BEIJING: China‘s new home prices extended declines in November, official data showed on Monday, indicating that a recovery in demand remains elusive despite the government promising to stabilise the sector. Prices fell 0.4% month-on-month, according to Reuters calculations based on National Bureau of Statistics data, compared with a 0.5% decline in October.
On an annual basis, home prices fell 2.4% in November, steeper than the 2.2% drop the previous month.
China‘s property market has been mired in a downturn since mid-2021, fuelled by declining sales, a liquidity crunch for developers, and falling home prices, which have eroded household wealth and dampened consumption. China’s top leaders have repeatedly pledged to stabilise the housing sector, as that would boost overall household consumption, which in turn helps the $19 trillion economy reduce its 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.
“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 gets worse the window of intervention could open early next year,” said Tianchen Xu, senior economist at the Economist Intelligence Unit.
With policymakers focused on stabilising prices, any new measures are likely to include interest rate cuts, mortgage subsidies, and a relaxation of purchase restrictions, Xu added. Property investment and home sales by floor area slumped at a faster pace in the first 11 months of the year, separate official data showed. Home sales were 50% lower than in the same period in 2021, according to a Reuters calculation.
“Homebuyer sentiment remains subdued. We expect supportive policies to increasingly target direct subsidies for buyers, such as mortgage interest deductions and replacement subsidy programmes in select provinces,” said Jeff Zhang, an equity analyst for Morningstar. Economists in the latest Reuters quarterly poll expected China’s home prices to extend declines into 2026 and remain flat in 2027, with some economists citing structural challenges and a supply glut.
The International Monetary Fund earlier this month 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 estimated 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 stabilising the market and curbing systemic risks. In a key policy meeting earlier this month, officials pledged to implement city-specific strategies to optimise supply, reduce inventory, and enhance affordable housing programmes.
