China's Tier-1 Cities See 0.2% MoM Rise in New Home Prices in May; Tier-2 and Tier-3 Cities Continue to Decline
0xBroomberg
China's May housing data shows tier-1 cities rising — new homes up 0.2% m/m, resale up 0.4% — while tier-2 and tier-3 keep sliding. The recovery is still a tier-1 story, not a national one.
How much did tier-1 cities gain, and who led?
Tier-1 new-home prices rose 0.2% m/m, up 0.1 pp from April. Shenzhen led at +0.4%; Shanghai and Guangzhou each rose 0.2%.
The lone decliner was Beijing, down 0.2% m/m on new homes.
Resale prices across tier-1 rose 0.4% m/m. Shenzhen and Shanghai both gained 0.6% — the two most active markets.
This means → within tier-1, buyer confidence is strongest in Shenzhen and Shanghai; Beijing is still working through inventory.
Why are tier-2 and tier-3 cities still falling?
Tier-2 new-home prices fell 0.1% m/m, flat with April. Tier-3 fell 0.4%, widening by 0.1 pp.
Resale was weaker: tier-2 down 0.2%, tier-3 down 0.4% — no narrowing in either.
In plain terms = the policy warmth stops at the tier-1 boundary. Lower-tier cities still can't move inventory, and the pressure is growing.
What does the year-on-year picture show?
Year-on-year, every tier is still negative — tier-1 new homes down 1.7%, tier-2 down 3.2%, tier-3 down 4.2%.
Resale gaps are larger: tier-1 y/y down 5.8%, with Guangzhou at −7.0% and Beijing at −6.5%.
The positive signal: declines are narrowing — tier-1 new-home y/y drop shrank by 0.4 pp, resale by 1.0 pp.
This means → prices haven't recovered, but they're falling more slowly. For existing homeowners, "bleeding slower" is more accurate than "healing."
Why is Shanghai the sole outperformer?
Among all tier-1 cities, Shanghai is the only one with positive y/y new-home prices, up 3.2%.
By contrast, Shenzhen is still down 4.5% y/y, Guangzhou −3.3%, Beijing −2.1%.
This reflects a stark supply-demand divergence even within tier-1 — Shanghai's demand drivers (population inflow, high-end upgraders) are materially stronger than those of its three peers.
Are more cities joining the upturn — or fewer?
Of the 70 major cities, 16 saw m/m new-home price gains, up 2 from April — growing, but still under a quarter of the total.
For resale, only 10 cities rose m/m, down 2 from April.
In plain terms = the recovery footprint is still very narrow. Most cities remain on a downward price path.
What to watch next?
NBS senior statistician Yang Caifang noted that tier-3 y/y declines in both new and resale homes are still widening — destocking pressure in lower-tier cities has not eased.
This means → judging whether the market has truly stabilized requires tier-2 and tier-3 data to inflect, not just tier-1 gains.
The near-term signal to track: when tier-3 y/y declines stop widening — that is the most direct test of whether policy effects are filtering down.
Content is for reference only, not financial advice.