China’s Property Market Shifts Focus Amid Slump
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China's Property Market Shifts Focus Amid Slump
- China's new home sales are predicted to decline by 11-13% in 2026 from 2025 levels, according to Fitch Ratings.
- In August 2026, Chinese authorities announced new measures to stabilize the property market, including tighter rules on unfinished home sales and an extension of maximum mortgage terms to 40 years.
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China’s property market is undergoing a significant transformation as the government implements new policies to address a prolonged downturn that began around 2020. This slump has been characterized by declining new home sales, with Fitch Ratings forecasting an 11-13% drop in 2026 compared to 2025. S&P Global Ratings similarly projected a 10-14% fall in nationwide primary property sales in 2026. The crisis has its roots in government efforts in 2020 to curb excessive borrowing and speculation by developers, leading to substantial debt burdens and unfinished projects.
In response, Beijing unveiled a package of measures in late August 2026 aimed at stabilizing the market and rebuilding buyer confidence. A key focus of these reforms is a shift away from the traditional presales model towards promoting the sale of completed homes. This includes stricter rules on the sale of unfinished properties and the requirement for mortgage proceeds to be held in supervised escrow accounts until projects are completed. Additionally, the maximum repayment period for individual housing loans has been extended from 30 to 40 years, a move intended to ease financial pressure on homebuyers.
The downturn has had a considerable impact on related industries and employment. New residential and commercial construction starts in China plummeted by approximately 67% between 2019 and 2024. The construction industry, which employed about 51 million people in 2025, saw a reduction of over 7.6 million workers that year. The property and related sectors accounted for around 13% of China’s GDP and supported over 70 million jobs, making the slump a significant drag on domestic consumption. While these new policies are seen as a concerted effort towards a healthier long-term housing market, some analysts suggest they could prolong the sector’s downturn in the short term by further impacting construction and associated employment.