By Liangping Gao and Ryan Woo
BEIJING (Reuters) -China’s new-home prices were expected to decline more slowly in 2025 than previously forecast, and slip a further 0.5% in 2026, a Reuters survey showed, as policy support tempers the downturn but shows few signs of ending the protracted property crisis.
The August poll projected a 3.8% decrease in 2025, an improvement from the 4.8% decline forecast in May. Prices were set to return to modest 2% growth in 2027. The survey, conducted from Aug.26 – Sept. 3, gathered responses from 11 economists.
Forecasts for 2025 remained widely dispersed, from a 15% drop to a 1.5% decline, reflecting uncertainty on the timing and strength of any demand recovery.
Property activity was expected to remain weak for the remainder of this year. Respondents projected a 7.5% fall in property sales in 2025, a sharper contraction than the 5.0% decline predicted in May. Real estate investment was forecast to shrink 11.0%, worse than the 8.4% decrease expected in the previous poll.
The prolonged downturn, triggered by a deleveraging campaign that exposed strained developer balance sheets, has led to a wave of defaults, stalled projects, and a significant reduction in land purchases.
A series of support measures, including lower down-payment requirements, reduced mortgage rates, and programs to absorb unsold homes and idle land, have yet to yield significant improvements, as the sector continues to search for a bottom.
The year-on-year declines in property investment and sales area last year were 10.6% and 12.9%, respectively, official data showed.
Weak income expectations, elevated unemployment pressures, and high listings in the secondary market continue to dampen buyer sentiment, particularly in smaller cities burdened with high inventory.
“Fitch believes the property sector will continue to face many structural challenges in the medium term, including demographic shifts, low housing affordability and high unsold inventory in many parts of the country,” said Lulu Shi, director, Asia-Pacific corporate ratings at Fitch Ratings.
Most analysts expect housing prices to stabilise no earlier than the second half of 2026 or 2027, about half a year later than expectations three months ago.
Stabilising the market may require a shift from incremental policy easing to direct intervention by the central government, said Gao Yuhong, rating director of industrial and commercial enterprise rating department at CSCI Pengyuan Credit Rating, adding fiscal funds should be used to purchase unsold homes and idle land for conversion into social housing.
“To bring the destocking cycle back to a healthy 12-month level, roughly 600-700 million square meters of unsold inventory must be absorbed… the total funding required would be about 5 trillion yuan($699.02 billion),” said Gao.
(Other stories from the Q3 global Reuters housing poll)
($1 = 7.1529 Chinese yuan)
(Reporting by Liangping Gao and Ryan Woo; Additional reporting by Shuyan Wang; Editing by Shri Navaratnam)
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