Property mkt bracing for big overhaul

China's real estate sector, a key engine of the world's second-largest economy for decades, will be transformed significantly in the next five years, from being positioned as a growth pillar to one that prioritizes comprehensive living standards, analysts said.

The sector will now be reoriented around the core needs of residents going forward, marking an upgrade from simply ensuring housing availability to improving housing quality and livability, they added.

Their comments came after China in October adopted recommendations for its next five-year blueprint, in which policymakers have set a clear tone, of "promoting high-quality real estate development", and listed the task within the framework of "social welfare and public livelihood".

In 2024, the real estate and construction sectors together accounted for a combined 13 percent of China's GDP, Minister of Housing and Urban-Rural Development Ni Hong said in article published just after the release of the recommendations for formulating the 15th Five-Year Plan (2026-30).

Looking ahead, Ni stressed that China's real estate market still holds significant potential and room for development.

"Today, public demand for housing has shifted from basic access to quality living. Moreover, with an aging population, declining birth rates, regional population shifts, and evolving lifestyles, housing needs have become more personalized and diversified," Ni said.

He stressed the need to adapt to these new trends and accelerate the establishment of a new real estate development model.

Zhang Bo, head of the 58 Anjuke Research Institute, said: "The era of a sheer nationwide housing shortage is largely over, but it has been replaced by a more complex and deeply entrenched structural problem."

While overall housing supply may be adequate, the specific needs of young people and new urban migrants in major cities remain unfulfilled, Zhang said.

"The era of building first and hoping people will come is over," Zhang said. "You must first understand the composition of the population — how many recent graduates, how many skilled technicians a city is bringing in — before you pour the foundation."

The application of this data-driven strategy is most acute in the nation's high-growth hubs. Cities with a persistent net inflow of people should focus their efforts specifically on expanding the supply of government-subsidized housing, Zhang added.

According to data from the Ministry of Housing and Urban-Rural Development, during the 14th Five-Year Plan period (2021-25), China constructed more than 11 million units of affordable housing and resettlement housing, benefiting over 30 million people.

Apart from affordable housing, "improved housing" and "quality homes" are seen as the key to meeting people's needs for better living conditions and reversing the current subdued market sentiment, analysts said.

According to data from the China Index Academy, in the first three quarters of 2025, the proportion of 120-144 square meter units in 30 key cities increased to 30 percent. Large unit types have become the mainstream of the new housing market, with the share of units over 120 square meters rising across cities.

Localities should seize this opportunity to ensure adequate product supply. The supply of improved housing should be treated as a key lever for unleashing housing demand and a primary driving force for the next cycle of positive development in the real estate market, said Yan Yuejin, deputy head of Shanghai-based E-House China R&D Institute.

Beyond targeted supply in the housing market, policymakers are likely to roll back purchase restrictions that have suppressed consumer activity.

Major core cities like Beijing and Shanghai still possess room to further optimize their purchase restriction policies during the coming year, said Chen Wenjing, director of policy research at the China Index Academy.

Chen noted that this process is likely to continue gradually, avoiding any sudden, market-shocking moves.

Luo Zhiheng, chief economist and president of the Research Institute at Yuekai Securities, said that it's viable to continue to lower the five-year loan prime rate, on which many lenders base their mortgage rates.

Meanwhile, policymakers could also slash various tax and fee burdens across the home purchase process to ease the financial load on buyers, Luo added.