A recent survey indicates that China’s residential property market may be experiencing a less severe downturn than experts previously predicted, with signs pointing toward potential recovery by 2027.
According to a Reuters housing market survey conducted between May 18-28, residential property values are projected to decrease by 3.5% this year, which represents an improvement from the 4.0% drop that was anticipated in March. The outlook extends further into the future, with prices expected to climb 0.3% in 2027, contrasting with earlier predictions of no movement, and a 1.8% increase anticipated for 2028, up from the previously forecasted 0.5% gain.
Lulu Shi, director of Asia-Pacific corporate ratings at Fitch Ratings, explained that the nation’s construction sector will likely continue shrinking through 2026, though the rate of contraction should gradually moderate as government support measures persist, risks from defaults and contagion diminish, and new housing sales reach more sustainable long-term volumes.
The central government’s recent efforts to restrict new developments and reduce housing stock, announced during the annual parliamentary session in early March, have prompted various Chinese municipalities to introduce buyer incentives, including financial subsidies.
In late April, Shenzhen relaxed purchasing restrictions in its central areas, while Guangzhou implemented subsidies for home purchases.
Shi noted that recent policy adjustments could speed up market stabilization in prime locations within major cities, while “suburban districts and lower-tier cities facing population outflows and industrial decline may remain under greater pressure.”
The survey reveals that property investment is anticipated to decline 12.0% this year, a steeper drop than the 10.3% decrease predicted in March, while sales are expected to fall 8.3%, worse than the previously estimated 6.5% decline.
Huang Yu, executive vice president of the China Index Academy, pointed to diminished household confidence regarding employment, income, and housing value expectations as continuing factors that will suppress market demand.
Industry analysts emphasized that policymakers are focused on market stabilization and preventing chaotic deceleration rather than attempting to revitalize the sector through aggressive stimulus measures.
Yingxue Ren, associate director of corporate ratings at S&P Global (China) Ratings, described the primary policy goal as working to “prevent the risk of a sharp loss of momentum,” while noting that officials retain the capacity to expand support measures if circumstances require it.
