Nomura: Shanghai's existing-home rebound is no proof of a broad-based recovery in China's property market

Overview

This report discusses the recent localized improvement in China's existing-home market, especially the rebound in Shanghai's existing-home transaction volume and prices. Nomura believes that although some market participants interpret this as the starting point of a recovery in China's property sector, there is not enough evidence to support that view. The report emphasizes that there is no stable leading relationship between improvements in existing-home transactions and a recovery in new-home sales, and that the macro boost from existing-home transactions to developers' cash flow, local government revenue, property investment, and GDP capital formation is much weaker than that from new-home sales.

Core views

The core view is: first, China's existing-home market does show early signs of stabilization, but the improvement is mainly concentrated in a few first-tier cities; second, Shanghai's property market is influenced by local policies, government purchases, and the wealth effect from its role as a financial center, so it cannot represent the whole country; third, new-home sales remain in deep contraction, and developers' credit and delivery confidence are still important reasons for buyers shifting demand to existing homes; fourth, downward pressure on national house prices has not been removed, and property distress may continue for several more years.

Analysis framework

The report evaluates whether the improvement in the existing-home market can be transmitted to new homes and the overall property cycle by comparing existing-home transactions, new-home transactions, sales by the top 100 developers, official NBS house-price data, MOHURD transaction-structure data, Wind's major-city samples, and the Iceberg leading price index. The focus of the analysis is not a rebound in a single city, but the relationship among transaction structure, price trends, developers' funding chains, buyer confidence, and policy factors.

Methodology notes

• Real estate cycle analysisComparison of new-home and existing-home transmission

  Distinguish between improvement in existing-home transactions and recovery in new-home sales

  The report argues that new-home sales can channel household savings to developers and local governments, and further generate property and infrastructure investment; existing-home transactions are mainly asset transfers between households, with limited direct support for the macroeconomy and developer investment.

• Leading indicatorIceberg Index

  Lowest-listing-price tracking

  The Iceberg Index tracks the lowest asking prices of existing homes in residential communities at a high frequency, and the report treats it as a leading indicator for early pressure or stabilization signs in China's existing-home prices.

• Sample-city monitoring18-city existing-home and 20-city new-home samples

  High-frequency transaction comparison

  The report uses an existing-home transaction sample from 18 major cities and a new-home sales-area sample from 20 major cities to compare the difference between existing-home stabilization and new-home contraction.

• Developer sales trackingTop 100 developers' contracted sales

  Sales pressure on the developer side

  The report uses year-on-year changes in sales area and sales value for the top 100 developers to gauge developers' cash flow and new-home market conditions, and the results show deep negative growth in Q1.

Asset mapping & comparison

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

• China's property sector

  Core research object

  Strengths

  Existing-home transactions and prices in some first-tier cities have shown short-term improvement.

  Weaknesses

  New-home sales are still deeply contracted, developer credit and delivery confidence are insufficient, and downward pressure on house prices has not been removed.

  Comparison

  The improvement in existing homes is much stronger than in new homes, but the macro transmission and developers' funding-chain improvement are limited.

  Risks

  Overextrapolating localized data, insufficient policy stimulus, and another accelerated decline in house prices.

• Shanghai residential market

  Localized improvement case

  Strengths

  Existing-home transactions turned positive YoY, prices turned positive MoM, and government purchases plus easing purchase restrictions provided support.

  Weaknesses

  The improvement depends heavily on local special factors and cannot represent the whole country.

  Comparison

  Compared with most cities, Shanghai is more strongly influenced by its status as a financial center, the stock-market wealth effect, and local policies.

  Risks

  If policy support and the wealth effect fade, transaction and price improvements may prove unsustainable.

• Chinese property developers

  Asset and credit entities affected by new-home sales

  Strengths

  The decline in new-home sales has narrowed compared with Q4 2025.

  Weaknesses

  Sales area and value for the top 100 developers still fell 25.0% YoY in Q1, and presale delivery and debt pressures remain significant.

  Comparison

  Developer-side performance is weaker than the existing-home market, showing that the rebound in existing homes has not yet materially improved new-home demand.

  Risks

  Continuing cash-flow pressure, slow debt-restructuring progress, and insufficient delivery confidence.

• Chinese equity market

  Indirect influence on Shanghai housing demand

  Strengths

  Rising Wind All-A Index and higher trading volume may improve income expectations for high-net-worth individuals and financial-sector employees.

  Weaknesses

  The wealth effect is unevenly distributed and is unlikely to produce a nationwide improvement in housing demand.

  Comparison

  Support for Shanghai and other financial centers may be stronger than in other cities.

  Risks

  A stock-market correction would weaken the wealth effect and homebuying confidence.

Key data

• 18-city existing-home transaction volume growthQ1 2026 -2.1% YoY, Q4 2025 -23.0% YoYShows that the decline in existing-home transactions narrowed significantly.
• Shanghai existing-home transaction volume growthQ1 2026 1.3% YoY, Q4 2025 -20.6% YoYShanghai turned positive first among first-tier cities.
• Shanghai daily existing-home transactionsMarch 28, 2026: 1,585 unitsThe highest single-day transaction level in five years.
• NBS existing-home pricesFebruary 2026 -0.43% MoM, January -0.54% MoMThe pace of decline in national existing-home prices narrowed.
• Existing-home prices in first-tier citiesFebruary 2026 -0.1% MoMThe highest reading since March 2025; Beijing and Shanghai rose 0.3% and 0.2%, respectively.
• 20-city new-home sales areaQ1 2026 -16.1% YoYNew-home sales remain in clear contraction.
• Top 100 developers' contracted salesQ1 2026: both area and value -25.0% YoYSales pressure on developers is more visible than in the sample cities.
• 2023 to 2025 transaction structureExisting-home sales area grew 4.0%, new-home sales fell 21.2%, and total housing sales fell 11.4%The share of existing homes rose to 45.5% in 2025, but this did not stop the overall property market from declining.
• Cumulative existing-home price adjustmentUnder the NBS methodology, down 22.2% from the July 2021 peak to February 2026; the Iceberg Index fell 41.0%The Iceberg Index suggests the actual price adjustment may have been larger.
• A-share wealth effectWind All-A Index rose 30.6% from July 2025 to February 2026The report believes this wealth effect may be supporting housing demand in Shanghai in a non-uniform way.

Impact & implications

For investors, the report does not support interpreting the rebound in Shanghai's existing-home market as a direct sign of a full recovery in China's property sector. If new-home sales continue to decline by double digits, developers' cash flow, land-finance revenue, property investment, and related industrial chains will remain under pressure. The rising share of existing homes may more likely reflect buyers' concerns about delivery risk, developer credit, and new-home pricing rather than a recovery in total demand.

Risks

• Misjudging the improvement in Shanghai's existing-home market as a nationwide property rebound.
• New-home sales continuing to fall by double digits, dragging on developers' cash flow and property investment.
• Expectations for further house-price declines becoming entrenched, leading buyers to continue favoring existing homes or staying on the sidelines.
• Developer debt, guaranteed delivery, and the credibility of the presale model continuing to suppress new-home demand.
• The Iceberg Index suggesting that national house-price declines may widen again in March, with the short-term improvement possibly distorted by the Lunar New Year effect.
• First-tier cities attracting resources from surrounding cities, potentially intensifying regional divergence.

What to watch

• Whether official NBS new-home sales data for Q1 2026 still shows double-digit negative growth.
• Whether the improvement in Shanghai existing-home transactions and prices can persist after the policy effect fades.
• Whether the Iceberg Index and NBS existing-home prices weaken again in March and thereafter.
• Whether contracted sales area and value for the top 100 developers improve.
• Whether buyers' confidence in presold-home delivery and developer credit recovers.
• Whether local governments roll out more decisive real estate policy solutions.