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China Property Sales to Drop 10-14% as Housing Glut Blocks Recovery

A new S&P Global report forecasts a 10-14% drop in China's primary property sales, hindered by a persistent oversupply of completed housing. Completed inventory is 45% higher than the pre-downturn 10-year average, with a slow destocking trend. Price declines have now spread to tier-one cities like Beijing and Shenzhen, with only Shanghai posting a gain in primary prices. The agency warns that further sales declines could put rating pressure on many developers, as foreclosed properties add another layer of supply.

Key Points: China Home Sales Forecast to Fall 10-14% Amid Oversupply

  • Primary sales forecast down 10-14%
  • Completed inventory 45% above 10-year average
  • Price weakness spreads to top-tier cities
  • 4 in 10 developers face rating pressure
  • Foreclosed properties add to oversupply
2 min read

China primary home sales likely to drop 10-14 pc amid oversupply: Report

S&P Global report warns China's property sales and prices will keep falling due to a massive inventory glut, with recovery out of reach.

"We previously viewed these markets as healthy, and as the likely starting place of any national property recovery. - S&P Global Report"

Mumbai, Feb 13

China's nationwide primary property sales are expected to fall 10-14 per cent as a persistent glut of completed housing keeps a market recovery out of reach, a new report has said.

The report from S&P Global said the completed primary inventory rose for the sixth year in a row to 766 million square metres by 2025 end, up 1.6 per cent (year-on-year).

Completed inventory at end-2025 was 45 per cent higher than the 10-year average prior to the downturn, the report further said.

The ratings agency highlighted a slow destocking trend, saying completed inventory dipped 4 per cent from a February 2025 peak but warned that without major nationwide policies to tackle excess supply, sales will likely keep falling.

S&P Global flagged that price weakness for primary and secondary homes has spread to tier-one cities in the last quarter of 2025.

"We previously viewed these markets as healthy, and as the likely starting place of any national property recovery," the report said, adding that Shanghai was the only city that posted a rise in primary property prices.

Beijing, Guangzhou and Shenzhen declined 3.2-5.6 per cent YoY in terms of primary home prices in CY25, the report noted.

The report forecasted primary home prices to likely drop 2-4 per cent in 2026 and secondary home prices to drop 5-8 per cent.

"We assume potential price regulations by local governments would likely prevent big drops in primary home prices," the report said.

In 2025, secondary home prices fell in all of China's 70 mid to large cities, according to the National Bureau of Statistics.

The ratings agency warned that if contracted sales fall another 10 percentage points, four in 10 Chinese developers (excluding China Vanke) could face downward rating pressure. As Chinese banks offload foreclosed properties in select regions, around 7 lakh -1.3 million units were up for sale in 2025, the report said.

"We assume that foreclosed properties could emerge as an additional source of oversupply and may put further downside pressure on home prices," it flagged.

- IANS

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Reader Comments

R
Rohit P
Wow, 766 million square metres of inventory! That's an unimaginable number. It puts our own real estate challenges in perspective. While our market has its issues, we haven't seen a nationwide glut of this scale. Hope the Chinese government can manage a soft landing for the sake of their citizens' investments.
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Aman W
The part about foreclosed properties adding to oversupply is concerning. When banks start dumping assets, it creates a vicious cycle of falling prices. RBI and our banks need to be vigilant. A stable housing market is crucial for middle-class financial security.
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Sarah B
Interesting data. From an investment perspective, this shows the risks of concentrated exposure in any one asset class, especially real estate. Diversification is key. Indian investors looking at property abroad should be very cautious.
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Vikram M
The report says price weakness has spread to tier-one cities. That's the last bastion falling. It reminds me of the unsold inventory in our own tier-2 and tier-3 cities. Maybe there's a lesson here about sustainable urban planning and not just building endless ghost towns.
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Karthik V
While the situation is tough for China, I respectfully think the article focuses only on the negatives. Every major economy goes through property cycles. Their government has strong tools for intervention. This might present a buying opportunity for some in the long term, once the dust settles.

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