Despite Policy Easing, China’s Property Prices Extend Losses as ‘Income Expectations’ Collapse

September home prices fall 0.4% month-on-month
Prices drop in 63 of 70 major cities
Weakened consumption and slower growth deepen downturn

China’s property market slump is worsening. In September, new home prices saw their steepest monthly decline in 11 months, underscoring that a series of government stimulus measures have failed to revive sentiment. As expectations of future income weaken sharply, housing demand is collapsing amid population decline and oversupply.

Widening Home Price Declines in September

According to China’s National Bureau of Statistics on October 22, new home prices across 70 major cities fell 0.41% from the previous month, marking the steepest drop in nearly a year and exceeding August’s 0.3% decline. In first-tier cities—Beijing, Shanghai, Guangzhou, and Shenzhen—new home prices fell 0.3% month-on-month, widening the previous month’s drop by 0.2 percentage points. While prices in Beijing and Shanghai rose 0.2% and 0.3%, respectively, Guangzhou and Shenzhen saw sharper declines of 0.6% and 1.0%.

Resale home prices fell even faster, down 0.64% from the previous month—the largest decline in a year. In first-tier cities, resale prices fell 1.0%, while second- and third-tier cities recorded decreases of 0.7% and 0.6%, respectively. The weakness extended beyond residential prices. Real estate investment dropped 13.9% year-on-year, while new housing floor space sold and total transaction value declined 5.5% and 7.9%, respectively.

“No Matter How Much You Earn, You Still Can’t Buy a House”

Chinese financial outlet Caixin noted that since Beijing’s sweeping monetary-easing package announced in September last year—known as the “9·24 Policy”—a deepening decoupling has emerged between the stock market and the property market. While equities have rallied, housing remains mired in a slump. The 9·24 package included a cut in the reserve requirement ratio (RRR) and a 10-percentage-point increase in the loan-to-value (LTV) ratio, aimed at bolstering liquidity and supporting property and capital markets. Following the policy, the Shanghai Composite Index and Shenzhen Component Index surged 43.66% and 62.02%, respectively, from their September lows—standing in sharp contrast to property prices.

Although housing prices briefly stabilized after the 9·24 measures, they resumed their downward trend in April this year. Authorities have since introduced a flurry of property-specific relief measures. Beijing and Shanghai eased purchase restrictions for households that have paid income taxes for a certain period, while Tianjin allowed the use of housing provident funds for down payments on existing homes. The State Council also launched redevelopment projects targeting old residential districts. Yet, the property downturn persists.

Analysts attribute the market’s stagnation, despite aggressive policy support, to a steep decline in income expectations. As household income growth slows, widespread pessimism has emerged that future housing costs will be unaffordable. In other markets like South Korea, housing scarcity and regulatory bottlenecks could still drive buying sentiment even without strong income growth, but China lacks such constraints—making housing demand acutely sensitive to purchasing power. In contrast, speculative funds are increasingly flowing into equities, fueled by the rise of artificial intelligence (AI) firms such as DeepSeek, which have become new growth engines for stock prices.

Population Decline and Oversupply Cloud Market Outlook

A further drag on China’s housing market is rapid demographic contraction. Goldman Sachs estimates that due to population decline, annual urban housing demand will fall below five million units in coming years—just one-fourth of the 20 million-unit peak in 2017. The bank projects that shrinking population will cut housing demand by 500,000 units annually in the 2020s and by as much as 1.4 million units per year in the 2030s.

Analysts foresee the real estate industry shifting over the next decade from a construction-driven model to a service-oriented one. Zhaopeng Xing, chief strategist at ANZ Research, estimates that China’s housing construction volume will fall an additional 30% by 2035 to about 5.8 billion square meters, with more than half of new demand coming from remodeling existing homes. Consequently, property’s contribution to China’s GDP is expected to continue declining.

Now in its fourth year, the real estate slump is weighing heavily on the broader economy. China’s third-quarter GDP growth slowed to 4.8%, down from 5.4% in the first quarter and 5.2% in the second—missing the government’s annual target of 5%. Kelvin Lam, senior economist at Pantheon Macroeconomics, predicted that “a meaningful rebound in home prices is unlikely until 2027, when housing inventories fall to more reasonable levels.”