China home prices forecast to drop 4 percent in 2026
China home prices are forecast to fall 4% in 2026 before stabilizing in 2027. High inventory and weak demand continue to weigh on the struggling property sector.
Recent data from a quarterly Reuters poll suggests that residential property prices in China are set to experience a sharper decline than previously estimated before potentially finding a floor in 2027. The real estate sector, a critical component of the national economy, remains burdened by excessive inventory and weak buyer sentiment, prompting calls for more aggressive government support.
The survey, conducted between March 2 and 12, indicates that home prices are expected to fall by 4.0% in 2026. This projection is more pessimistic than the 2.8% drop predicted in the previous quarterly poll. Analysts expect prices to remain flat in 2027 before seeing a marginal increase of 0.5% in 2028.
The ongoing downturn has significantly impacted household wealth and dampened consumption across the country. Lulu Shi, director of Asia-Pacific corporate ratings at Fitch Ratings, noted that the sector faces deep-seated structural hurdles, including demographic changes, employment uncertainty, and high levels of unsold housing stock.
"Shi said stabilising the sector would require a broad policy package to support the economy, improvements in labour-market conditions and reduced housing inventory, adding that the process would take time."
Despite various measures introduced since the 2021 market crisis—including the easing of purchase restrictions and reduced down-payment requirements—demand has failed to recover. Zichun Huang, an economist at Capital Economics, observed that the market has likely not yet reached its trough.
"A clear signal that policymakers are willing to devote substantial fiscal resources to reduce the stock of unsold homes would mark a potential turning point, Huang said."
The poll results also point toward continued weakness in market activity for the remainder of the year. Property investment is forecast to contract by 10.3%, while total sales are expected to decline by 6.5%.
In response to the crisis, Chinese policymakers have pledged to stabilize the market by optimizing the use of existing housing stock. This strategy includes a plan to purchase unsold homes and convert them into government-subsidized housing, as outlined in an official report from early March. However, the success of these measures remains uncertain.
"Home prices could fall more than we forecast if macro-level government policies fail to boost confidence, potentially causing further market disruption through rising residential mortgage delinquencies and increased instances of negative equity, Shi said."
