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China's housing market continues to face mounting pressure as new-home prices fell 0.3% month-on-month in June, the steepest drop in eight months. This extended the decline that began mid-last year, despite a series of stimulus efforts introduced by the government to stabilize the property sector. Compared to the same month last year, prices fell 3.2%. Investment, home sales, and new construction all remain under stress, and analysts now warn that unless stronger and more targeted policy measures are adopted, the downturn could persist well into 2026.
New-home prices in China recorded a sharper-than-expected fall in June, dropping by 0.3% from the previous month, data from the National Bureau of Statistics revealed. This marked the fastest monthly decline since October last year and followed a 0.2% decrease seen in May. On an annual basis, prices were down by 3.2%, underscoring the ongoing weakness in the property market despite a host of policy support measures rolled out over recent months. Advertisement
The property sector, which at its peak contributed up to a quarter of China's gross domestic product, continues to struggle with subdued demand, oversupply, and a shift in household behavior. Real estate investment contracted by 10.9% year-on-year in the first half of 2025, while new home construction starts plunged 20.6%, according to official data.
In a bid to revive confidence and clear unsold inventory, authorities have taken a range of actions cutting down payments, relaxing mortgage rules, and enabling state-backed companies and local governments to acquire unsold housing stock and land. The People's Bank of China has also trimmed key interest rates multiple times in the last year, hoping to encourage borrowing and home purchases. However, the effect of these measures remains uneven, with larger cities showing some resilience but smaller cities continuing to experience price erosion.
A statement by the State Council indicated that local governments are being urged to conduct detailed surveys of land supply and unfinished projects to better coordinate interventions. Despite these efforts, Goldman Sachs recently forecast that housing prices could decline by up to 10% between now and 2027 if stronger policies are not enacted soon.
Analysts have attributed part of the crisis to a structural shift: younger consumers are showing increasing reluctance to invest in property, partly due to high youth unemployment and falling confidence in developers especially after high-profile defaults like those of Evergrande and Country Garden. Meanwhile, ongoing restrictions on capital flows and heightened global trade uncertainties particularly with the United States have further impacted investor sentiment in the housing sector.
The weakness is also evident in the secondary market, where prices have reportedly declined at their fastest pace in nearly seven to eight months. Many developers are still under liquidity stress, with debt servicing burdens and a lack of fresh financing continuing to constrain new project launches. Even government-backed "white list" financing schemes have had limited success in easing market distress.
While authorities have emphasized the need to transition towards a "new development model," analysts believe more aggressive easing including direct subsidies, broader mortgage reforms, and possible bailouts for distressed developers may be necessary to arrest the downturn. Until then, market recovery is expected to remain patchy and slow, especially beyond the country's top-tier cities.
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