Rising transaction volumes in major cities, plus a headline return to profit by debt-ridden developer Country Garden Holdings (HKEX: 02007), could be flagging patchy signals of a long-awaited turning point from China’s beleaguered property market.
According to a report by HSBC, a modest pickup in secondary home sales and targeted policy easing in cities such as Shanghai have begun to support improving sentiment towards the sector.
However, analysts and company disclosures suggest that much of the apparent improvement remains subject to policy support and accounting adjustments rather than a sustained recovery in core housing demand.
The latest data points to a tale of two different markets.
In China’s four top-tier cities - Shanghai, Beijing, Guangzhou and Shenzhen - transaction volumes have risen about 20% over the same period, while prices for second-hand homes have largely stabilised in recent weeks.
HSBC data suggests that while declining listings since December suggest sellers are under less pressure to exit, buyers are gradually re-entering the market.
“A functional secondary market brings more participants into the market, reinforcing the stability of newly discovered transaction prices,” Michelle Kwok, HSBC’s head of Asia real estate research, wrote in a recent client note.
The recent shift may reflect early effects of policy easing, with Shanghai last month easing home purchase restrictions and introducing tax exemptions, which has prompted renewed interest, particularly from younger and non-local buyers.
Nevertheless, analysts remind the market that confidence still remains shaky.
HSBC also reminds investors that without improved activity in the secondary market, it’s difficult to establish transparent price benchmarks.
This is seen as integral to restoring buyer confidence after a prolonged downturn triggered by developer defaults and falling prices.
Developer balance sheet strain
Against this backdrop, Country Garden reported a net profit of 3.26 billion yuan (US$472 million) for 2025, reversing a 32.8 billion yuan loss a year earlier, according to its latest annual report.
Revenue, however, fell 39% to 155 billion yuan, marking a fourth consecutive annual decline.
Shades of a turnaround in Country Garden’s fortunes is welcome relief for shareholders who have witnessed the stock lose its perch as China's top home builder by sales to 16th due to severe debt crisis and a 70% sales slump in 2024.
Underpinning the turnaround were non-cash gains of more than 80 billion yuan linked to a sweeping debt restructuring, which covered US$17.7 billion in offshore liabilities and 13.77 billion yuan in onshore bonds.
Excluding these gains, the company remained loss-making, weighed down by 44.5 billion yuan in asset impairments tied to unsold or unfinished projects.
Financial disclosures highlight ongoing stress, with the company reporting a gross loss of 43.1 billion yuan for 2025, while its auditor flagged “material uncertainties” about its ability to continue as a going concern, citing high short-term debt obligations relative to cash holdings.
Debt restructuring buys time, not growth
Country Garden has reduced its interest-bearing liabilities by 42% to 148 billion yuan and extended maturities on restructured offshore debt to as long as 11 years, with financing costs lowered to between 1% and 2.5%.
These measures have eased immediate liquidity pressures and enabled the company to continue project delivery, completing about 170,000 homes in 2025.
While the restructuring has helped the company get back on its feet, analysts suspect these developments don’t yet signal a recovery in underlying sales, which remain nowhere near peak levels seen in 2021.
Cautious demand recovery
Meanwhile, Beijing has continued to roll out measures aimed at stabilising the housing market, including easing purchase restrictions and expanding financing access through a “whitelist” mechanism for developers.
These policies are intended to reduce inventory, support project completion and restore buyer confidence.
There are early indications that sales may be bottoming out, with Country Garden’s Country monthly sales showing signs of recovering at a low base in early 2026, following a prolonged, steep decline in 2024.
Over the last four months, Country Garden’s monthly sales have sat consistently within the 2.2 billion yuan to 2.7 billion yuan range.
While these figures represent less than one-tenth of the company’s February 2021 peak of 46.65 billion yuan, renewed stability suggests a potential bottoming out in their business operations.
However, despite encouraging signs of green shoots, industry participants do not expect a rapid rebound.
“The market won’t return to pre-2020 levels any time soon,” said Song Yulin, a manager at property agency Lianjia, reflecting a consensus that any recovery will be gradual and policy-dependent.
For now, China’s property sector appears to be entering a phase of tentative stabilisation rather than expansion, with improved transaction activity and reduced financial stress offset by weak demand fundamentals and lingering balance sheet risks among developers.
