China's real estate market transitions into the era of existing housing stock

Editor's note: Zhu Fangfei is deputy director at the Institute for Public Policy of Zhejiang Province and director at the Research Department of the Institute for Public Policy of Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN.

As China's real estate market pivots from new development to the operation of existing properties, the country is entering an era defined by its housing stock. 

The old growth model, powered by the continuous expansion of newly built commercial housing, is giving way to a new phase focused on revitalizing existing homes, improving quality, and strengthening long-term management.

At a press conference held by the State Council Information Office on September 18 this year, the Ministry of Housing and Urban-Rural Development cited data from the National Bureau of Statistics showing that second-hand home transactions accounted for 27% of housing transactions in China in 2020; the figure rose to 46% in 2025 and climbed further to 52% in the first eight months of 2026. This marks a landmark transition in China's real estate market and reflects a profound shift in the sector's underlying development model. 

Over the past two decades or so, China's real estate sector followed a typical growth model driven by new development, with its core task centered on addressing the issue of ensuring adequate housing supply. During the period of rapid urbanization, people flocked to cities, creating an acute housing shortage. 

At that time, when making home-buying decisions, residents often weighed the long-term benefits of location and urban planning as well as the promise of property appreciation in new districts far more heavily than the actual quality of the properties. Housing was viewed primarily as a commodity bought and sold in a one-off transaction, while maintenance, renovation, and long-term management following construction and handover often took a back seat. 

As urbanization has slowed, China’s permanent resident urbanization rate rose from 17.9% in 1978 to 67.89% in 2025. Urban per capita housing floor area has surpassed 40 square meters. The era of an overall shortage of housing has therefore largely come to an end. 

Second-hand homes now account for more than half of all housing transactions, which indicates that the market no longer relies primarily on new housing supply to meet residential demand. Instead, value is increasingly being created by bringing second-hand homes back onto the market, matching them with buyers' needs, and improving their quality. 

As the market enters this new era of existing housing stock, homebuyers are placing higher requirements on housing quality, property management services, the community environment, and transportation infrastructure.

Home-buying decisions are increasingly driven by genuine, diverse housing needs, with the focus shifting from whether a home is available to whether it is a good place to live. The main direction for the development of the real estate industry is no longer the large-scale addition of new housing supply, but rather revitalizing the vast stock of existing homes through urban renewal, the renovation of older residential compounds, the upgrading of housing quality, and refined property management so as to unlock the value of existing assets. 

The foundations of stability in the housing market are also shifting away from the supply of new land and newly built homes toward the efficient circulation of existing homes, the maintenance of housing quality, and the optimal allocation of resources. Therefore, the rising share of second-hand-home transactions should not be seen as a sign that the real estate market is stagnating. Rather, it reflects a maturing market transaction structure and an accelerating transition in the sector's development model.

As it shifts from new development to the operation of existing housing stock, the real estate sector's underlying development model is changing accordingly. First, the industry's focus will shift from front-end development toward back-end operations. The future of real estate will no longer hinge solely on the addition of housing supply. What can truly create sustained value is back-end activities, such as renovating older residential compounds, upgrading old and dilapidated houses, redeveloping urban villages, improving the energy efficiency of existing buildings, carrying out age-friendly renovations, upgrading property management services, and operating rental housing. 

All of these will become new spaces for growth. Real estate companies need to unlock the value of existing assets by improving living quality, extending building lifespan, and enhancing community services. These efforts can also drive the development of consumption chains such as renovation, home furnishings, home appliances, elderly care and childcare, and community commerce.

More importantly, this shift toward managing existing housing stock requires real estate companies to evolve from developers into asset operators. The value of housing assets is no longer tied only to dividends from land appreciation. To a large extent, it now hinges on how well properties are managed and maintained over time. A company's competitiveness will no longer depend on how much land it acquires or how quickly it develops properties, but more on its ability to manage existing assets, attract businesses, and provide refined services. Vacant commercial, office, and industrial properties can be re-engineered into affordable rental homes, youth communities, scientific and technological parks, or community service spaces. 

Similarly, older residential compounds can be made more habitable and valuable by installing elevators, improving shared spaces, and introducing professional property management companies, thereby turning underutilized spaces into effective supply. Competition in the new-home market will increasingly be about setting industry benchmarks, with greater emphasis on product quality, reliable delivery, green and healthy living environments, smart services, and community operations capability. Companies that can genuinely deliver good homes, well-managed residential compounds, and high-quality communities will still gain market recognition.

From the perspective of urban governance, the shift to an era of existing housing stock also marks a transition from outward urban expansion to improving the quality of existing urban areas. In the past, urban growth was often driven by developing new areas and expanding land boundaries. In the future, urban renewal will need to serve as a key lever of development, helping optimize urban structures, foster new growth drivers, and improve the quality of urban life. 

Revitalizing existing housing stock can reduce the resource consumption associated with large-scale demolition and reconstruction. It can also help cities optimize spatial structures within limited land resources, bridge gaps in public services, and elevate the quality of community life.

This year, the State Council issued an urban renewal plan for the 15th Five-Year Plan period (2026-2030), which, for the first time, sets quantitative targets and tasks for urban renewal across the country. The plan makes clear that the policy focus of the CPC Central Committee and the State Council is shifting from building new facilities to renovating existing ones, and from scale expansion to upgrading the quality of existing urban areas. 

This also signals a broader shift in China's real estate market away from new development and toward the revitalization of existing assets, quality enhancement, and refined operations. Therefore, continuously optimizing the allocation of housing resources and improving the living environment will be essential to ensuring steady and healthy growth of the property market and fostering a virtuous cycle of interaction between the real estate sector and China's new urbanization process.