Investing.com — S&P Global Ratings has downgraded its forecast for China’s property sales in 2026, now predicting a 10% to 14% decline compared to its earlier October estimate of a 5% to 8% drop.
“This is a downturn so entrenched that only the government has capacity to absorb the excess inventory,” S&P analysts wrote in a Sunday report. They suggested the state could purchase more unsold property to create affordable housing, though current efforts have been limited.
China’s real estate market, which once represented more than 25% of the economy, has seen annual sales volume cut in half over just four years. The initial decline began with Beijing’s crackdown on developers’ debt-heavy growth models, while home buyer demand remains weak.
The ratings agency highlighted persistent oversupply issues that are expected to push prices down by another 2% to 4% this year, following similar declines in 2025. “Falling prices erode homebuyers’ confidence,” the report stated. “It’s a vicious cycle with no easy escape.”
Particularly troubling is the worsening price decline in China’s largest cities during the fourth quarter of 2025. Beijing, Guangzhou, and Shenzhen all reported home price drops of at least 3% last year. Shanghai was the only major city to show growth, with prices rising 5.7% in 2025 compared to 2024.
Despite the ongoing sales slump, developers have maintained construction activity, resulting in a sixth consecutive year of completed but unsold new housing inventory, according to S&P.
The property market deterioration accelerated throughout 2025. S&P initially predicted a 3% sales decline in May, revised it to 8% in October, but actual sales fell 12.6% to 8.4 trillion yuan ($1.21 trillion). This represents less than half the 18.2 trillion yuan in annual sales recorded in 2021.
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