As China’s real estate sector seeks to regain stability, experts are urging faster and stronger measures to restore market confidence, including easing home purchase restrictions in major cities, cutting mortgage rates further, and expanding government-led acquisitions of unsold housing to convert into affordable homes.
These recommendations follow the recent Central Economic Work Conference in Beijing, which set priorities for China’s 2026 economic agenda, placing a high emphasis on stabilizing the property market. Policymakers highlighted the need for city-specific strategies to manage new housing supply, clear inventory, and encourage government purchases of existing residential units for subsidized housing programs.
Economists note that the property market has a direct effect on household wealth and consumption. Robin Xing, chief China economist at Morgan Stanley, emphasized that residential property constitutes a substantial portion of family wealth, and falling housing prices reduce homeowners’ perceived wealth.
This, in turn, erodes financial confidence, drives precautionary savings, and discourages consumer spending. With the government explicitly targeting an increase in household consumption as a share of GDP in its five-year economic plan, analysts argue that more decisive measures are urgently needed to halt the market downturn and mitigate its impact on spending.
Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, suggested that further relaxation of home purchase restrictions in Beijing, Shanghai, and Shenzhen could provide a clear signal of government commitment to stabilizing the sector. While some curbs have been lifted in suburban areas and for nonlocals, core districts still retain purchase limits.
Stabilizing these metropolitan hubs, Wang said, is critical as they function as barometers for the national market, and positive movement there could create a ripple effect, boosting confidence in smaller cities under greater pressure. Wang also recommended targeted mortgage rate cuts, fiscal interest subsidies, and substantial reductions in property transaction taxes and fees to lower borrowing costs and stimulate demand.
Amid these immediate policy recommendations, analysts highlight long-term housing needs driven by China’s ongoing urbanization. Yuan Haixia, dean of China Chengxin International Credit Rating, pointed out that China’s urbanization rate remains roughly 15 percentage points below that of advanced economies, with nearly 300 million “new citizens” — migrants and recent urban residents — expected to generate sustained housing demand.
Yuan stressed that while commercial homeownership is important, providing around 100 million units of government-subsidized housing for this demographic is equally vital. Local governments, he added, should accelerate purchases of unsold developer inventory for conversion into public housing aligned with urbanization trends and population growth.
Experts also recommend a strategic approach to adaptively repurpose acquired housing stock. Yan Yuejin, deputy head of the E-House China R&D Institute, emphasized converting units in high-demand metropolitan areas into affordable rental housing for young urban migrants, with simplified eligibility criteria. Additionally, portions of state-acquired housing could be redesigned into age-friendly apartments or allocated to senior living communities to meet the needs of an aging population.
In summary, while China’s property market faces short-term pressures from slowing prices and declining sentiment, experts argue that a combination of targeted policy measures, mortgage relief, government-led inventory acquisition, and long-term planning to accommodate urbanization and demographic shifts is essential to restore stability and support sustainable growth in the sector.
