BEIJING — China’s property sector continues to deteriorate in 2026, with fresh forecasts painting an increasingly bleak picture for the year ahead. S&P Global Ratings now anticipates a decline of 10% to 14% in primary real estate sales, a significant downward revision from its October prediction of a 5% to 8% drop.
The deepening slump, which has seen annual sales volume halve in just four years, is proving remarkably resistant to policy interventions. According to S&P analysts, “This is a downturn so entrenched that only the government has capacity to absorb the excess inventory.” While state intervention in the form of purchasing unsold properties for affordable housing has been suggested, efforts to date have been described as “piecemeal.”
The initial trigger for the downturn was Beijing’s crackdown on developers’ high levels of debt, but consumer demand has failed to rebound. The market is now facing a sixth consecutive year of completed, unsold new housing, exacerbating downward pressure on prices. S&P forecasts a further price decline of 2% to 4% this year, following a similar drop in .
“Falling prices erode homebuyers’ confidence,” the S&P report stated, creating a “vicious cycle with no easy escape.” The situation is particularly concerning in China’s largest cities, which were previously considered relatively healthy and potential drivers of a national recovery.
In , Beijing, Guangzhou, and Shenzhen all experienced home price declines of at least 3%. Shanghai was the only major city to buck the trend, recording a 5.7% increase in prices year-over-year.
The progressive worsening of the property slump throughout is evident in S&P’s revised forecasts. An initial prediction of a 3% decline in new home sales in May was increased to 8% in October, ultimately resulting in a 12.6% fall to 8.4 trillion yuan ($1.21 trillion). This represents less than half the 18.2 trillion yuan in sales recorded in .
This sustained downturn is placing significant pressure on Chinese real estate developers. S&P analysts warn that if sales fall 10 percentage points below their base case scenario for and , four of the ten Chinese developers they rate could face potential credit rating downgrades. This excludes China Vanke, which requested a delay in repayment on some of its debt in late .
Despite the ongoing crisis, Chinese authorities have refrained from implementing substantial new support measures for the property sector. Instead, the focus remains on developing advanced technologies. A recent report by Rhodium Group highlighted that China’s push into high-tech industries is currently insufficient to offset the impact of the property slump, leaving the economy reliant on exports and vulnerable to trade tensions.
The latest data reinforces a broader trend of decline. According to China Real Estate Information Corporation (CRIC), combined contracted sales by the top 100 developers fell 27% year-over-year in January , reaching 165.5 billion yuan ($24 billion). Barclays reported that contracted sales for 18 major developers with outstanding US-dollar bonds plummeted 53.67% in January from December and 18.51% year-over-year, signaling weakening debt-repayment capacity.
Even after adjusting for seasonal effects, the month-on-month decline in January sales for these developers was steeper than the historical average post-COVID decline of 44%. Confidence remains subdued, new projects are selling slowly, and some developments have been delayed due to insufficient policy support, according to Barclays.
Further compounding the challenges, Reuters reports that China’s home prices are forecast to fall 3.7% this year, continuing a decline that is expected to persist through before stabilizing in . China’s Index Academy projects a 6.2% decrease in newly built commercial housing sales for , accompanied by an 8.6% drop in new construction work and an 11% reduction in total real estate investment. Secondhand home prices in 100 cities fell by 8.36% in , and national real estate investment plummeted by 15.9% year-over-year.
Morgan Stanley analysts predict that new home prices could fall another 2 to 3 percent in , citing the government’s reactive approach to policy fixes and continued consumer timidity. Average home prices in China have already declined 12.1% from their peak in , marking four consecutive years of market decline.
Top policymakers are scheduled to announce economic goals for the year at a parliamentary meeting next month, and the property sector will undoubtedly be a key focus of discussion.
