Developer financingNew funding sources in March +48% month-over-month, +14% year-over-year1Q26 was +7% year-over-year, mainly driven by onshore bond issuance.
• March land acquisition intensity of six covered developersAbout 31% of contracted salesAverage project-level GPM was about 25%, with 98% allocated to tier-1 and tier-2 cities and 45% to Top-10 cities.
• Goldman Sachs April forecastNew home sales area to grow by a low single-digit percentage year-over-year, sales value roughly flat year-over-yearMainly supported by stable early-month performance and a low base.

Impact & implications

If the price recovery in tier-1 cities and the decline in existing home supply continue, the market may gradually form a positive feedback loop of price stabilization, improved expectations, and recovering transactions, which would be more favorable for high-quality state-owned developers, land banks in core cities, and improved liquidity in commercial real estate REITs. However, the construction chain remains weak, implying that the recovery in property investment and upstream building materials demand may lag behind sales and prices.

Risks

• Home price stabilization is concentrated only in tier-1 cities and fails to spread to tier-2 and lower-tier cities.
• Listed supply of existing homes rises again, suppressing price and transaction recovery.
• Rental yield improvement is insufficient, and the holding cost of home purchases remains relatively negative.
• New starts and completions continue to decline, and recovery in property supply-chain demand is slower than sales.
• The intensity or execution speed of policy support may fall short of expectations.
• Improvement in developer liquidity is insufficient, and financing pressure on private developers remains high.
• Weak macro employment and income expectations constrain household home-buying demand.

What to watch

• Whether core tier-1 cities, especially Shanghai and Shenzhen, show housing price stabilization or a positive inflection point.
• Whether other cities follow the price improvement seen in tier-1 cities.
• Whether existing home listings in higher-tier cities continue to decline.
• Whether rental yields and rents in higher-tier cities continue to improve.
• Housing provident fund reform, large-scale mortgage interest subsidies, or further cuts in commercial mortgage rates.
• Whether purchase restrictions in core districts of tier-1 cities are further relaxed or removed.
• Whether employment-support and demand-expansion policies improve household income expectations.
• Whether urban renewal, urban village redevelopment, and government inventory acquisition receive more funding support.
• The extent to which commercial property REIT pilots improve whitelist projects and developer liquidity.