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China’s real estate sector continued to falter in September, with new home prices falling at the fastest pace in 11 months, deepening concerns about the broader economy. The slowdown in property sales and declining prices are eroding consumer confidence and household spending, prompting calls for policymakers to step up measures to stabilize the market amid global trade pressures.
According to data from the National Bureau of Statistics (NBS), new home prices fell 0.4% month-on-month in September, following a 0.3% drop in August. Year-on-year, prices declined 2.2%, slightly improving from the 2.5% fall in August. Despite the marginal improvement compared with the previous month, the trend reflects persistent weakness in China’s housing sector, which has been struggling since 2021.
Hannah Liu, China economist at Nomura, noted the broader impact of falling home values: “If the value of real estate, especially in first-tier cities, continues to shrink, people will feel they have less money to spend and will expect even less in the future.” Liu suggested that stabilizing or slightly raising housing prices in major cities could be a critical measure to boost consumer spending.
Traditionally, September and October are peak seasons for property purchases in China, as developers launch promotional campaigns during national holidays. However, the prolonged downturn, characterized by developer defaults, unfinished presold projects, and falling home prices, has dampened consumer sentiment, reducing the effectiveness of seasonal sales efforts.
Data from the NBS showed that out of 70 cities surveyed, 63 reported month-on-month declines in home prices, and 61 recorded year-on-year falls. The weakness is not limited to new homes: secondary home prices fell 3.2% year-on-year in tier-one cities, 5% in tier-two cities, and 5.7% in tier-three cities. Meanwhile, property investment and sales slowed significantly during January–September. Analysts expect this trend to continue, with Centaline Property Agency chief analyst Zhang Dawei predicting a 10% drop in property transaction volumes for the year.
The property sector, once a major engine of China’s economic growth, has become a drag on the economy. September’s slowdown coincided with broader signs of economic softening, as separate data showed that China’s headline economic growth slowed in the third quarter, partly due to the property slump and ongoing tensions in the U.S.-China trade relationship.
The Chinese government has repeatedly pledged to stabilize the real estate market over the past two years, introducing measures such as mortgage rate cuts, easing of home purchase restrictions, and campaigns to accelerate urban village redevelopment. Local authorities have also offered stimulus through home-purchase incentives and tax reductions. Despite these efforts, the market remains fragile, and analysts warn that it could take a year or more for prices and investment activity to recover fully.
Nomura analysts noted that the government will need to “more seriously address the fallout from the property market collapse” in its new five-year plan for 2026–2030, with a focus on stabilizing the sector while encouraging local stimulus measures. Jeff Zhang, property equity analyst at Morningstar, emphasized that the government is likely to continue prioritizing sector stability, while supporting targeted initiatives such as home purchase subsidies and tax incentives to revive confidence.
The property slowdown is affecting all tiers of Chinese cities. While first-tier cities have seen relatively moderate declines, tier-two and tier-three cities have experienced sharper drops in home prices, reflecting both weaker demand and oversupply issues in these regions. The situation underscores the challenge facing policymakers: balancing economic growth, financial stability, and social expectations tied to home ownership.
China’s ruling Communist Party’s Central Committee is scheduled to hold a closed-door meeting to discuss the country’s 15th five-year development plan, which is expected to address the property sector’s continuing challenges. Analysts and investors alike will be watching closely, as the decisions made in the coming days could shape the trajectory of China’s housing market and broader economy for years to come.
As the government evaluates potential policy measures, economists suggest that lowering mortgage rates, expanding personal income tax deductions, and providing targeted incentives could help restore confidence and stimulate property demand. However, the road to recovery may be gradual, with both structural and sentiment-related factors influencing the pace of stabilization.
China’s property market, long a cornerstone of growth, now faces a pivotal moment. How policymakers respond to the ongoing slump will determine whether housing can regain its role as a driver of consumption and investment, or continue to weigh on the economy in the years ahead.
