China Housing Demand: Goldman Sachs Forecast
- Beijing – China's housing market is bracing for a prolonged downturn, with demand for new homes expected to remain well below its 2017 peak in the coming years.
- The Chinese property sector, a key driver of economic activity, accounting for about 25% at its height, began a downturn in 2021.
- The investment bank projects new home demand will likely stay below 5 million units annually.
Goldman Sachs forecasts a sustained downturn in China’s housing market, predicting new home demand will remain significantly below 2017 levels, despite existing economic support. The Chinese property sector, a key driver of the economy, faces continued challenges, with falling new home prices adn a shift toward urban renewal influencing demand. The investment bank’s projections highlight a critical slowdown, contrasting sharply with the market’s peak. This analysis, featured in News Directory 3, underscores the complex factors impacting China’s economic outlook, including evolving government strategies and potential negative investment demand. evaluate the detailed data; China’s economic future hinges on property’s recovery. Discover what’s next for the sector.
China Housing Market Faces Prolonged Property Slump
Updated June 17, 2025
Beijing – China’s housing market is bracing for a prolonged downturn, with demand for new homes expected to remain well below its 2017 peak in the coming years. Goldman Sachs released a projection Monday indicating that the world’s second-largest economy faces a critically important property slump.
The Chinese property sector, a key driver of economic activity, accounting for about 25% at its height, began a downturn in 2021. Market sentiment has been negatively impacted by debt-ridden developers struggling to complete homes already paid for by buyers.This decline in the housing market and new home demand is a key factor in China’s economic outlook.
The investment bank projects new home demand will likely stay below 5 million units annually. This is a sharp contrast to the 20 million units sold in 2017.
Official data released Monday showed new home prices continued to fall in May, marking two years of stagnation. This highlights the ongoing challenges in the sector, despite various economic policy support measures.
Goldman Sachs cited several factors influencing their revised estimates. “Our earlier estimates did not account for the fact that investment demand in china could turn negative as owners sell vacant apartments, and that the 2015-18 government-led shanty town redevelopment shoudl result in fewer demolitions in subsequent years,” the firm stated.
“Holders of investment properties are likely to be net sellers (to owner-occupiers) for the foreseeable future,” the report added.
The government’s evolving focus, shifting from demolition to urban renewal and rehabilitation, will further reduce housing demand. The bank estimates average demand for homes due to demolition will decrease from 4.7 million units in the 2010s to 2.7 million units in the 2020s.
What’s next
analysts will be closely watching upcoming economic data and policy responses to gauge the depth and duration of the housing market slump and its broader impact on China’s economic growth.