China’s struggling property market is starting to show signs of stabilizing after a few tumultuous years, with the country’s new home prices finally having stopped falling in December, according to the latest official data.
It is the first time in 18 months that new home prices in China have not declined, Reuters reported after analyzing data from China’s National Bureau of Statistics (NBS). Newsweek contacted Goldman Sachs and S&P Global for comment by email on Monday morning.
Why It Matters
The ongoing crisis in the property market has been dragging China’s entire economy down, as the property sector accounted for 25 percent of the Chinese economy in 2021, The International Monetary Fund said—the share rose to 31 percent if infrastructure was included. The sector also accounted for 70 percent of household wealth.
Any signs of recovery are positive news for the Chinese government, after its intervention to stabilize the market has had little success until now.
What To Know
China’s once-booming property market spurred the explosive growth of the country’s economy in the past few decades.
But the same industry that helped bring millions of people out of poverty and into the middle class has faced a dramatic downturn over the past three years. There have been decades of risky investments and the default of major developers like Evergrande in 2021 and Country Garden in 2023.
Data released by the NBS on Friday showed new home prices in China remained unchanged between November and December 2024—putting a stop to a downslide that has been going on since June 2023.
Compared to a year earlier, however, prices fell by 5.3 percent—slightly less than in November, which saw a 5.7 percent year-on-year drop.
In another positive sign of stabilization, 23 of the 70 large- and medium-size cities analyzed by the NBS saw an increase in home prices—six more than in November.
Chinese media have attributed these price increases to the government’s initiatives to stabilize the country’s property sector, including by encouraging local governments to slash inventory.
“Key measures include eased purchasing restrictions, lowering home-buying costs and the introduction of a trade-in scheme for houses to stimulate demand,” the People’s Daily, a government-controlled news website, wrote on Monday.
“On the supply side, local authorities have encouraged the conversion of commercial housing into government-subsidized housing, while also curtailing land sales to cap market supply.”
Sawayasu Tsuji/Getty Images
What’s Behind the Ongoing Crisis?
The ongoing crisis in China’s property sector was triggered by a liquidity crunch that followed years of risky investments by developers in the country. Concerned over how indebted the sector had become, the Chinese government restricted new borrowing by developers in August 2020. However, the measure had the unwanted consequences of leaving many developers in the country unable to complete their housing projects and defaulting on their debt.
Evergrande, once China’s top-selling developer, defaulted on its offshore debt obligations in late 2021, in a major blow to the country’s sector. The giant’s downfall, which shook consumer and investor confidence, reflected system issues in the entire sector.
What People Are Saying
Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management, told Reuters: “The property sector is still under pressure and authorities don’t want to see a return to the old days of leverage and big price rises, so investors still need to be patient.”
In a recent report by Goldman Sachs, Yi Wang, who leads the China real estate team, said: “Incremental government implementation of housing destocking will provide much better visibility for the housing market to stabilize in the coming years.”
What Happens Next
A recent report by Goldman Sachs on the state of the Chinese property sector found that the government’s measures to address the crisis had so far fallen short. However, “there are indications that the government will follow through with enough additional fiscal stimulus to address the real estate market breakdown in the coming years.”
S&P Global wrote in October last year that it expects China’s property sales to stabilize toward the second half of 2025 as prices steady in the most expensive cities in the country and overall sales volumes.
“This will depend on the government’s continued support for funding conditions for developers and efforts to reduce inventories,” the company wrote.