China’s Real Estate Market Remains in Prolonged Slump: The “Golden September, Silver October” Era Is Gone

China’s real estate market

[People News] China’s once-vibrant “Golden September, Silver October” real estate season has vanished. The housing market has entered deep stagnation, and the latest September–October data reveal record-setting declines.

October Data Show Deepening Weakness

On October 20, China’s National Bureau of Statistics released data showing that new home prices in September fell 0.4% month-on-month, the sharpest drop in 11 months. Among first-tier cities, prices fell 0.3%, widening by 0.2 percentage points from August. In second-tier cities, prices dropped 0.4%. Of 70 major and medium-sized cities, only five saw price increases, the fewest this year. Overall, the average month-on-month drop of 0.41% was the steepest of 2025.

The secondhand housing market was even worse: in all 70 major cities, secondhand home prices fell month-on-month — the first time this year that every single city posted a decline. The overall decrease was 0.64%, 0.05 percentage points worse than August.

Between January and September, national real estate investment totaled 6.77 trillion yuan, down 13.9% year-on-year, with residential investment down 12.9%. Newly started floor space fell 19.5% from January to August.

According to a November 1 report by the China Index Academy, average secondhand housing prices in 100 cities fell 0.84% month-on-month and 7.6% year-on-year in October, to 13,268 yuan per square meter.

Even after purchase restrictions were eased in Beijing, Shanghai, and other top-tier cities since August, viewings surged but actual transactions plummeted. For example:

• Shanghai: new home sales fell 22.7% month-on-month; secondhand (including commercial) transactions dropped 9.3%.

• Beijing: new home contracts edged down 0.2%, secondhand contracts plunged 23.7%.

• Shenzhen: new home sales down 14.1%, secondhand down 7.7%.

• Guangzhou: only 610,000 m² sold in October, a 46% year-on-year plunge.

The CRIC Research Center reported that new home supply in October was cut in half, the second-lowest level of the year. Though transactions rose 1% month-on-month, they were down 36% year-on-year. Across 30 tracked cities, cumulative sales from January–October totaled 98.25 million m², down 7% year-on-year.

Fitch: China’s Property Market Has Not Yet Hit Bottom

Fitch Ratings’ Asia-Pacific corporate director, Shi Lulu, recently stated that China’s real estate sector “remains in decline and has not yet bottomed out.” Fitch had projected early this year that 2025 new home sales would fall another 15% to about 7.3 trillion yuan. The agency bluntly pointed to structural maladies: excessive inventory, weak job markets, and diminished homebuyer affordability.

Fitch’s analysis essentially means that China’s overall economy is deteriorating, bursting the real estate bubble. Temporary policy measures—lower down payments, loosened purchase restrictions, easier financing—can cause brief rebounds, but cannot resolve the fundamental structural crisis.

Fitch expects Chinese housing prices to fall 4–6% in 2025 and another 2–4% in 2026. Goldman Sachs, in its June report, estimated that after a cumulative 20% decline between 2021–2025, home prices could drop another 10–25% by 2027, especially in smaller cities facing huge inventory pressure.

Despite differing forecasts on the depth of the fall, both Fitch and Goldman Sachs agreed on the structural causes of the crisis.

Structural Problems: Population Decline and Debt Saturation

The first issue is negative population growth. Fitch noted that the “demographic dividend” supporting housing prices has vanished. China’s total population is shrinking, aging rapidly, and urbanization has slowed. Fewer young people means fewer new buyers.

Goldman Sachs found that since 2022, the population has been declining: there are 40 million fewer post-1990s youth than post-1980s, and births have dropped 40% in eight years. Urbanization growth slowed to 0.5% annually, and new urban housing demand could plunge from 6.4 million units per year in the 2010s to just 2.8 million by 2030.

The second issue is debt and leverage saturation. Fitch explained that the “leverage dividend” has evaporated: local governments relied on land sales, developers on high leverage, banks on mortgage lending, and households on generations of savings to chase speculative gains. Now, the entire economy is over-leveraged, household balance sheets are contracting, and no one dares to borrow or spend. Thus, real estate—the old growth engine—can no longer restart.

Goldman Sachs estimated that by the end of 2024, China’s unsold housing inventory reached 93 trillion yuan—67% of GDP—plus developer liabilities of 59 trillion yuan (excluding pre-sales). With average financing costs above 7%, some developers’ interest payments exceeded 30% of sales revenue, fueling a “price-cut → loss → deeper price-cut” spiral.

Even though 2024 saw the most aggressive monetary easing in a decade, the policy multiplier fell to a historic low of 0.3, constrained by high local government debt (125% debt ratio), high household leverage (62.8%), and falling corporate turnover. In short, stimulus policies now have minimal effect.

Foreclosure Boom and Structural Risk Explosion

China’s homeownership rate exceeds 90%, far higher than Japan (77%) or the U.S. (65%). Per capita housing space has reached 42 m², surpassing many developed nations. Vacancy rates remain elevated: an average 12% in 28 major cities, including 7% in top-tier, 12% in second-tier, and 16% in smaller cities.

Housing demand continues to collapse. Projections show that new-home rigid demand will drop from 190 million m² in 2024 to 70 million m² by 2035, then turn negative. “Upgrade” demand will fall from 290 to 260 million m², and “old-for-new replacement” from 350 to 280 million m². Investment demand will vanish entirely within a decade.

China’s price-to-income ratio of 10× far exceeds that of the U.S. (6.8×) and Japan (5.3×). The rent-to-price ratio is around 2%, much lower than the global norm of 4%+, showing that property yields in China remain unsustainably low.

Meanwhile, the broader economy remains in deflationary decline. Investment, consumption, and exports—the “three growth engines”—are all stalled. Unemployment remains high. Many citizens not only refuse to buy homes—they cannot even repay their mortgages. The middle class is collapsing, assets are shrinking, and the surge in court-ordered property auctions (foreclosure sales) reflects both household distress and systemic risk.

According to the 2025 First-Half National Judicial Auction Market Report, listings of foreclosed homes reached 576,600 units, up 18.8% year-on-year. Only 83,600 units were sold, a historically low 14.5% transaction rate, with an average liquidation discount of 77.29%, the lowest in years.

In the first quarter alone, 99,000 residential properties were listed for auction, but only 26,000 sold, at prices 6.1% lower year-on-year—a trend now spreading nationwide. Notably, first-round auction success rates fell to 11.6%, while most sales occurred only in second or liquidation rounds (67%), showing collapsing buyer confidence and falling price expectations.

Foreclosure prices have become the “price assassin” of the entire market, revealing the grim truth behind property valuations. Beneath those numbers lies the shattered wealth of millions of families—heavily indebted households now facing insolvency, homelessness, and ruin.

Policy Impact: Short-Lived and Ineffective

Beijing’s short-term housing rescue policies have proven as fleeting as a spark. The structural rot—demographic decline, debt saturation, and deflation—remains unresolved and likely unsolvable.

China’s property slump has entered a deadlock and point of no return, and it will inevitably drag the broader economy into deeper recession.

(First published by People News) △