The picture shows the construction site of Shanghai real estate developer Hongkong Land on November 4, 2024.
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A Reuters survey showed that China’s housing price decline is expected to slow this year and next and stabilize in 2026 as a series of support measures to reverse the years of real estate slump begin to bear fruit.
Analysts participating in the survey now expect home prices to fall 6.0% in 2024, compared with an 8.5% decline in the last survey in August. The annual decline in new home prices in October was the largest since 2015, but the decline narrowed from the previous quarter.
Prices are likely to fall by 2.0% in 2025 and rise by 1.6% in 2026, compared with an increase of 0.0% in the last survey.
China has been stepping up efforts to contain a real estate downturn that began in 2021, which has squeezed financing for local governments and discouraged homeowners and businesses associated with an industry that once accounted for a quarter of China’s economic activity.
In late September, policymakers changed regulations for the real estate industry, including lowering minimum down payments to 15% for all housing categories and easing restrictions on home purchases.
The Treasury Department introduced tax cuts in November to stimulate demand. But a broader crisis in consumer and investor confidence has tightened the wallets of would-be buyers.
“The current decline in housing prices in the real estate cycle is mainly affected by supply and demand and expectations for home purchases.” Gao Yuhong, credit rating manager of CSI Pengyuan, said.
“It is expected that housing prices in first-tier cities will be the first to stabilize in the second half of next year,” Gao said.
The poll of 13 analysts conducted from November 15 to 28 showed that real estate sales are expected to shrink 5.0% in 2025, down from the 10.0% decline forecast in the previous poll, while investment is expected to fall 8.0%, lower than the previous poll. A 7.5% decline was forecast for August.
“Since the end of September, under the combined effect of monetary, fiscal, real estate and other policies, home sales have rebounded significantly in October, showing a stabilizing and improving trend,” said senior analyst Wang Xingping at Fitch Ratings.
“The policy of ‘allowing special-purpose bonds to be used to purchase land and existing housing’ is an important measure to destock and stabilize the property market, but continued efforts are still needed,” Wang added.
