Core Insights - The Chinese real estate market in 2026 may not simply follow a downward trend but could exhibit a more complex pattern of differentiation, influenced by various factors such as policy changes, supply-demand dynamics, and population movements [1][7]. Policy Changes - Since August 2023, local governments have implemented unprecedented easing policies aimed at lowering home purchase barriers, such as allowing the use of housing provident funds for down payments on second-hand homes and introducing measures to alleviate developers' financial burdens [1][2]. - The central government has signaled a commitment to stabilize the real estate market, suggesting that more supportive policies may be forthcoming [1]. Supply and Demand Dynamics - There has been a significant decline in new housing starts, with a 19.5% year-on-year decrease in new construction area from January to August 2025, and an 18.3% drop in residential new starts [2]. - Concurrently, cities like Hangzhou and Chengdu are experiencing rapid population growth, with Hangzhou adding 195,000 residents and Chengdu 237,000 in the first half of the year, leading to an increasing supply-demand gap that is expected to push up housing prices in 2026 [3][6]. Inflation and Investment Trends - Global inflation pressures are anticipated to persist, with forecasts suggesting an average global inflation rate of 3.9% in 2026, which may drive investment into real estate as a hedge against inflation [5]. - The demand for housing in core cities is expected to increase as individuals seek to protect their assets from inflation, even if property prices do not rise significantly [5]. Population Movement and Urbanization - The "Matthew Effect" in population movement is becoming more pronounced, with traditional first-tier cities like Beijing and Shanghai seeing slower population growth, while new first-tier cities like Hangzhou and Changsha attract more residents [6]. - This trend will likely lead to stronger housing demand in cities with continuous population inflow, supporting price increases [6]. Developer Strategies - Developers are shifting their focus from quantity to quality, emphasizing high-quality housing projects and improving standards and amenities [6]. - This change in supply strategy is expected to significantly impact the price structure of the housing market in 2026, with high-quality properties potentially commanding higher prices while ordinary homes may struggle to attract buyers [6]. Conclusion - The real estate market in 2026 is expected to reflect a complex interplay of factors, with significant opportunities in new first-tier cities experiencing population growth, while areas with declining populations may see substantial price drops [7][10].