China’s property slump this year looks worse than expected, S&P says
Pictured is the construction of a real estate project in Huai’an City, Jiangsu Province, China, on October 9, 2025.
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BEIJING — China’s real estate market is expected to decline more sharply than expected in 2025, S&P Global Ratings said in a report late Thursday, extending the sector’s slump to a fifth consecutive year and delaying hopes for a market recovery.
Analysts predict that new home sales will fall 8% from last year to between 8.8 trillion yuan and 9 trillion yuan ($1.23 trillion to $1.26 trillion).
That’s a much steeper decline than the 3% drop the major ratings agency predicted in May. Edward Chan, director of corporate ratings at S&P Global Ratings, told CNBC that analysts expected at the time that the trade war and other external uncertainties would push China to provide stronger support for the real estate sector.
The main reason for the weak outlook is that “homebuyer sentiment is still quite fragile,” Chan said. “So the government will need to continue to support the industry and demand [to] Help regain homebuyers’ trust.”
In September 2024, Beijing called for efforts to “stop” the real estate decline at a high-profile meeting. However, following some new measures last year, political momentum to increase support appears to have slowed.
S&P noted that China’s five-year loan rates (the benchmark for most mortgages) have fallen just 10 basis points so far this year, compared with a 60 basis point decline in 2024. This signals that Beijing is not easing policy as aggressively as before despite the housing crisis.
Three of China’s largest cities in August eased purchasing restrictions to allow buyers to own more than one property, but S&P noted that the move mostly applied to units in the city’s less desirable outskirts.
“If demand can be stabilized first in high-tier cities, especially first-tier cities [largest] “This will likely help make the trajectory of the demand recovery more sustainable,” Chan said. he said.
Coming back is still hard
For now, hopes that China’s real estate market crash will bottom out look even more distant.
China’s real estate market, with sales projected to be 9 trillion yuan or less this year, will halve from 18.2 trillion yuan in 2021 in just four years, according to S&P. The rating agency expects sales to fall another 6% to 7% in 2026, with primary home prices to fall 1.5% to 2.5%.
In recent years, home buyers in China tended to purchase apartments before they were completed. But as developers faced financial difficulties, The postponement of construction shook consumer confidence. This prompted Beijing last year to announce a “white list” to finance approved unfinished projects.
S&P said the completed but unsold housing stock increased from 753 million square meters in December 2024 to 762 million square meters as of August.
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“The government is doing a lot to keep people safe.” [that getting] Their apartments are not the problem right now,” Chan said. “The problem is that overall demand for the nation as a whole looks weaker than we expected.”
Going forward, he expects the government to intervene, albeit gradually, when market weakness emerges.
August saw both a loosening of some home-buying restrictions and a high-profile admission by Chinese Premier Li Qiang that the real estate slump remained unresolved, suggesting further support was needed.
The next month, sales of China’s top 100 developers rose 0.4% year-on-year, S&P reported, citing industry data.
As developers struggle to survive, “the end result may be a smaller market, but it may also result in a healthier and more resilient industry,” the report says.
