The decline in average primary home prices across China's 70 cities narrowed in March, but the recovery remains uneven

Overview

This report tracks the National Bureau of Statistics' 70-city housing price data and Goldman Sachs' high-frequency real estate indicators. The core conclusion is that the month-on-month decline in primary home prices narrowed slightly in March versus February, with Tier-1 cities showing marginal improvement, but the nationwide year-on-year decline continued to widen, Tier-2 and Tier-3 cities remained in a downtrend, and secondary home price indicators also continued to show pressure.

Core views

Goldman Sachs noted that the seasonally adjusted weighted average price of primary homes across 70 cities fell at an annualized month-on-month rate of 4.1% in March, narrowing from a 4.3% decline in February; Tier-1 cities rose at an annualized month-on-month rate of 0.4%, with Shenzhen performing the strongest, while Shanghai and Hangzhou still recorded year-on-year gains. However, Tier-2 cities fell at an annualized month-on-month rate of 4.7%, Tier-3 cities fell 5.2%, and the nationwide year-on-year decline in primary home prices widened to 3.5%. The report emphasizes that the 70-city data only covers primary home transactions, while National Bureau of Statistics data and third-party platform data for secondary homes indicate that secondary home prices have fallen about 5%-15% over the past year.

Analysis framework

The report is based on National Bureau of Statistics data on primary and secondary home prices across 70 cities, using Goldman Sachs' seasonal adjustment and population-weighting methods to estimate nationwide and city-tier price changes, and combining this with primary home transaction volumes in 30 cities, high-frequency months-of-inventory data, and third-party secondary home price indices to assess marginal changes in the property market.

Methodology notes

• High-frequency real estate tracking70-city weighted primary home price indicator

  Population-weighted and seasonally adjusted annualized month-on-month change

  Goldman Sachs population-weights the National Bureau of Statistics' 70-city primary home price data and uses its own seasonal adjustment method to calculate annualized month-on-month changes, so the results may differ from a simple average.

• City-tier analysisNational Bureau of Statistics city-tier classification

  Price divergence among Tier-1, Tier-2, and Tier-3 cities

  The report classifies the 70 cities into different tiers based on the National Bureau of Statistics definition, to compare improvements in Tier-1 cities with continued declines in Tier-2 and Tier-3 cities.

• Inventory destocking analysisMonths of inventory

  Saleable gross floor area divided by rolling 12-month transacted gross floor area

  Months of inventory in major cities declined from 29.9 in March to 29.3 in early April, with the decline mainly driven by Tier-2 cities.

Asset mapping & comparison

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

• China real estate market

  Direct subject of research

  Strengths

  In March, the month-on-month decline in primary home prices narrowed, Tier-1 cities turned positive, and primary home transaction volumes in 30 cities were broadly in line with the same period last year.

  Weaknesses

  The nationwide year-on-year decline in primary home prices widened, Tier-2 and Tier-3 cities remained in decline, and secondary home prices fell 5%-15% over the past year.

  Comparison

  Compared with February, the annualized month-on-month decline in primary home prices across 70 cities narrowed from -4.3% to -4.1% in March; Tier-1 cities improved from -0.8% to +0.4%.

  Risks

  The scope of price recovery is limited, and lower-tier cities and the secondary housing market may continue to weigh on overall confidence.

• Tier-1 city residential market

  Submarket with the most evident marginal improvement

  Strengths

  In March, primary home prices rose at an annualized month-on-month rate of 0.4%, with Shenzhen up 5.3%, supporting the improvement in the overall data.

  Weaknesses

  The improvement is concentrated mainly in a few cities, and its sustainability still requires verification from subsequent transaction and price data.

  Comparison

  Tier-1 cities performed significantly better than Tier-2 cities at -4.7% and Tier-3 cities at -5.2%.

  Risks

  If policy support or homebuying demand is insufficient, the short-term rebound may be difficult to spread to a broader range of cities.

• Tier-2 and Tier-3 city residential market

  Main drag

  Strengths

  The decline in Tier-3 cities narrowed slightly from February.

  Weaknesses

  The decline in Tier-2 cities widened to -4.7%, while Tier-3 cities still fell -5.2%, indicating that price pressure remains evident.

  Comparison

  Both Tier-2 and Tier-3 cities underperformed Tier-1 cities and remained in an annualized month-on-month decline.

  Risks

  Inventory and demand pressure may cause price adjustments to persist for longer.

• Secondary housing market

  Important reference for validating pressure on property prices

  Strengths

  The share of cities with month-on-month gains increased in March.

  Weaknesses

  Data from the National Bureau of Statistics and third-party platforms shows that secondary home prices still fell about 5%-15% over the past year.

  Comparison

  The 70-city primary home data showed marginal improvement, but secondary home indices still indicate deeper price adjustment.

  Risks

  Price cuts in the secondary housing market may feed through to primary home pricing and buyer expectations.

Key data

• March annualized month-on-month change in the weighted average primary home price across 70 cities-4.1%After Goldman Sachs' seasonal adjustment, the decline narrowed from -4.3% in February.
• March year-on-year change in the weighted average primary home price across 70 cities-3.5%The year-on-year decline widened from -3.3% in February.
• March annualized month-on-month change in primary home prices in Tier-1 cities+0.4%It was -0.8% in February, marking the first increase since April 2025.
• March annualized month-on-month change in Shenzhen primary home prices+5.3%The strongest increase among Tier-1 cities; it was -0.7% in February.
• March annualized month-on-month change in primary home prices in Tier-2 cities-4.7%It was -4.5% in February, with the decline widening slightly.
• March annualized month-on-month change in primary home prices in Tier-3 cities-5.2%It was -5.4% in February, with the decline narrowing slightly.
• Year-on-year change in Shanghai primary home prices+3.7%The report mentions that some cities still recorded year-on-year gains.
• Year-on-year change in Hangzhou primary home prices+2.4%The report mentions that some cities still recorded year-on-year gains.
• Decline in secondary home prices over the past year5%-15%Indicated by data from the National Bureau of Statistics and some third-party platforms.
• Months of inventory in major cities29.3Level in early April, below 29.9 in March.

Impact & implications

The data indicates limited marginal improvement in China's real estate market, especially as signals from Tier-1 cities and relatively stable transaction volumes help ease short-term pessimistic expectations; however, the widening year-on-year decline, continued price drops in Tier-2 and Tier-3 cities, and ongoing pressure on secondary home prices mean that industry fundamentals have not yet fully stabilized. For the real estate value chain and related financial assets, the market is more likely to focus on whether price declines continue to narrow, whether transaction volumes can remain stable year on year, and whether inventory destocking improves further.

Risks

• The 70-city data only covers primary home transactions and cannot fully represent the secondary housing market and overall residential asset prices.
• Third-party data on secondary homes may have issues such as discontinued updates or inconsistent timing; for example, some price series from Beike, Guoxinda, and Zhuge have been suspended.
• Improvements in Tier-1 cities may not be nationally representative, while Tier-2 and Tier-3 cities still face downward price pressure.
• The widening year-on-year decline indicates that the market recovery remains unstable.
• Although months of inventory have declined, they remain at a high level, and destocking pressure still needs continued monitoring.

What to watch

• Whether the annualized month-on-month decline in primary home prices across 70 cities continues to narrow or turns positive in subsequent data.
• Whether price gains in Tier-1 cities can spread from Shenzhen to more cities.
• Whether price declines in Tier-2 and Tier-3 cities show clearer convergence.
• Whether primary home transaction volumes in 30 cities can continue to match or exceed the same period last year.
• Whether months of inventory in major cities continue to decline, especially whether destocking in Tier-2 cities can be sustained.
• Whether secondary home price indices stabilize from the 5%-15% decline recorded over the past year.