Chinese Buyers Prefer Existing Housing Over New Development

We are excited to announce that Jonathan Miller, who has long authored the most authoritative report on the residential real estate market, is partnering with The Real Deal. Below, you’ll find his Housing Notes column, which will now run on our site several times a week. In addition, Miller’s quarterly report for New York City, which he published through Douglas Elliman for more than three decades, will now be “The Real Deal report, prepared by Jonathan Miller.” Miller’s data venture, Streetmatrix, which provides hyperlocal data, will provide statistics to TRD Data subscribers.

— TRD editors

In China, a “primary” market means new development

Source: Wind, Goldman Sachs Global Investment Research

Given the recent summit between China and the U.S., I thought it would be interesting to look at the Chinese housing market. This week’s meeting was a high-stakes but limited breakthrough summit. It was a bid to stabilize a deteriorated relationship, heavy on symbolism and “guardrails,” light on deep concessions.

The Chinese residential new development market has been significantly underperforming since its peak in 2021. After the developer distress and “pre-sale delivery” scares since the pandemic, many households no longer want to take on construction or be subjected to the completion risk embedded in buying off a floor plan. During the pre-pandemic Chinese development frenzy, three and four-generation families would pool their resources to buy a new property. Prices fell, and multi-generational family savings were wiped out.

We went to Shanghai in 2015 and 2016, where I moderated a couple of panels at a TRD forum during the city’s new development boom. My wife and I walked around the city with a tour guide, which made the trip even better. I innocently asked the guide what the market was like for existing (secondary) homes, and the guide gave me a blank stare. I asked several locals whom I met, and all gave me that same stare, which gave the impression that buying and selling the existing housing stock was not much of an economic driver — the real action was in the new development space (primary market).

Today, their developers are constrained by financing costs, and often cannot cut prices as aggressively as individual owners without triggering more distress, so new-home prices tend to be stickier even as resale values slide. This practice widens the relative value appeal of existing homes.

One of my favorite real estate sayings is that housing prices are stickier on the downside.

China has a large glut of primary (new development) inventory built up over years of credit-fueled construction, and completed primary inventory has continued to rise, which depresses demand for yet more new units. An existing apartment reveals the value, the building quality, neighborhood services and actual occupancy in its price, which matters more when confidence in developers’ promises has eroded. In a confidence shock, households prioritize certainty of delivery and livability over the theoretical benefits of new stock. In this environment, many households that still want to transact gravitate to existing stock rather than committing to additional off‑plan supply.

And a “secondary” market means existing home sales

Literally “second‑hand house,” the mainstream term for resale/existing homes as opposed to new‑build units directly from developers.

China’s housing ministry now explicitly frames the next five years as a period in which second‑hand homes will play a much bigger role, as cities work through inventories. This includes policies to repurpose existing homes for affordable housing and other uses, indirectly supporting liquidity in the existing-home segment. Existing home sales in China are performing on par with pre-pandemic levels, unlike newly developed homes. After the 2021 developer liquidity crisis and the surge in “stalled” or unfinished projects, buyers became much more wary of presales and of new developments in general. Beijing has had to launch national campaigns just to ensure pre‑sold homes are delivered, highlighting why many households prefer a lived‑in unit they can inspect and occupy immediately.

In many regions of China, there are more second‑hand transactions than new‑home sales, and big cities like Shanghai have seen sharp increases in existing‑home deals recently, even while new‑home sales and investment keep falling at a national level. That pattern is consistent with a market moving from a build‑and‑sell model to one where turnover of the existing stock dominates.

Resales are declining in price more than new development

In large coastal cities where demand is relatively strong, resale prices per square meter often run about 10 percent to 15 percent below those of nearby new projects, especially for five- to ten‑year‑old stock in good locations. In interior and smaller cities with bigger overbuilding and weaker demand, discounts of 20 percent to 30 percent (or more for older, less desirable stock) are common. Official national indices show new‑home prices declining modestly year on year, while second‑hand prices have fallen faster, implying a widening negative gap for existing homes even where headline averages look similar. Developers tend to resist very steep price cuts because it worsens collateral values, so they “overprice” relative to the resale market and instead rely more on subsidies, decorating packages and mortgage support. Individual sellers have more flexibility to cut to clear, which mechanically deepens the new vs. second‑hand price spread.

Wind is a primary data source for Chinese housing

Wind Information Co. (often just “Wind”) is a Shanghai‑based financial data and software company that provides real‑time and historical data on equities, bonds, mutual funds, commodities, derivatives, and macro indicators focused on China. They were the primary resource for those earlier Goldman Sachs charts I shared.

Final thoughts

China’s housing downturn isn’t just cyclical; it signals a transition from a developer-driven, leverage-fueled growth model to a more conventional, transaction-based housing market where liquidity and price discovery come from existing stock. That shift weakens developers’ historical dominance and reduces the sector’s role as a primary engine of economic growth, while increasing the importance of household balance sheet health and market transparency. It also suggests future policy will focus less on stimulating new construction and more on clearing inventory, stabilizing prices and restoring buyer trust, effectively redefining housing from a speculative growth asset into a consumption-oriented good.

The actual final thought — Sometimes you just have to focus on hitting the target.
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