State Council Reemphasizes Real Estate Stabilization Measures as Major Cities Prepare for Further Policy Optimization

As the early-year “mini spring” in China’s real estate market draws to a close, renewed policy momentum is urgently needed to stabilize and reverse ongoing declines. On June 13, Premier Li Qiang chaired a State Council executive meeting to review reports on developing a new real estate model and promoting quality housing initiatives. The meeting emphasized that establishing a new real estate development paradigm is crucial for ensuring the market’s stable, healthy, and high-quality progress. The discussion underscored the importance of long-term vision, advocating steady advancement and the principle of establishing foundations before phasing out outdated frameworks. It was stressed that comprehensive institutional support should be built methodically.

Accelerating the construction of high-quality housing was also highlighted, with integration into urban renewal mechanisms and the provision of policy backing across planning, land use, finance, and monetary domains. The meeting called for a thorough nationwide assessment of land supply and ongoing construction projects to further optimize current measures, improve systemic implementation, stabilize market expectations, stimulate demand, refine supply, mitigate risks, and bolster the broader recovery of the property sector.

Li Yujia, Chief Researcher at the Housing Policy Research Center of the Guangdong Urban Planning and Design Institute, noted that real estate functions as a pillar industry with a complex and extensive value chain. The shift from traditional to new development models requires a stable economic environment and clear expectations. Abruptly discarding the previous model would risk sustained property price declines and emerging financial vulnerabilities, undermining the environment needed for new frameworks to take root. Thus, a phased transition, prioritizing establishment before deconstruction, is essential.

The concept of “establishing before breaking” has been a consistent theme in recent real estate policymaking. At the beginning of 2023, a national conference for the housing and urban development sector advocated for pilot-driven reforms and the orderly formation of systems compatible with high-quality development. This principle, originally cited in early 2023, gave way to calls for acceleration in subsequent announcements. Now, it re-emerges in the latest State Council session, reiterating a focus on cautious, sequenced reforms.

In 2024, the Government Work Report called for adapting to the evolving dynamics of urbanization and shifting supply-demand trends by expediting the construction of a modern real estate model. The July Third Plenary Session Decision similarly proposed reforms to the housing supply system, financing models, and presale mechanisms. The end-of-year Central Economic Work Conference reiterated the goal of building foundational systems in an orderly manner.

Chen Wenjing, Policy Research Director at the China Index Academy, explained that real estate’s basic institutional framework spans land, finance, taxation, market regulation, and public housing. The meeting provided further clarity by emphasizing systematic construction of these components and reaffirming the priority of establishing before breaking. She anticipates incremental progress in implementing existing-home sales policies, with cities tailoring efforts based on local conditions. Regions with larger inventories may act first.

Commenting further, Yan Yuejin, Deputy Research Director at the E-House China Research Institute, observed that this principle means legacy practices cannot be dismantled purely in pursuit of new models. Doing so could trigger systemic financial threats, operational challenges for developers, and broader livelihood concerns. He emphasized that moving toward existing-home sales will require local governments to introduce standardized frameworks—possibly drawing lessons from cities like Xinyang in Henan—while ensuring developers can withstand the associated capital pressures.

The meeting also emphasized that “good housing” initiatives should be incorporated into urban renewal strategies and that coordinated support in planning, land allocation, fiscal funding, and financial services should be reinforced. These two themes—quality housing and urban renewal—have been at the forefront of recent real estate policy and are backed by strategic top-level designs. As of May 1, new national “good housing” standards under the updated Residential Project Code have been implemented. In mid-May, a strategic framework for continued urban renewal titled "Opinions on Promoting Urban Renewal" was released.

Policy guidance since the start of 2024 has increasingly aligned urban renewal with quality housing goals. During a March press conference at the 14th National People's Congress, Minister of Housing and Urban-Rural Development Ni Hong highlighted two key priorities. First, affordable housing must meet “good housing” criteria as part of the government’s social welfare responsibilities. Second, the focus should not be limited to new builds; older housing stock must also be upgraded through multiple urban renewal approaches.

The urban renewal document emphasizes a people-centered philosophy aimed at delivering quality homes, neighborhoods, communities, and urban districts. At a recent State Council Information Office briefing, Vice Minister Qin Haixiang noted that the blueprint for this initiative is highly integrated, covering both new housing development and renovation of existing buildings to meet higher standards.

Li Yujia pointed out that in the current era of a housing-stock-driven market, the effectiveness of “good housing” efforts in meeting rising consumer expectations depends on successfully converting existing properties. Renovating aging neighborhoods, building complete communities, overhauling municipal infrastructure, and addressing deficits in public services all require substantial financial input. While central fiscal incentives and bond financing provide leverage, long-term success hinges on mobilizing multi-channel investments.

Furthermore, integrating good housing efforts with urban renewal helps correct imbalances. Although developers are promoting fourth-generation residential products aligned with these national goals, gaps between design expectations and real market results have placed older second-hand listings under pressure—an issue that is now receiving close attention.

With the traditional March–April peak season drawing to a close, concerns over continued market softness have grown. According to the National Bureau of Statistics, April data showed that new home prices in first-tier cities stagnated, while second-hand home prices declined by 0.2 percent. In second-tier cities, new home prices were flat, with second-hand prices down 0.4 percent. Third-tier cities recorded a 0.2 percent drop in new home prices and a 0.4 percent decrease in the secondary market.

This year’s “Silver April” also fell short of expectations. First-tier cities ended a four-month streak of price increases. According to CRIC data, the top 100 real estate developers posted sales of 284.68 billion yuan in April, down 10.4 percent month-over-month. The second-hand market saw even sharper declines: the 70-city price index fell 0.4 percent from March, doubling the previous month’s decline.

Li Yujia attributed the decline in second-hand prices largely to a rise in listing volumes. In Shenzhen, data from the local real estate intermediary association showed that by April 7, 73,145 second-hand homes were on the market—an increase of over 10,000 in two months. Listings have also increased in other major cities. The surge is due in part to policies encouraging housing upgrades, prompting homeowners to sell, and to new quality housing options entering the market, leading sellers to reassess their property’s competitiveness.

Given these developments, the State Council underscored the need to further strengthen efforts to stabilize and reverse the housing market’s downturn. Chen Wenjing noted that while Q1 continued the recovery trajectory seen at the end of 2023, the late-April Politburo meeting stressed the need to reinforce stability. This most recent meeting, with its call for more forceful measures, signals the central government’s awareness of recent fluctuations and its intent to respond promptly.

Under this guidance, regulatory bodies and local governments are expected to accelerate policy execution. Anchoring expectations, revitalizing demand, improving supply conditions, and mitigating financial risks will be central to the strategy. Chen added that after Guangzhou reaffirmed the full removal of home purchase, sale, and price restrictions on June 13—alongside lower down payment ratios and mortgage rates—Beijing, Shanghai, and Shenzhen may follow with further policy adjustments. Additional measures may include broader use of housing vouchers, optimized housing fund loan terms, incentives for trade-in programs, and enhanced home purchase subsidies.