China Real Estate: Existing-home market shifts from a “sharp decline” to a “moderate decline”

Overview

This report summarizes the key views from J.P. Morgan’s conference call with Iceberg Index industry experts. The experts believe China’s real estate market is moving from the previous phase of rapid decline into a phase of more moderate decline, with 2026 potentially becoming a turning-point year near the bottom. The main basis for the report’s view that market sentiment may improve includes better existing-home transaction volumes, listings no longer rising in a panic, narrower bargaining room, and Shanghai taking the lead in stabilizing.

Core views

The core views include: first, existing-home prices have already undergone a deep correction, with the 40-city transaction average price index down 41% from its peak, suggesting that room for further sharp declines may be narrowing; second, transaction volume after the 2026 Chinese New Year was clearly better than in 2025, reflecting improving buyer confidence; third, Shanghai is leading the recovery, with valuation repair in low-total-price homes for rigid demand after larger previous declines; fourth, nationwide home prices are still unlikely to stage a strong rebound in the short term and are more likely to continue declining moderately through 4Q26 before stabilizing in 2027; fifth, confirmation of stability in tier-one cities would catalyze a re-rating of real estate sector valuations.

Analysis framework

The report uses expert interviews, Iceberg Index high-frequency existing-home data, city transaction year-over-year comparisons, changes in listing volume, price indexes, and rental trends to cross-validate whether the real estate market is nearing a bottom. The analytical focus is not the effect of a single policy stimulus, but whether transaction conversion rates, listing behavior, bargaining room, and price declines are improving simultaneously.

Methodology notes

• Expert conference callIceberg Index expert interviews

  Use industry experts to explain the changes in market behavior behind high-frequency existing-home data.

  Experts believe this round of improvement is driven more by higher transaction volume, easing listing pressure, and recovering buyer confidence, rather than simply by Shanghai’s relaxation of home purchase restrictions in February.

• High-frequency market dataIceberg 40-city transaction average price index

  Tracks the long-term trend of existing-home transaction average prices.

  The index is down 41% from its peak and has returned to the March 2016 level, and is used to assess whether the price correction is nearing its end.

• Price and supply-demand monitoringIceberg 70-city listing price index and 25-city listing volume

  Combine month-over-month listing price changes and listing inventory to judge supply-demand balance.

  The increase in listings after the 2026 Chinese New Year appears more seasonal and did not repeat the panic selling of 2024/2025; bargaining room narrowed in tier-one cities, indicating a more balanced supply-demand relationship.

Asset mapping & comparison

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

• China real estate sector

  Core research target

  Strengths

  Prices have already corrected deeply, transaction volume is improving, listing pressure is easing, and the market may be nearing a bottom.

  Weaknesses

  Nationwide prices are still expected to continue falling moderately, and capital inflows into the housing market remain constrained.

  Comparison

  Compared with the prior phase of sharp decline, the current environment is closer to a moderate decline; compared with Hong Kong’s sharp rebound, mainland China’s short-term rebound is expected to be limited.

  Risks

  If the transaction improvement is not sustainable or listings rise again, sector re-rating may be delayed.

• Shanghai residential market

  Leading stabilizing city

  Strengths

  Listing volume is falling, transactions are strengthening, and low-total-price homes for rigid demand rebounded after mid-March.

  Weaknesses

  After valuation repair in low-priced homes, the momentum for continued gains may be limited, and buyers remain cautious about large mortgages.

  Comparison

  Shanghai is outperforming most cities and may become the bellwether for stabilization in tier-one cities.

  Risks

  In the bearish scenario, prices could still fall by about 3% in 2026.

• CR Land, COLI, Jinmao

  Preferred developer names in the report

  Strengths

  If tier-one cities stabilize, high-quality developers may be the first to benefit from sector re-rating.

  Weaknesses

  They are still constrained by industry sales, pricing, and financing conditions.

  Comparison

  Compared with weaker-quality developers, high-quality developers are more likely to benefit from a recovery in market risk appetite.

  Risks

  Continued nationwide home price declines or insufficient policy impact would weigh on valuation recovery.

• CR Mixc

  Preferred property management name in the report

  Strengths

  Cash flow in property management is relatively steadier than in development and may benefit from improving real estate sentiment.

  Weaknesses

  Growth still depends on the property cycle and the consumption environment.

  Comparison

  Compared with developers, property management companies may have lower cyclical volatility.

  Risks

  Recovery in related property sales and commercial operations may fall short of expectations.

• KE Holdings - H 2423.HK

  Beneficiary of improving existing-home transactions

  Strengths

  If existing-home transaction volume remains strong, platform trading activity and revenue elasticity may improve.

  Weaknesses

  Demand for new homes may be crowded out by the price advantage of existing homes, and the industry as a whole remains in an adjustment period.

  Comparison

  Compared with developers, KE benefits more directly from improving existing-home transaction volume.

  Risks

  Falling transaction volume, continued price declines, or policy disruptions may affect the platform business.

Key data

• Decline in 40-city transaction average price index-41%The Iceberg 40-city transaction ASP index fell from its peak back to the March 2016 level.
• YoY transaction growth in core cities in the 55 days after Chinese New Year+13.7%Real-time existing-home transaction volume in core cities in 2026 increased versus the same period in 2025.
• YoY transaction growth in non-core cities in the 55 days after Chinese New Year+38.2%The improvement in existing-home transactions was larger in non-core cities.
• Nationwide moderate-decline assumption约-0.5% M/MExperts expect nationwide home prices to continue declining moderately through 4Q26.
• Distance of most cities from the bottom约5-6%Experts expect most cities may need to fall further before bottoming.
• Shanghai 2026 scenario乐观持平，悲观-3%Shanghai may already be near the bottom; even in the bearish scenario, the decline would still be moderate.
• Beijing and Shenzhen 2026 scenario-3%至-6%Experts expect Beijing and Shenzhen may still decline moderately.
• Current price of KE HoldingsHK$42.10The disclosed price in the report is as of the close on April 20, 2026, with the rating marked as OW.

Impact & implications

If tier-one cities, especially Shanghai, can continue to confirm price stabilization and improving transactions, the market’s extremely low expectations for China’s real estate sector may recover, creating valuation re-rating opportunities for developers, property management companies, and existing-home transaction platforms. However, the report also emphasizes that the market is currently closer to a “slowing decline” than a strong rebound, with capital inflows still constrained, making it difficult to replicate Hong Kong’s sharp rebound over the past year in the short term.

Risks

• Nationwide home prices may continue to decline, and experts expect most cities still have 5-6% room before reaching the bottom.
• After valuation repair in Shanghai’s low-total-price homes, the momentum for continued gains may be limited.
• Capital inflows into the housing market remain constrained, making a strong short-term rebound less likely.
• New-home price adjustments are not flexible enough, and the relatively low prices of existing homes may continue to crowd out new-home demand.
• If listing volume rises again or homeowners resume cutting prices to sell, the improving supply-demand signals could reverse.
• The boost from policy easing to actual demand may be limited, and recovery should not be judged solely on policy catalysts.

What to watch

• Whether Shanghai listing volume continues to decline, especially whether the trend since late March to April can be sustained.
• Whether bargaining room in tier-one cities continues to narrow, indicating easing pressure on sellers to cut prices.
• Whether the year-over-year transaction improvement after Chinese New Year in core and non-core cities can continue into subsequent months.
• Whether the Iceberg 70-city listing price month-over-month change moves further toward zero or turns positive.
• Whether nationwide home prices gradually complete bottoming before 4Q26 and stabilize in 2027.
• Whether stronger existing-home transactions continue to benefit trading platforms such as KE Holdings, and whether they crowd out demand for new homes.