Background on the Relevance of the Situation
China’s new home prices experienced a significant monthly decline in October, according to official data released on Friday. This drop underscores the ongoing weakness in demand for the real estate sector, which has been affected by the economic crisis. The Chinese government’s political recommendations prioritize “high-quality” development in the housing sector as part of their 2026-2030 development plan.
Monthly and Annual Price Declines
In October, new home prices fell by 0.5% on a monthly basis, marking the sharpest decline in over a year. This follows a 0.4% monthly drop in September, as calculated by Reuters based on data from the National Bureau of Statistics. Annually, prices dropped by 2.2% in October, matching the previous month’s decline.
Challenges for Beijing in Supporting the Real Estate Sector
The continuous decline in new home prices, particularly during the traditionally strong sales period of September and October, highlights the difficulties Beijing faces in helping the real estate sector recover amidst growth challenges.
Since market turbulence in 2021, the sector has grappled with sluggish sales and liquidity constraints. Stabilizing the market could boost household consumption and help reduce China’s excessive reliance on government-driven infrastructure investments and exports, which have been affected by U.S. President Donald Trump’s trade policies.
Government Measures and Their Impact
Although authorities implemented key measures in the second half of 2024 to support the market, no significant large-scale stimulus has been introduced this year. Recent policy measures have mainly reaffirmed existing commitments.
After reducing mortgage costs for some buyers in the first half of 2025, political officials reiterated their commitment to stabilizing the market.
Declining Confidence in Smaller Cities
A survey conducted by China Index Academy across 260 cities revealed a notable decrease in confidence regarding housing purchases, particularly in smaller cities. The survey found a 2.9 percentage point drop compared to the previous month.
Of the 70 surveyed cities, 64 reported monthly price declines, and 61 recorded annual price declines.
Key Questions and Answers
- What are the recent trends in China’s new home prices? New home prices fell by 0.5% on a monthly basis in October, the steepest decline in over a year. Annually, prices dropped by 2.2%.
- Why are China’s new home prices falling? The ongoing weakness in demand for the real estate sector, exacerbated by economic crisis and growth challenges, is causing the price declines.
- What are the government’s priorities for the housing sector? The Chinese government prioritizes “high-quality” development in the housing sector as part of their 2026-2030 development plan.
- What challenges does Beijing face in supporting the real estate sector? Beijing faces difficulties in helping the real estate sector recover amidst growth challenges, sluggish sales, and liquidity constraints.
- What impact could stabilizing the housing market have on China’s economy? Stabilization of the housing market could boost household consumption and help reduce China’s excessive reliance on government-driven infrastructure investments and exports.
- What recent measures have been taken by the Chinese government to support the housing market? Authorities reduced mortgage costs for some buyers in the first half of 2025 and reaffirmed their commitment to stabilizing the market through recent policy measures.
- How has consumer confidence in housing purchases been affected? Confidence in housing purchases, particularly in smaller cities, has declined notably. A survey by China Index Academy found a 2.9 percentage point drop in confidence compared to the previous month.
