China's real estate market, which has been facing a years-long crisis, appears to be gradually improving, according to UBS analysis. Analysts expect the sector to reach a state of stability by 2026, earlier than previously expected, suggesting the crisis could end sooner than expected.
Analysts expect the sector to reach a state of stability by 2026, earlier than previously expected.
Positive signs of recovery
<John Lam, head of real estate research at UBS Investment Bank, revealed encouraging signs after a period of steep decline, most notably that real estate sales in major cities increased by more than 30% on a weekly basis compared to a year ago. Wind Information's data also showed a gradual improvement in the market, boosting hopes for a recovery in the sector.
Factors supporting market stabilization.
Factors supporting market stabilization
According to the bank, four key factors may contribute to the stabilization of Chinese real estate: Declining real estate supply reducing downward pressure on prices, rising land price premium as an indication of returning investor confidence, increasing secondary transactions that are expected to account for half of total real estate transactions by 2026, and improving rental prices, which have been on the rise since February 2025.
According to the bank, four key factors may contribute to the stabilization of China's real estate market.
Government moves to halt deterioration
<Last September, the Chinese government stressed the need to halt the decline in the real estate sector, which makes up a large part of household wealth and used to contribute more than 25% of GDP. But despite government efforts, major real estate developers, such as Evergrande, continue to face financial difficulties, with real estate sales dropping by about half since 2021.Despite the government's efforts, major real estate developers, such as Evergrande, continue to face financial difficulties.
Crisis started in 2020. And late solutions
The crisis began when the authorities imposed strict restrictions on real estate borrowing in late 2020, leading to a lack of liquidity for developers and stalled housing projects. Despite government stimulus packages, the sector has yet to make a clear recovery, but it may gradually move towards stabilization during the second half of 2025.
