Financial institutions such as Goldman Sachs have predicted that China’s real estate market will reach its lowest point in 2025, despite Chinese President Xi Jinping’s promise to the people to “stop the decline in the real estate market”. We predicted that it would not improve until the second half of the year.
Goldman said its analysis shows that real estate prices in China will begin to stabilize in the second half of 2025, rising by an average of 2% two years later. This current situation is likely due to developers’ high debt burdens and practice of selling homes before completion, which has led to a decline in consumer confidence.
To address these issues, the Chinese government will spend an additional 8 trillion yuan ($1.12 trillion) to reduce the inventory of unsold homes and ensure the delivery of sold and unfinished homes. Goldman predicts.
S&P Global Ratings Director Edward Chan also noted that the government needs to prioritize support for developer financing and inventory reduction to achieve stabilization in the second half of 2025.
But China says its priority now is to strengthen advanced manufacturing as a new growth engine, with support for the real estate sector, which once accounted for more than a quarter of GDP, taking a backseat. Therefore, this has become a major issue.
Additionally, according to Nomura, approximately 20 million sold homes remained unfinished as of the end of last year, and only 4 million homes were completed and delivered to buyers under this year’s whitelist program. It is said that
Nevertheless, the government’s efforts have not gone unnoticed. According to real estate research firm China Index Academy, real estate sales in 22 major cities fell by about 4% in October, much smaller than the 25% decline in September.
Although stabilization may be on the horizon, Goldman believes the amount of stimulus being pumped into real estate is still insufficient and that the Chinese government needs better execution on this issue to halt the decline. warned that it was necessary. The American investment bank also warned that real estate prices could continue to fall by another 20-25% if the government fails to implement the policies that the market really needs.
Analysts at S&P Global also added that this deterioration could lead to a new persona among developers, leading to a “lack of confidence” and a “cautious approach” to acquiring land and starting new projects. . Based on official data from the National Statistics Office, the number of new construction projects plummeted by 42% in 2023 from a peak in 2019.