(Jan 31): China’s residential sales resumed falling in January, suggesting the property sector still has some way to go before it can show a sustained recovery.

The value of new-home sales from the 100 biggest real estate companies dropped 3.2% from a year earlier to 227.6 billion yuan (RM137.7 billion), after being flat in December, according to preliminary data from China Real Estate Information Corp. 

Beijing is struggling to revive the property market amid weak domestic demand and a worsening job situation. While the housing sector has picked up modestly on the back of government support, improvements have mostly been in the second-hand market as buyers remain concerned about developers’ ability to finish projects on time. 

“New-home sales will likely see lingering challenges in 2025,” said Cao Jingjing, a researcher at China Index Holdings. “Homebuyers’ outlook for their income hasn’t materially improved, and sales in the used-home market have squeezed the new-residence sector.” 

The January decline may have been exacerbated by an unfavourable comparison with last year, when the Lunar New Year holiday fell in February. This year, China began an eight-day holiday on Jan 28. 

China unleashed a raft of measures to boost the residential market in recent months, including cutting borrowing costs on existing mortgages, relaxing buying curbs in big cities and lowering taxes on home purchases. More efforts may follow as Beijing tries to shore up an economy facing the threat of US tariffs under President Donald Trump.

“In view of the rising geopolitical tensions, we expect the Chinese government to prioritise stabilising the property market,” UOB Kay Hian analysts Jieqi Liu and Damon Shen wrote in a note last week. “Potential policy catalysts, especially fiscal easing, remain key drivers of sales.” 

Homebuyers’ confidence towards developers could be eroded again by an unexpected management overhaul at China Vanke Co. Earlier this week, Vanke’s two top veteran executives stepped down after the company warned of a record US$6.2 billion (RM27.2 billion) loss. An official from Shenzhen Metro Group Co, its largest state shareholder, will take over as chair. 

Analysts remain skeptical that the housing market will turn a corner this year. Fitch Ratings has estimated prices will fall by 5% in 2025 and new-home sales will decline 10% by area. 

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