China’s property slump is far from bottoming. But Beijing is prioritizing tech growth
A new residential complex under construction in Hangzhou, Zhejiang Province, China, on October 20, 2025.
Cphoto | Future Publishing | Getty Images
BEIJING – Chinese policymakers are unlikely to support the country’s struggling real estate sector even as the housing decline hurts economic growth, analysts told CNBC.
The assessment comes as China’s top leaders, called the Central Committee, wrap up a four-day meeting on Thursday to set priorities for the next five years.
In Beijing’s view, technological development is becoming a more pressing priority in the current geopolitical environment as the real estate sector’s pressure on growth eases, said Ning Zhu, author of “China’s Guaranteed Bubble.” In his view, this means Beijing is unlikely to issue much stronger real estate support.
Following years of concerns over property developers’ debts that led to pressure from Beijing, Chinese state media said earlier this month: “Risks in key areas effectively prevented This piece was part of a series of articles highlighting achievements over the past five years and highlighting Beijing’s stimulus efforts, according to a CNBC translation. opportunities in technology.
This underscores the divergence between Beijing’s views and those of most analysts.
“The government believes that the real estate market has hit rock bottom,” Zhu said. “I believe this is a gradual process and may take more time before reaching the bottom.”
The latest data underscores the divide between Beijing’s optimism and market reality. of china Bureau of Statistics on Monday He said that high-tech manufacturing grew by 9.6% in the first three quarters of the year compared to the same period in 2024, surpassing the 6.2% growth in general industrial production.
However, real estate investment fell by 13.9% in the first three quarters compared to the same period of the previous year, and the decline in the sector continued until September. The decline pushed fixed asset investment into negative territory; this was the only such decline recorded, excluding the Covid-19 pandemic.
This means that more than a year after Beijing called for a “halt” in the real estate sector’s decline, there is still little sign of a turnaround.
It’s hard to say when real estate will “hit bottom,” said Lulu Shi, director of Fitch Ratings. “The overall population, demographics, employment status and housing market inventory are all deteriorating.”
While China’s falling birth rate indicates that housing demand will weaken in the future, uncertainty about employment and income growth also weighs onS. on homebuyer sentiment in the near term.
House prices are falling
The decline in property prices over the past two years or so is also weighing on homebuyer sentiment, reversing decades of gains that once led to heavy speculation in the real estate market.
The weighted average of new home prices in September fell 2.7% on an annual basis from the previous month, according to Goldman Sachs’ analysis of official data from China’s 70 largest cities released on Monday. This was steeper than the 2.1% decline seen in August.
Prices for “secondary” homes that have already sold once have fallen much more over the past year, by 5% to 20%, Goldman said, citing a mix of official and third-party figures.
Bruce Pang, an assistant professor at CUHK Business School, said looking ahead, Beijing is unlikely to put too much emphasis on real estate policy, whether for additional support or to discourage real estate speculation.
China’s multi-year plans, such as the next five years, tend to focus on new approaches to growth, he noted.
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Relief measures introduced in August, such as easing restrictions on buying multiple properties in major cities, have done little to boost confidence. Policy changes have mostly been applied to the outskirts of the city rather than the most attractive areas in the city centre.
Citing weaker-than-expected policy support, S&P Global Ratings predicted earlier this month that property sales would fall 8% this year, worse than previous forecasts. They expect another decline of at least 6% next year as the market bottom is still uncertain.
Moody’s Ratings also forecasts that home sales in China will decline by single digits over the next 12 to 18 months.
Moody’s Ratings vice president and analyst Daniel Zhou said that forecast was based on reduced demand from buyers expecting policy easing. He said the real estate market should gradually stabilize in the long term under current policy measures.
Wider economic impact
Although the sector’s role in more than a quarter of production has diminished, the real estate collapse continues to weigh heavily on China’s economy. Real estate sales approx. Manufacturing and exports, which halved in just a few years, helped offset the decline.
“The Chinese economy remained in 2-speed mode, with consumption/ownership being the weak path and exports/manufacturing being the strong path,” Larry Hu, Macquarie’s chief China economist, wrote in a note. he said. “This pattern will continue until policymakers can no longer rely on external demand to drive growth.”
China’s exports have remained unexpectedly strong so far this year, rising 8.3% in September from a year ago despite a 27% drop in shipments of goods to the United States.
“It’s very difficult to see a growth trend” in real estate, Shi said. “We believe there will be more policies, but one policy is unlikely to change the entire situation.”
Eventually, once the decline in home prices eases, he expects more buyers to gradually return to the housing market.
