In January 2026, the transaction area for pre-owned homes in 13 key cities reached approximately 8.1 million square meters, marking a month-on-month increase of 16% and a year-on-year surge of 33%. This figure represents an 18% growth compared to the monthly average in 2025.
The secondary housing market is demonstrating a trend of "trading price for volume." Demand is stabilizing in core cities, and valuations appear to be bottoming out, raising expectations for a "small spring" rally in 2026. However, a comprehensive recovery for the property market still faces significant challenges.
On the morning of February 2nd, Li Qing received a message from a real estate agent informing him that a property he had viewed just the day before had already been sold. This was the fourth property he had lost out on recently. Li Qing has been actively searching for a school-district apartment in Beijing's Haidian district for his child, who is about to start elementary school. After seeing several desirable properties sell quickly, he has decided to act immediately upon finding the next suitable home.
An agent from Lianjia in Beijing's Xicheng district reported that following new policies introduced on December 24, 2025, prices in a school-district community he manages have increased by 100,000 to 150,000 yuan. Another agent in Chaoyang district noted that transactions for a popular school-district complex doubled from about 20 units in December to a higher figure in January.
This sentiment is supported by broader data. Research from Guojin Securities indicates that by the end of January, the year-on-year decline in the transaction area for pre-owned homes across 22 cities had narrowed from 26.8% to 13.0%. The transaction area rebounded to 2.79 million square meters, the highest level since June 2025, with the year-on-year growth rate turning positive at 17.7%.
Real-time agency signing data shows significant improvement. By the end of January, the number of real-time pre-owned home signings across 26 major cities increased by 27.0% year-on-year and 18.5% month-on-month. Given the leading nature of this data, the recovery in transaction volume is expected to continue and potentially strengthen leading up to the Spring Festival.
Listing prices for pre-owned homes have also shown signs of stabilizing. In January 2026, the month-on-month decline in national listing prices narrowed to 0.7% from an average of around 1.3% over the previous six months. Declines moderated in first, second, and third-tier cities.
Cao Jingjing, General Manager of the Index Research Department at China Index Academy, stated that 2026 marks a new phase for real estate policy aimed at "stabilizing expectations and shortening the adjustment period." She anticipates a "small spring" market in core cities around March, driven by the release of premium land plots and increased promotional efforts by developers before the holiday.
Following cities like Zhengzhou, Nanjing, Qingdao, and Haikou, Shanghai officially began exploring the acquisition of pre-owned homes for public rental housing in early February. However, a full, nationwide recovery for the property market is expected to take a longer period.
Transaction activity has warmed up in many regions. Data from China Index Academy shows that in January, the average price for pre-owned homes in 100 cities was 12,900 yuan per square meter, a month-on-month decrease of 0.85%, with the rate of decline narrowing by 0.12 percentage points. Price declines narrowed across all city tiers.
Transaction data from CRIC indicates the transaction area in 13 key cities was approximately 8.1 million square meters in January. Major first-tier cities performed well. Beijing recorded over 15,000 net signings, exceeding its market benchmark for three consecutive months. Shanghai saw 22,800 net signings, a five-year high for January. Guangzhou's transactions increased slightly, while Shenzhen's surged 45.5% year-on-year.
The "Iceberg Index," reflecting real-time market activity, showed a 14% month-on-month increase in transactions across 26 key cities in January, with Xiamen leading at 34%. Cao Jingjing attributed the sustained activity in core cities to strong underlying demand, the "price for volume" dynamic, effective policies, and a lower base due to the later Spring Festival. A reduction in listing volume has shortened negotiation periods and transaction times, further boosting activity.
In contrast, the new home market was relatively subdued due to limited supply. While prices saw a structural increase from new high-end projects, the transaction area fell. CRIC data shows the transaction area for new homes in 50 key cities was about 810 million square meters in January, down 32% month-on-month and 20% year-on-year. Declines were observed across all city tiers.
The narrowing price declines at the start of 2026 are partly seasonal, as sellers traditionally become less willing to reduce prices ahead of the Spring Festival, anticipating a "Golden March, Silver April" period. Li Yujia, a chief researcher, added that recent transactions have been dominated by school-district properties, which saw significant price drops and increased activity as parents seek to buy before the school year.
Analysts suggest the market may be nearing a bottom. Guojin Securities reports that based on cumulative price drops, rental yields, and price-to-income ratios, many cities' markets are approaching valuation lows. The total housing demand in core cities stabilized in 2025. The national rental yield rose to 2.39% in December 2025, close to the 2.6% provident fund loan rate, indicating a market bottom where the居住 attribute of housing is returning. The price-to-income ratio in most cities has returned to levels at or below those of 2006, moving towards the internationally recognized reasonable range of 4-6 times.
Experts like Wu Jing, Director of the Hang Lung Center for Real Estate at Tsinghua University, observe conditions for a market recovery, particularly in major cities and prime locations. He believes the "small warm winter" in first-tier cities could extend into a "small spring." Zhang Bo, President of the 58 Anjuke Research Institute, also expects a spring rally, noting strong demand for high-end new homes and narrowing downside for budget-friendly pre-owned homes. Positive signals include increased user interest, shorter listing periods, and improved industry sentiment.
However, a comprehensive national recovery is not yet certain. Wu Jing advises observing long-term trends and suggests potential for further policy improvements, such as lower interest rates or expanded government purchases. Zhang Bo proposes monitoring indicators like stable price fluctuations, sustained monthly transactions around 300,000 units in 35 key cities, and reduced average listing times.
Shanghai's new initiative involves acquiring pre-owned homes for public rental housing. The first batch of projects, launched on February 2nd with support from China Construction Bank, focuses on smaller units in Jing'an, Pudong, and Xuhui districts. The program, requiring buyers to purchase a new home in the same district, aims to benefit all parties by reducing transaction costs, increasing rental supply, and accelerating inventory digestion for developers.
The success of such "trade-old-for-new" policies hinges on the alignment of government appraisal prices with seller expectations. Appraisal prices, based on six-month average transaction data, tend to be more conservative than fluctuating market prices. These programs are best suited for families with urgent upgrade needs whose older properties are difficult to sell, rather than owners of newer or larger units with high price expectations.
Effective implementation requires strong inter-departmental coordination regarding property conversion, tax benefits, and financing. The scale of funding and availability of suitable new homes are also crucial. While many properties in Shanghai's pilot districts meet the acquisition criteria, the high price of new homes in Jing'an and Xuhui may pose challenges for buyers.
Similar programs have been launched in other cities since 2024, but face challenges like short timelines to sell old homes and limited choices for new ones. Caution among buyers regarding pre-sale properties and uncertain income expectations also affect participation. Li Yujia suggests that for such policies to become常态化, developers and local governments must offer quality homes at fair prices. Government acquisitions require significant funding and operational expertise for managing dispersed rental properties. The government's role should focus on creating incentives, simplifying procedures, and ensuring credible valuations to facilitate market circulation.