UOB Kay Hian
Report Date: 29 May 2025

China Property Market Update May 2025: Suzhou New Home Sales Improve but Market Sentiment Remains Fragile

Overview: May 2025 Property Sector Highlights

In May 2025, China’s new home sales saw a month-on-month recovery, with notable improvements across 28 monitored mainland cities. However, despite the uptick, overall market sentiment remains subdued, with ongoing policy support deemed crucial to sustain momentum. The second-hand home market continues to exhibit resilience, primarily due to flexible pricing tactics. UOB Kay Hian maintains an OVERWEIGHT stance on the sector, highlighting CR Land as the top pick.

Key Findings from Suzhou Residential Market Channel Check

UOB Kay Hian conducted visits to three residential projects in Suzhou’s Xiangcheng district, including developments by local government financial vehicles (LGFVs), CIFI Holdings, and China Railway Construction Corporation (CRCC). These on-the-ground checks revealed several critical trends:

• Significant Discounts: Discounts in Suzhou are notably larger compared to other regions, with reductions supported by both developers and local government talent subsidies. Discount rates ranged from 8% to as high as 20% on certain projects.
• Strong Demand for Small Units: Units below 120 sqm achieved the highest sell-through rates (60–80%), underscoring robust demand for smaller, entry-level housing.
• Shrinking Share of New Home Sales: The proportion of new home sales relative to total residential transactions in Suzhou has declined sharply, reflecting a shift of first-time buyers to the secondary market and a reduction in new land supply.

National New Home and Secondary Market Sales Trends

• New Home Sales: In May 2025, average daily sales of new homes (by gross floor area, GFA) in 28 cities rose by 11.6% month-on-month (MoM) and 2.4% year-on-year (YoY). Tier 1 cities led the recovery, with respective MoM increases in Tiers 1/2/3/4 of 6.7%, 11.5%, 14.6%, and 19.3%. YoY, Tier 1 and Tier 3 cities posted gains, while Tier 2 and Tier 4 cities saw declines or moderate growth.
• Second-Hand Home Transactions: In Tier 1 cities (excluding Guangzhou), average daily sales dropped 13.5% MoM but climbed 27.6% YoY. Beijing, Shanghai, and Shenzhen all registered MoM declines in unit sales but substantial YoY gains. The MoM drop was mainly attributed to the Labour Day holiday.
• Price Flexibility Drives Secondary Sales: Listing prices for second-hand homes in Beijing, Shanghai, Guangzhou, and Shenzhen fell moderately (0.6%–1.1% MoM) in late May, which helped maintain transaction volumes despite broader market headwinds.

Top Sector Picks and Peer Comparison

UOB Kay Hian’s sector picks are summarized in the table below:

Detailed Project Insights: Suzhou Residential Developments

UOB Kay Hian’s field research highlighted three key projects in Suzhou’s Xiangcheng district:

1. Stream Villa (溪前雅居)

• Site Area: 99,161 sqm
• Gross Floor Area (GFA): 268,330 sqm
• Plot Ratio: 2.7
• Unit Sizes: 120/140/225 sqm
• ASP on GFA: RMB 20,000 (120 sqm), RMB 24,000 (140 sqm), RMB 26,000 (225 sqm)
• Land Cost: RMB 8,500/sqm
• Discount to Registration Price: Up to 20%
• Efficiency Ratio: ~90%
• Sales Launch Date: December 2024
• Expected Delivery: September 2026
• Sell-through Rate: Only ~30% overall due to large supply of high-rise units and incomplete infrastructure, despite scenic location near a lake.

2. Fourth Forest (蠡棠森屿)

• Site Area: 83,664 sqm
• GFA: 203,653 sqm
• Plot Ratio: 2.4
• Unit Sizes: 150/220 sqm
• ASP on GFA: RMB 25,000 (150 sqm), RMB 30,000 (220 sqm)
• Land Cost: RMB 16,000/sqm
• Discount to Registration Price: 10–15%
• Efficiency Ratio: ~95–125%
• Sales Launch Date: April 2025
• Expected Delivery: December 2026
• Sell-through Rate: 60–70% overall, helped by proximity to the metro (700m), high efficiency layouts, complimentary terraces, and comprehensive infrastructure. 60% of buyers are from Suzhou Industrial Park; 10% from Shanghai.

3. CRCC Artistic Mansion (花语云萃)

• Site Area: 127,600 sqm
• GFA: 454,800 sqm
• Plot Ratio: 3.6
• Unit Sizes: 130/145/180 sqm
• ASP on GFA: RMB 23,000 (130 sqm), RMB 25,000 (145 sqm), RMB 30,000 (180 sqm)
• Land Cost: RMB 17,500/sqm
• Discount to Registration Price: ~10%
• Efficiency Ratio: ~88%
• Sales Launch Date: July 2022
• Expected Delivery: July 2025
• Sell-through Rate: 85% overall. However, the remaining units are selling slowly due to limited discounts, despite strong sales momentum at launch and comprehensive infrastructure (600m to metro station).

Market Dynamics: Shrinking Share for New Homes and Policy Implications

In the first four months of 2025, new homes accounted for only 26% of Suzhou’s total residential sales, a significant drop from around 50% in 2022-23.
The decline is attributed to:

• First-time buyers increasingly favoring the second-hand market due to limited supply of 100–120 sqm units.
• New land supply for residential use decreasing 45% YoY to 5.5 million sqm in 2024.

Sector Outlook and Policy Support

UOB Kay Hian reiterates an OVERWEIGHT stance on the China property sector.
While new home sales are showing signs of recovery, buyer sentiment remains fragile due to tariff risks and the fading impact of supportive policies implemented since September 2024.
Further policy support is anticipated to be the next catalyst for sustained recovery.
CR Land is named as the top pick, given its strong fundamentals and defensive qualities.

Conclusion: Defensive Play With Upside Potential

The China property sector remains a crucial defensive play for investors in 2025. Despite short-term headwinds and shifting buyer preferences, the sector is expected to benefit from continued government commitment to stabilizing domestic demand and ongoing policy support. Investors are advised to monitor further policy developments closely, as these will likely provide the next boost to sector sentiment and sales momentum.

Key Contact Analysts

• Jieqi Liu: jieqi.liu@uobkayhian.com.hk
• Damon Shen: damonshen@uobkayhian.com