China’s housing market has fallen back below where it started 20 years ago, once inflation is factored in. The country’s real residential property price index sat at 85.13 in the first quarter of 2026, according to data from the Bank for International Settlements published via the Federal Reserve, down from a peak of roughly 113 in 2021 and below the index’s starting level when tracking began in 2005.
The decline shows no sign of bottoming. New home prices across 70 Chinese cities fell 3.5% year-over-year in May, marking the 35th straight month of decline, the steepest drop pace since May 2025. Secondary-market prices have fallen even further, with China Index Academy data showing resale prices across 100 major cities dropping 0.42% month-over-month in June, with 88 of those cities posting declines and only 12 recording gains.
The scale of the wealth destruction is significant given how central property is to Chinese household finances. Residential real estate accounts for roughly 70% of urban household assets in China, far higher than in the United States, and the sector’s collapse has been a major drag on the broader economy. Goldman Sachs estimates the property downturn subtracted about two percentage points from annual GDP growth in both 2024 and 2025, and property investment fell 17.2% in 2025 alone.
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The crisis has claimed some of China’s largest developers. Evergrande faced liquidation with roughly $300 billion in liabilities, while Country Garden, once the country’s largest homebuilder, defaulted on its dollar bonds.
Revenue from residential land sales fell roughly 65% from its 2020 peak in 2025, according to China Index Academy data reported by Caixin, forcing even state-backed local government financing vehicles, which had propped up land auctions during the downturn’s early years, to pull back.
Land-use rights sales, once responsible for close to 40% of local government revenue at their 2021 peak, generated less than a third of that peak total through most of 2025, and local governments have responded by cutting spending and increasingly issuing asset-backed securities collateralized by state-owned assets to plug the gap.
Construction and property-related activity have historically consumed a majority of the world’s cement and roughly half its steel supply, meaning the sector’s contraction removes a major pillar of global commodity demand, with ripple effects already showing up in metals and materials markets.
Beijing has introduced targeted stimulus, including a bank loan “whitelist” mechanism that has approved more than 7 trillion yuan in financing for stalled projects, but a Reuters poll of analysts in March pointed to continued weakness, with home prices expected to fall another 4% in 2026 before stabilizing in 2027 and rising only modestly in 2028.
