In April, household loans decreased significantly by 786.9 billion yuan, setting a new record low since data became available. This sharp contraction in household credit stands in stark contrast to the ongoing recovery in the property market, where a 'mini spring' rally has continued, with transaction volumes for pre-owned homes in key cities surging significantly.
The domestic real estate market has shown steady improvement since 2026, with April continuing the warming trend seen in the first quarter. High-frequency data indicates that the transaction area for commercial housing in 30 major cities increased by 3.3% year-on-year in April, ending a previous streak of declines. Reports show that the 'mini spring' momentum persisted in core city property markets during April. The sales area for new commercial residential buildings remained largely flat compared to the same period last year, while transaction volumes for pre-owned homes in key cities saw notable year-on-year growth. This reflects continued demand release and improved market sentiment, with Shanghai's pre-owned home prices maintaining a slight increase.
Specifically, in the pre-owned home market, transaction volume in April grew by 13.4% year-on-year, with both Beijing and Shanghai reaching their highest levels for April in recent years. Influenced by the later timing of the Spring Festival this year, the release of home purchase demand was delayed, leading to the first year-on-year increase in pre-owned home transactions across 20 cities in April. Data shows that 156,000 pre-owned residential units were transacted in these 20 cities in April, a 13.4% increase year-on-year. By the fourth week of April, the weekly transaction volume in these 20 cities had already reached a new high since 2025. Cumulatively, from January to April, 489,000 pre-owned residential units were transacted in these 20 cities, a 0.8% increase year-on-year, indicating stable demand release.
The 'mini spring' trend continued in core city pre-owned home markets, with transaction volumes showing significant year-on-year growth. Among first-tier cities, Beijing saw 18,000 pre-owned residential transactions in April, a record high for the month in the past five years. Shanghai recorded 29,000 pre-owned commercial property transactions, also maintaining a high activity level for April. While Shenzhen saw a 2% year-on-year decline, new policies introduced at the end of the month are expected to provide a short-term positive boost. Several second and third-tier cities also experienced notable year-on-year growth.
In sharp contrast to the property market data are the weak household credit figures. Data shows that net new yuan loans decreased by 10 billion yuan in April, a rare negative reading, representing a year-on-year decrease of 290 billion yuan. Household loans were the primary drag, decreasing by 786.9 billion yuan in April, which was 265.3 billion yuan more than the decrease in the same period last year. Specifically, short-term and medium-to-long-term household loans decreased by 446.2 billion yuan and 340.8 billion yuan, respectively, representing year-on-year decreases of 44.3 billion yuan and 217.7 billion yuan more than the previous period. The significant year-on-year decreases in both categories point to a broad-based contraction in demand for consumer loans and mortgages.
Comprehensive market analysis suggests that the divergence between the recovery in property transactions and the weakness in medium-to-long-term household loan data in April results from a combination of factors, including a shift in household willingness to take on debt and differentiation in purchase structures. The core issue is the continued deepening of the trend of active deleveraging by the household sector. Unimproved expectations regarding income and employment, coupled with seasonal demand pullback, led to the pronounced decline in household credit in April. Analysis indicates that the substantial reduction in household sector credit in April was due to a larger year-on-year decline in total bank lending for consumption, auto loans, and mortgages. Although the transaction area for commercial housing in 30 major cities was slightly higher than the same period last year, it declined compared to March. With no signs of a national housing price recovery, weak home purchase demand and insufficient mortgage loan growth have dragged down overall credit expansion.
Another reason is households' active deleveraging, leading to a significant increase in the proportion of self-funded purchases. Research reports note that new medium-to-long-term household loan data further weakened compared to the same period last year. Despite a 3.4% year-on-year growth in commercial housing transaction area across 30 cities in April—turning positive after seven months of decline—purchases were primarily made using own funds, indicating that households' desire to increase leverage remains weak. Since the beginning of the year, the property market has shown some improvement, with recovery in high-tier cities contributing to marginal improvement in medium-to-long-term household loans. In the first four months, medium-to-long-term household loans increased by 119.9 billion yuan. However, the overall property market is still in a bottoming-out phase, with households remaining reluctant to increase leverage, and mortgage prepayments continue. Experts view this as a natural process where households actively reduce debt burdens and improve their balance sheets.
Analysis suggests several reasons for the divergence between the recovery in pre-owned home transactions and the medium-to-long-term household loan data in April. First, households' willingness to increase leverage remains weak, with actual purchases tending towards higher down payments and lower loan-to-value ratios. Second, while the number of pre-owned home transactions recovered, prices are still adjusting. The recovery in total transaction value lags behind the growth in transaction numbers, potentially lowering the average loan amount per transaction. Third, recent increases in provident fund loan limits in several core cities may have partially substituted for commercial loans. Furthermore, the recovery in new home sales lags behind the rebound in pre-owned home transactions. The latter primarily involves existing stock transactions, where the 'sell one, buy one' model generates limited new mortgages, often resulting in loan transfers rather than net increases, which is also considered a factor behind the poor performance of medium-to-long-term household loans.
From a macro perspective, the deep adjustment in the real estate market in recent years has, to some extent, affected households' willingness to expand credit, with many families gradually shifting from 'leveraging up' to 'deleveraging.' Since 2024, the growth of personal loans has slowed, driving a continuous decline in the household sector's leverage ratio, from 62.3% in the first quarter of 2024 to 59.0% in the first quarter of 2026. Reports show that the household sector's debt growth rate was -0.4% in the first quarter, marking the first negative growth since the third quarter of 1995. Among this, mortgage loan growth is estimated to have decreased from -1.8% at the end of 2025 to -2.6%, marking 12 consecutive quarters of negative growth since the second quarter of 2023. Consumer loan (excluding mortgage) growth turned negative for the first time, dropping from 0.7% at the end of 2025 to -1.2%. Business loan growth was 3.7%, down 0.3 percentage points from the end of 2025. Downward pressure on housing prices and slowing income growth are key factors constraining credit expansion, contributing to the household sector's leverage ratio declining from 59.4% at the end of 2025 to 59.0%.
Data on personal housing loan balances also shows a decrease. By the end of March, the outstanding balance of personal housing loans was 36.72 trillion yuan, a further reduction of 290 billion yuan from 37.01 trillion yuan at the end of the previous year and a decrease of 1.18 trillion yuan compared to the same period last year, a drop of 3.11%. Analysis indicates that currently, with slowing household income growth, poor employment expectations—particularly significant pressure on youth employment—insufficient consumer confidence, and relatively high debt pressure, the tendency to reduce household debt and increase defensive savings is quite evident.
Looking ahead, industry experts generally believe that the property market remains in a bottoming-out phase, with credit demand yet to recover. Analysis suggests that driven by incremental and存量 policies across regions, the property market may continue its structural recovery in the second quarter, potentially releasing more rigid and improvement-oriented housing demand. However, the sustainability of policy effects and the pace of demand release require attention. Policies aimed at boosting consumption, such as plans to increase urban and rural residents' income, programs for replacing old consumer goods, promoting spring and autumn breaks in primary and secondary schools, and implementing a system for paid staggered leave for employees, are expected to gradually take effect and further stimulate consumer credit demand.
Experts also suggest that mortgage loans may continue to experience negative growth. At this stage, the overall property market is still bottoming out, with regional and project differentiation continuing. Core cities are seeing better performance for high-value-for-money and improvement-oriented products. The structural nature of the property market rally, combined with households' yet-to-be-repaired employment, income, and expectations, leads to relatively obvious wait-and-see sentiment regarding property purchases. Households remain cautious about leveraging up for home purchases. Mortgage loan issuance is significantly constrained by insufficient demand, prepayment pressure remains high, and overall readings are expected to remain negative. Further analysis indicates that households' willingness to increase leverage may still require further repair. The release of household home purchase and consumption demand may need to be observed in conjunction with improvements in income expectations and balance sheet repair.