Beijing Says Stay Optimistic on Property-But the Market Has Only Stabilized at the Top

Beijing's optimism fits stabilization, not a sector-wide recovery

The right read of Beijing's optimism is narrow: the market may have found a floor, but property does not yet look ready to drive growth again. The evidence does show real stabilization at the top end. Secondhand apartment sign-ups rose 10.2% in the first half, and combined new-plus-secondhand sales turned positive for three straight months. At the same time, sentiment improved enough that 63.1% of property workers expect new-home prices to stabilize or rise, up 20 percentage points from last year's low. For investors, that is enough to spark a rerating trade - if they do not confuse "better" with "back."

A floor is not the same as a turnaround

The bull case is easy to see. When secondary transactions speed up and overall sales stay positive quarter after quarter, the market is no longer free-falling. That can support selected developers, local government finances, and broader confidence.

But the cautionary case still matters. Reuters quoted developers and analysts saying the market hasn't stabilised because funding remains tight and prices have been falling for too long. Broader price data also still show a broad-based sales price correction, even if adjustment has slowed in some stronger submarkets. And property's drag on the wider economy remains a real headwind: The slowdown in China's property market has pressured GDP growth.

So the mistake to avoid is buying a full recovery story too early. The better interpretation is simpler: the worst may be over, but the sector still has to clear a meaningful common-sense test.

What is improving, and where the recovery is still uneven

What is getting better is straightforward: stabilization is showing up first where demand is strongest, not everywhere at once. Cheaper financing reduces friction for serious buyers, with household medium- and long-term loans rebounding and new mortgage rates around 3.1%. At the same time, inventory pressure is easing, with commercial housing inventory down 0.9% year over year. In the best cities, prices have also started to move the right way: first-tier cities saw new-home prices rise 0.1% to 0.2% month on month, while second-hand prices rose 0.3% to 0.4%, each for four straight months. When buyers see core-city prices holding, housing starts to look less like a falling knife.

The clearest sign of fresher demand is the growing role of used homes. Secondhand transaction area is now about equal to new-home sales area, and secondhand online sign-ups rose 10.2% in the first half. That matters more than another policy headline. It suggests that more of the market is being driven by actual buyers and sellers moving into existing stock, not just developers trying to offload fresh inventory. In plain terms, the market is getting livelier in the cities that matter most.

What still fails the smell test

Improvement is still narrow. Even with some month-on-month progress, prices remained lower year-over-year across both new-build and second-hand segments, with resale prices still under greater pressure. That is the bear case worth respecting: stabilization at the top does not mean the whole sector has recovered.

Expectations also still look fragile outside the best markets. Global Property Guide's 2026 outlook still points to primary prices falling 1.5% to 2.5% and secondary prices falling 4% to 5%. That is not the profile of a clean turnaround. It is still a market working through weak buyer confidence and elevated stock.

Developers on the ground make the same point. Private firms say the market hasn't stabilised because funding remains tight and prices have been falling for too long. That does not erase the positive signs, but it does limit the story.

How to position for a stabilization trade

Here the playbook is simple: trade stabilization, not a comeback.

The market is improving first in the best cities and in the most practical parts of the chain - used homes, serious buyers, and core demand. That points investors toward selective names with real product quality and enough balance-sheet room to breathe, rather than a broad "buy everything with a shovel" trade.

What to own

Favor companies that can pass the everyday smell test:

• Developers with access to funding and credible balance sheets
• Names exposed to core cities where prices and transactions are stabilizing first
• Builders with product quality that can attract actual end-users rather than speculative flows

What to avoid

Stay away from the cheap-looking traps. Bears are right on one key point: lending to private firms still scarce, and many developers still say the market has not stabilized. That keeps pressure on highly leveraged names outside prime markets.

Also, do not confuse a better tape with a clean price picture. Prices remained lower year-over-year across both new-build and second-hand segments, with resale prices still under greater pressure.

What would confirm, or invalidate, the stabilization view

Confirm if: - positive signs widen beyond tier-one cities - price moderation keeps improving in stronger submarkets - policy support keeps reaching the right projects through the white-list mechanism

Invalidated if: - the broader price correction keeps spreading - funding stays tight for private firms - property remains a drag on growth pressure on GDP growth

Keep it simple. This looks more like a re-rating setup than a full-cycle recovery story.