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China's property market continues to face challenges, with home prices projected to decline until corporate earnings and residents' income prospects improve. Despite policymakers introducing measures such as tax breaks and reduced down payments to boost sentiment and affordability, the recovery remains uncertain. A Reuters poll predicts slower price drops this year and next, with stabilization expected by 2026 as support measures take effect. While the housing market has shown slight improvement since new policies were unveiled in September, Fitch Ratings maintains a negative credit outlook for the sector through 2025, citing concerns over the sustainability of the recovery.
A private survey recently revealed that new home prices in China increased at a quicker rate in November, possibly supported by recent policy measures aimed at stabilizing the struggling property market. According to data from the China Index Academy, the average price across 100 cities rose by 0.36% in November, compared to a 0.29% increase in the previous month. On an annual basis, prices climbed 2.40%, up from 2.08% growth recorded in October. Advertisement
China's statistics bureau is set to release official home price data on December 16. The ongoing slump in the property market, which at its peak in 2021 contributed about a quarter of the country's economic activity, continues to weigh heavily on the world's second-largest economy.
In recent months, Chinese policymakers have intensified measures to improve market sentiment, increase housing affordability, and ease home purchase restrictions through initiatives such as tax incentives and reduced down payment requirements.
According to a Reuters poll, home prices are anticipated to decline at a slower rate this year and next before stabilizing in 2026 as the effects of these support measures take hold.
Since the introduction of new real estate policies in late September, the markets for both new and second-hand homes have shown slight improvement. However, the sustainability of this recovery remains highly uncertain, noted Ying Wang, managing director of Asia-Pacific corporate ratings at Fitch.
Home prices are expected to keep declining until corporate earnings in the broader economy improve, boosting employment and residents' income prospects was stated by Wang . She also noted that the company maintains a negative credit outlook for China's real estate market through 2025.
In summary, new home prices in China showed a notable increase in November, influenced by government measures to stabilize the property market. Despite recent improvements, the long-term sustainability of this recovery is uncertain, with expectations of continued price declines until broader economic conditions, including corporate earnings and employment, improve. Fitch maintains a negative outlook for the real estate sector through 2025.
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