Title: China Index Academy expects a long inventory reduction for the real estate market this year, with sales expected to drop by 6%

The latest report from the China Index Academy reveals that while new home prices in 100 cities are expected to slightly rise by 2.58% in 2025, second-hand home prices are projected to plummet by 8.36%, showing a significant divergence between the two trends. Looking ahead to 2026, the report predicts that the national sales area and amount of new homes will continue to decline by about 6%, with the market overall in a prolonged "de-stocking" phase. Future purchasing power will be highly concentrated in "good cities and good houses," with an increasing proportion of improvement-driven demand, but weak expectations for residents' income will still constrain the overall market recovery. Reflecting on 2025, the China Index Academy indicates a significant structural differentiation in the market: the cumulative price of newly built residential properties in 100 cities rose by 2.58%, driven by the entry of high-end projects in core cities in the fourth quarter, with a quarterly increase of 0.93%; at the same time, the cumulative price of second-hand residential properties in 100 cities fell by 8.36%, with the decline expanding by year-end. This price divergence stems from profound changes in supply and demand dynamics—most regions have seen a significant reduction in new construction and land transactions, leading to limited new home supply that supports prices; meanwhile, the second-hand housing market faces immense inventory, with sellers generally "trading price for volume," resulting in continued price pressure. The China Index Academy states that the market's downward adjustment has persisted for about four and a half years, with new home sales area declining by about 50% from the peak in 2021. Alongside the market scale retreat, the characteristics of home buying demand have fundamentally changed—with an increasing proportion of improvement-driven demand. The China Index Academy points out that the purchasing decisions of these buyers are more easily influenced by income expectations and market confidence. However, current expectations for residents' employment and income remain weak, which has become a core factor constraining the rapid recovery of demand. Therefore, the China Index Academy notes that future market opportunities will be more structural, concentrated in "good cities + good houses." The Academy predicts that policy support, economic improvement, and improved income expectations will be key to demand recovery. It is anticipated that the prices of newly launched projects will remain stable and above the market average, but prices of early-stage projects still face pressure, and the overall average price of new homes may continue to slightly decline. Under neutral circumstances, the sales area of newly built commercial housing nationwide is expected to decline by 6.2% year-on-year in 2026, while sales revenue is projected to drop by 6.8% year-on-year.