China's Real Estate Market Continues to Slide: November Home Prices Show Steeper Declines
China's new home prices continued to decline in November, reflecting the persistent downturn in the real estate market. According to official data from the National Bureau of Statistics, prices fell 0.4% month-on-month, a slight improvement from the 0.5% decline in October. However, on an annual basis, home prices fell 2.4% in November, a steeper decline compared to the 2.2% drop in the previous month.
China's property market has been in a downturn since mid-2021, driven by declining sales, a liquidity crunch for developers, and falling home prices. These factors have eroded household wealth and dampened consumption. The government has repeatedly pledged to stabilize the housing sector, recognizing that a stable housing market is crucial for boosting overall household consumption and reducing the economy's reliance on exports and government-led investment.
The secondary home market remains sluggish, with housing prices falling across the board. In year-on-year terms, the declines have widened in first-tier, second-tier, and third-tier cities, dropping 5.8%, 5.6%, and 5.8%, respectively. Tianchen Xu, a senior economist at the Economist Intelligence Unit, noted that the decline in second-home prices has not yet reached the threshold seen during the property policy pivot in September 2024. However, if the market worsens, the window for intervention could open early next year.
With policymakers focused on stabilizing prices, any new measures are likely to include interest rate cuts, mortgage subsidies, and a relaxation of purchase restrictions. Jeff Zhang, an equity analyst for Morningstar, expects supportive policies to increasingly target direct subsidies for buyers, such as mortgage interest deductions and replacement subsidy programs in select provinces. Economists in the latest Reuters quarterly poll predict that China's home prices will continue to decline into 2026 and remain flat in 2027, citing structural challenges and a supply glut.
The International Monetary Fund (IMF) has called for more efforts from the Chinese government to resolve the property crisis, including speeding up the exit of unviable property developers from the market. The IMF estimates that China would need to spend 5% of its GDP to end the crisis in three years. In the second half of 2025, the central government refrained from announcing large-scale property market stimulus but reiterated its commitment to stabilizing the market and curbing systemic risks. At a key policy meeting earlier this month, officials pledged to implement city-specific strategies to optimize supply, reduce inventory, and enhance affordable housing programs.
