China’s property slump may be bottoming, as analysts point to signs

China’s slumping property market may finally be reaching a bottom, as credit has resumed flowing to developers while the nationwide inventory of unsold homes has shrunk, analysts said.

The decline in China’s new home sales this year may slow to 7 per cent, Fitch Ratings said on Tuesday after revising its forecast from a previous decline of 15 per cent, due to the better-than-expected performance of the property market in the first half. The credit-rating agency also lowered its forecast of the sales drop by gross floor area to 5 per cent, better than a previous estimate of 10 per cent.

Government support is helping, as relaxed rules around home purchases, lower mortgages, interest rate cuts, as well as the absorption of excess housing inventory via special-purpose bonds issued by local governments.

Five early indicators are supporting China’s housing market recovery, HSBC analysts wrote on Monday. These include improving credit conditions among developers, industry consolidation, inventory clearance, stronger land sales and improving market-oriented pricing models for residential homes, especially in higher-tier cities.

Cranes on residential buildings under construction by the Chinese property developer China Overseas in Nanjing, in eastern China’s Jiangsu province on April 25, 2025. Photo: AFP

“The downturn has been shorter than the ‘lost decade’ rhetoric that some investors embraced,” the analysts wrote. Since the property crisis began in 2021, the market has consolidated rapidly, with the top 15 state-owned developers expanding their market share from 15 per cent four years ago to 23 per cent in the first half of this year – a shift that has been instrumental in stabilising the sector, HSBC said.

South China Morning Post