China’s property market is showing deeper signs of stress as the downturn extends into a fifth year, with falling prices and swelling inventory putting more pressure on developers and homebuyers.
New figures from China Real Estate Information Corp showed that sales among the top 100 developers tumbled 36 percent in November from a year earlier, a slight improvement from a 42 percent drop in October but still signaling severe weakness. For the first 11 months of the year, sales were down 19 percent from the same period in the previous year.
Goldman Sachs chief China economist Hui Shan called the trend “real and concerning,” adding in a note that the probability of fresh housing stimulus had increased.
Secondary home prices are also sliding. The China Index Academy reported that resale prices across 100 major cities fell 7.95 percent in November, a deeper decline than the previous month, driven by high listing volumes and subdued buyer confidence. Morgan Stanley estimated that sales for 25 key developers dropped 42 percent year on year, with sluggishness expected to continue into next spring.
Daiwa Capital Markets analyst William Wu said Beijing’s goal to “halt the declines in housing market” now looks “increasingly unrealistic,” citing “renewed turmoil” late in the year, accelerating price drops and “resurfacing of high-profile defaults.”
Fresh concerns emerged after China Vanke asked bondholders to approve a one year delay on an onshore bond maturing on December 15. Vanke has long been viewed as one of the country’s more stable developers, supported by major shareholder Shenzhen Metro. That support came into focus in early November when Shenzhen said it would seek collateral for roughly 20 billion yuan in previously unsecured loans, sending Vanke’s bond prices to record lows.
Cathy Lu, a credit analyst at Octus, said the shift “reflects a liquidity crisis that will likely end in a comprehensive restructuring,” although she does not expect a broad wave of similar extensions or defaults.
Rating agency S&P Global downgraded Vanke’s long term issue credit ratings to “CCC-” last week, warning of a potential “distressed restructuring” within six months. Several of the company’s yuan bonds fell more than 20 percent on Tuesday, triggering trading suspensions in Shenzhen.
Beijing has tried to stabilize the market, including a 300 billion yuan initiative last year to help state owned enterprises buy completed but unsold homes. Yet excess inventory remains a major hurdle. S&P Global estimated that unsold completed units reached about 762 million square meters by the end of August 2025, up from 753 million square meters at the end of 2024.
Analysts at the Economist Intelligence Unit said that if authorities effectively limit land supply to developers and reduce inventory, home prices could bottom out as early as the first half of 2027. The inventory turnover cycle has shortened by five months since its April 2025 peak but still needs about 18 more months to return to historically healthier levels.
Economists expect incremental policy easing ahead as officials try to prevent a deeper downturn. Falling prices and declining sales have strained developers’ cash flow, leading banks to place more foreclosed homes on the market. Goldman’s Shan warned that this creates a “negative feedback loop” that policymakers need to break.
Morgan Stanley said Beijing may consider an “interest rate subsidy” to lower mortgage costs without harming banks, which could help steady prices and “buy time for a gradual demand led recovery.” The bank estimated that reducing mortgage costs by 1 percentage point in the second quarter of 2026 could lift new home sales and ease deflationary pressures, with higher tier cities likely to see prices find a floor first.
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