(Yicai) Nov. 28 -- China's real estate market may emerge from its three-year downturn and stabilize next year, contingent upon the effectiveness of economic and real estate policies, according to experts.

New home sales could stop falling in an optimistic 2025 scenario, driven by rapid implementation of policies such as urban village renovations, governmental commercial housing acquisitions, and home purchase subsidies, according to a recent report by the China Index Academy. The potential recovery also hinges on improving residents' employment prospects and income levels to boost home-buying sentiment, it added.

However, even in a more conservative scenario, the research institution anticipates a 6 percent year-on-year decline in new housing sales area in 2025.

This year, China introduced two rounds of supportive real estate policies in May and September, creating the most accommodative sales environment in over a decade. Currently, all cities except Beijing and Shanghai have lifted purchase restrictions, with mortgage down payment ratios and loan interest rates reaching historic lows.

Initial policy impacts are emerging, with signs of recovery last month. New home transactions grew 0.9 percent in October year-on-year, ending a 15-month decline, while second-hand home transactions surged 8.9 percent, marking the seventh consecutive month of growth, according to official data.

Sinolink Securities noted that stimulus measures demonstrate regulatory authorities' commitment to market stabilization, effectively boosting market confidence. The recent policy shifts have been particularly impactful, with stabilization signs expected to spread from first-tier to lower-tier cities.

China International Capital Corp. predicted that in a strong policy scenario, new and second-hand home sales could match this year's volumes in 2025, with home price declines narrowing. This outcome would require fiscal policies that improve income expectations and governmental housing acquisitions that effectively reduce inventory.

Editors: Dou Shicong, Emmi Laine