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Residential communities in Wuhan, Central China’s Hubei Province File photo: VCG

In this year's Government Work Report delivered and approved during the two sessions, China underscored its commitment to ensuring stability in the real estate market, as highlighted in the section on Overall Requirements and Policy Orientations for Economic and Social Development in 2025. The choice of wording reflects the country's strong emphasis on the importance of the real estate sector.

The government's strong focus on the real estate sector will help boost market confidence, facilitate the prompt implementation of relevant policies for the sector, and enhance coordination among different departments. It demonstrates the Chinese government's commitment and assurance in fostering the long-term healthy development of the housing market, which is undoubtedly a significant positive for the industry.

Fueled by a range of pro-housing policies, China's property sector began to show positive changes in the fourth quarter of 2024.

Signs of gradual stabilization are now emerging in the real estate market in the first-tier and some second-tier cities. It is expected that the inventory-to-sales ratio of commercial housing will steadily decline in 2025, with the largest cities likely to experience stabilization ahead of smaller ones.

As of the end of 2024, China's real estate investment had reached 10 trillion yuan ($1.4 trillion), with national real estate sales for the year also nearing 10 trillion yuan. Together, the housing sales and investment contribute around 15 percent to the GDP.

Considering the related industries tied to real estate, including construction materials, durable consumer goods, and corresponding real estate-related services, the sector's indirect contribution to the overall economy is even larger. Therefore, stabilizing the real estate market is of great importance for enhancing China's economic performance.

The real estate market in 2025 is expected to see marginal improvements. The decline in property sales is expected to slow considerably. Sales of existing homes are anticipated to outpace those of new homes. Additionally, more cities are likely to show signs of stabilization following a period of declining housing prices.

It is expected that this year, the price of newly built commercial housing will drop by about 1 percent year-on-year, while the price of second-hand homes may decline by roughly 2 percent year-on-year, marking a significant narrowing of the decline in housing prices compared to 2024.

The Government Work Report noted that China will make continued efforts to stem the downturn and restore stability in the real estate market. China is expected to ramp up efforts to introduce policies and measures to stabilize and shore up the real estate market in 2025.

First, the country's intensifying efforts to redevelop urban villages and renovate old and dilapidated houses are expected to support market demand and promote investment.

Second, the implementation of the "white list" mechanism will effectively improve the liquidity situation of real estate developers. This will better meet the construction needs of real estate projects and help the developers mitigate their debt risks.

China has entered a new stage of urbanization, and the real estate industry still has considerable growth room. Real estate remains an important component of the national economy. The sector's recovery has gained momentum in recent months, with increased transaction activity and renewed development vitality, signaling a shift toward a healthier and more sustainable growth trajectory.

The current round of adjustment in the real estate market is approaching its end, and the market is expected to continue its recovery momentum with stronger policy support in 2025. Key industry indicators are expected to improve or see a narrowing of declines, the risk exposure of real estate developers will decrease, and the overall market confidence will continue to recover.

The author is director and chief economist of Guangkai Chief Industry Research Institute. bizopinion@globaltimes.com.cn

Lian Ping Photo: Courtesy of Lian Ping