Secondary Homes Surpass New Builds, First-Tier Prices Recover; Lower-Tier Markets Remain Under Pressure
China's property market is showing credible signs of stabilization in August 2026, but the recovery is deeply uneven — concentrated in first-tier cities while lower-tier markets continue to struggle with oversupply, population outflows, and weak demand.
According to National Bureau of Statistics data released August 17, new home prices in 70 major cities continued to narrow their year-over-year decline in July 2026, with new home prices in tier-1 cities flat month-over-month. Secondary home prices in tier-1 cities rose 0.2 percent month-over-month, the fifth consecutive month of increase. However, among 70 cities, only 23 had rising or flat new home prices — and among those, only four (Shanghai, Hangzhou, Hefei, and Shenyang) had year-over-year increases.
Transaction Volume: New Homes vs. Secondary
August transaction data tells a nuanced story. In the week of August 8-14, 36 major cities recorded 12.21 million square meters of new home sales, down 13.6 percent year-over-year. In contrast, 15 cities recorded 14.93 million square meters of secondary home transactions, up 6.6 percent year-over-year. By August 16, cumulative new home sales across 36 cities reached 24.49 million square meters, down 9.4 percent year-over-year, while secondary sales across 15 cities reached 28.91 million square meters, up 6.4 percent year-over-year.
Nationally, secondary home transactions accounted for 50.4 percent of all residential transactions in the first half of 2026 — the first time secondary homes have overtaken new builds in market share, signaling a historic structural shift in China's housing market.
Aug 2026 Economic Backdrop
August economic data provides mixed signals for the property market. Industrial output rebounded to 6.1 percent year-over-year in August, up from 4.5 percent in July. Fixed-asset investment grew 5.3 percent year-to-date, and retail sales reached 3.1 trillion yuan in August. However, fixed-asset investment contracted 6.7 percent year-over-year in January-July, reflecting persistent weakness in property-linked capital formation.
Regional Divergence: Winners and Laggards
First-tier cities are the clear outperformers. Shenzhen's new home purchases surged 50 percent year-over-year in the first half of August. Shanghai's new home sales rose 28 percent year-over-year in August, and secondary home prices have risen for five consecutive months. In contrast, tier-2 and tier-3 cities face persistent headwinds: declining land revenues, weak demand, and limited access to financing.
Looking ahead, the traditional peak season (September-October) is approaching. With central government policy actively supporting stabilization and mortgage rates at historical lows, first-tier city demand should hold. However, structural imbalances will take time to resolve, and investors should not expect a uniform recovery across China's vast and diverse property landscape.