China Property Signals (#32): A New Sentiment Index For The Housing Market Suggests Macro-Property Indicators Should Show Improvements

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Over the last couple of months, at Real Estate Foresight (REF), we have been working on a new market sentiment indicator for the China housing market, and this post gives a quick preview of the findings.

This sentiment index is based on LLM-assessed sentiment in the curated set of local online news covering the property market (both primary and secondary residential sectors). It builds on some of the relatively new literature and best practices in this area (see a few references further below).

The purpose of this index is to answer the question "How is the market being described in the news today, relative to normal?" A rising trend means coverage across developers, prices, transactions, policy, and buyer confidence is turning more positive than each news source's typical tone. A falling index means coverage is turning more cautious or negative.

Here, we are showing the data from January 1, 2024, to May 31, 2026 (our full data set goes back to 2019, some of it still in progress), which indicates a clear improvement in the sentiment in 2026:

Our review of the historical 'performance' of the index vs the actual property metrics (especially new home sales) suggests this index can serve, under certain conditions, as a predictor of what the actual official data will show (directionally) for a given period. The official data is typically released a few weeks after the month-end, but this type of index can run daily, with a 30-day rolling figure.

The official NBS macro-property data for May is due next week.

Some references:

Bank for International Settlements. BIS Working Paper No. 1294, October 2025: Parsing the pulse: decomposing macroeconomic sentiment with LLMs.

Hong Kong Monetary Authority. Research Memorandum, January 2025: A Generative Artificial Intelligence Approach To Tracking Mainland China’s Housing Market Sentiment  Using Social Media Data.

International Monetary Fund. Working Paper, December 2024: Chinese Housing Market Sentiment Index: A Generative AI Approach and An Application to Monetary Policy Transmission.