Inventory Pressure Starts to Ease
China's secondary housing market is showing the first meaningful signs of inventory normalisation in years. For the week ending August 12, 15 monitored cities reported secondary home transaction volumes up 4.6% year-on-year, while 13 cities saw new home inventory fall 20.2% year-on-year, cutting the inventory clearance cycle to 18.1 months — a notable improvement from the 24-plus months that plagued the market in late 2025.
What Is Driving Clearance?
Three forces are converging to reduce oversupply:
- Policy stimulus: tier-one city liberalisations — especially Beijing's one-year social insurance rule for non-locals — are unlocking pent-up demand
- Price corrections: years of price declines have brought many secondary units within affordability range for upgraders
- Land supply constraints: the national urban renewal policy now discourages greenfield development, reducing the supply pipeline
Structural Differentiation Remains
Despite the positive headline, the clearance story is highly uneven. Tier-one and strong tier-two cities are clearing inventory faster than lower-tier markets, where oversupply remains acute. The CSI Real Estate Index rose 1.96% on August 12, reflecting investor optimism about a potential inflection point — but analysts caution that a sustainable recovery requires consistent month-on-month clearance data.
Developers' Sales Improve
Supporting the secondary market signal, top-100 developer contracted sales declined for only the fifth consecutive month of narrowing year-on-year losses through July 2026, with state-owned enterprise sales turning positive — suggesting that policy support is beginning to translate into genuine transaction volume rather than just sentiment.