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China’s residential property prices continued to decline in November, reflecting persistent weakness in demand despite repeated assurances from policymakers. Official data showed both monthly and annual price drops, with pressure visible across new and secondary home markets. Price falls widened across major and smaller cities, underlining the depth of the slowdown that began in mid-2021. Economists expect the downturn to extend into 2026, citing oversupply and fragile buyer sentiment. International agencies and analysts continue to urge stronger, targeted action to address the prolonged property crisis.
China’s new home prices extended their downward trend in November, official data showed, highlighting the continued struggle to revive buyer demand even as authorities reiterate their commitment to stabilising the property sector. Data from the National Bureau of Statistics, analysed by Reuters, showed prices fell 0.4% on a month-on-month basis, easing slightly from the sharper decline seen in October. Advertisement
On a year-on-year basis, prices dropped 2.4%, marking a deeper fall compared with the previous month. The sustained decline reflects the prolonged downturn that has affected the property market since mid-2021, driven by weak sales, liquidity stress among developers, and falling asset values that have weighed on household wealth and spending.
The slowdown has broader economic implications. The housing sector plays a critical role in supporting consumption in China’s USD 19 trillion economy, and stabilising it remains a key policy priority as the country seeks to reduce dependence on exports and state-led investment.
The secondary housing market showed even greater stress, with prices declining across first-, second- and third-tier cities. Annual price drops widened to 5.8% in top-tier cities, 5.6% in second-tier cities, and 5.8% in smaller cities, pointing to broad-based weakness rather than isolated pockets of correction.
Economists noted that price declines in the resale market have not yet reached levels seen during the policy shift announced in late 2024, but warned that further deterioration could prompt earlier intervention. Any fresh measures are expected to focus on lowering borrowing costs, offering mortgage subsidies, and easing purchase restrictions in select cities.
Separate official data showed that property investment and home sales by floor area fell at a faster pace during the first eleven months of the year. Compared with the same period in 2021, home sales were nearly 50% lower, underscoring the scale of the contraction.
Analysts said buyer sentiment remains weak, and future policy support may increasingly rely on direct incentives such as mortgage interest deductions and home replacement subsidy programmes, already being tested in some provinces.
A recent Reuters poll indicated that economists expect home prices to keep falling through 2026, before stabilising in 2027. Structural issues, including excess supply and demographic shifts, continue to limit the impact of incremental policy easing.
The International Monetary Fund has also called for stronger action, urging authorities to accelerate the exit of unviable developers and estimating that spending equivalent to 5% of GDP would be required to resolve the crisis within three years. While the central government has avoided large-scale stimulus in recent months, it has reaffirmed its focus on city-specific measures to cut inventory, optimise supply, and expand affordable housing.
Source Reuters
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