Beijing: China’s real estate market, once considered a cornerstone of the nation’s economic strength, showed renewed signs of weakness as new home prices recorded their sharpest monthly decline in nearly a year. The latest data released by the National Bureau of Statistics (NBS) revealed that new home prices in September fell by 0.4 percent compared to the previous month, marking the fastest pace of decline in eleven months and highlighting the persistent fragility in the housing sector.
Of the 70 major cities surveyed by the NBS, 63 reported month-on-month price drops, while 61 recorded year-on-year declines. On an annual basis, prices slid 2.2 percent in September, following a 2.5 percent drop in August, indicating that the market continues to struggle despite a series of policy interventions. Tier-one cities such as Beijing, Shanghai, Shenzhen, and Guangzhou also faced downward pressure, while lower-tier cities experienced more pronounced declines, underscoring the depth of the downturn across all segments of the market.
The persistent slump in housing prices is adding to China’s broader economic challenges, threatening to derail fragile post-pandemic growth. The real estate sector, which directly and indirectly accounts for roughly a quarter of China’s GDP, has long been a major driver of investment, employment, and local government revenue. However, falling home values are dampening consumer sentiment, curbing spending, and weakening the “wealth effect” that once fueled domestic demand.
Economists warn that the property slowdown could continue to weigh heavily on China’s growth trajectory unless substantial and targeted measures are implemented. The current pattern of declining sales, cautious buyers, and distressed developers suggests that confidence remains fragile.
Many Chinese property developers have been struggling under mounting debt since the government’s 2021 clampdown on excessive borrowing. The crisis, which began with the defaults of major firms such as Evergrande and Country Garden, has since spread through the sector, resulting in unfinished housing projects and growing public frustration. The inability of developers to deliver presold homes has further eroded buyer confidence, creating a self-reinforcing cycle of weak demand and price declines.
The financial distress among developers also threatens the stability of China’s broader financial system. Banks and shadow lenders with exposure to property loans face rising default risks, while local governments reliant on land sales for revenue are under severe fiscal pressure.
In response to the prolonged downturn, Chinese authorities have rolled out a series of measures, including lowering mortgage rates, easing down payment requirements, and relaxing home purchase restrictions in several cities. However, these efforts have so far failed to revive demand or reverse the downward trend.
Analysts believe that the next phase of intervention will likely be more comprehensive. They expect Beijing to integrate stronger housing-market support measures into its upcoming 2026–2030 Five-Year Plan, possibly including large-scale developer bailouts, guaranteed project completions, or new urban renewal incentives. Such initiatives could play a critical role in stabilizing sentiment and reviving the sector’s momentum.
According to the NBS data, secondary home prices fell by 3.2 percent year-on-year in Tier-one cities, 5.0 percent in Tier-two cities, and 5.7 percent in Tier-three cities. The sharp decline in lower-tier cities home to smaller populations and weaker job markets highlights the uneven nature of the crisis. While China’s largest cities continue to attract limited investment, many smaller urban centres are witnessing stagnant demand and excess inventory.
September and October are typically strong sales months due to seasonal promotions and holiday buying trends. Yet, this year’s data shows little sign of recovery, reinforcing fears that the property slump has moved beyond a temporary dip to a structural slowdown.
The sustained weakness in the housing sector poses broader challenges for Beijing. Beyond the immediate economic implications, it risks undermining household wealth, regional employment, and even social stability. Millions of Chinese families view homeownership as a primary means of securing their financial future, and falling prices could have a long-lasting psychological impact on spending habits.
Moreover, as land sales decline, local governments are finding it increasingly difficult to fund infrastructure projects and social programs, adding fiscal strain to regions already burdened with debt. The central government now faces the dual challenge of stimulating growth while preventing a full-blown financial contagion from the property market’s troubles.
Observers expect Beijing to continue walking a delicate line between stabilizing the market and preventing moral hazard among heavily indebted developers. The upcoming Central Committee meeting of the Communist Party, where plans for the next economic roadmap will be discussed, may offer clues on the future direction of housing policy.
Until then, the continuing fall in new home prices serves as a stark reminder that China’s real estate sector once the engine of its rapid urban transformation is now its most significant source of economic vulnerability.