China’s property market is facing a deepening crisis, with sales forecasts significantly lowered and a growing glut of unsold homes, according to S&P Global Ratings. The firm now projects a 10% to 14% drop in primary real estate sales this year, a substantial revision from its October 2025 prediction of a 5% to 8% decline.
The downturn, described by S&P analysts as “entrenched,” is so severe that only government intervention has the capacity to address the excess inventory. Analysts suggest the state could purchase unsold properties to create affordable housing, but current efforts have been limited in scope. This comes as the market has already seen annual sales volume halved in the past four years.
The initial slump was triggered by Beijing’s crackdown on developers’ high debt levels, and consumer demand has yet to recover. Economists have warned of overbuilding for years, and developers have continued construction despite declining sales, resulting in a sixth consecutive year of completed, unsold housing, according to S&P. The oversupply is expected to drive prices down another 2% to 4% this year, following a similar decrease in 2025.
The situation extends beyond sales figures. The Atlantic Council reports an estimated eighty million unsold or vacant homes currently clog the market. Multiple large private developers have defaulted on debts, and even state-backed firms like China Vanke Co. Have struggled to avoid a similar fate. One Chinese economist estimates that as many as 80 percent of developers and construction firms could exit the market in the coming years.
Beijing has signaled a shift in its approach, declaring the “traditional real estate model” of “high debt, high leverage, high turnover” at an complete. The government is now seeking a “new model of real estate development” focused on “affordable housing,” improved services, and “basically stable prices,” according to China’s Minister of Housing, Ni Hong. This represents a virtual abandonment of an industry that once accounted for approximately one-quarter of China’s gross domestic product and 15 percent of its nonfarm workforce.
But, this new paradigm clashes with existing market forces. Real estate remains the primary repository of savings for hundreds of millions of Chinese households, but Macquarie Group estimates that roughly 85 percent of the price gains that underpinned that wealth creation have evaporated since 2021, when credit restrictions were imposed. According to the National Bureau of Statistics (NBS) of China, 814.5 million square metres of new housing were sold nationwide in 2024.
The slowdown is impacting China’s overall economic growth. The South China Morning Post continues to provide ongoing coverage of the property market and its effects on the Chinese economy.
