China’s home prices to drop further, recovery not expected until 2026: Reuters poll

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BEIJING (Reuters) – The outlook for China’s property sector has turned gloomier despite expectations of price stabilisation by next year as government measures to boost demand help the fragile recovery, a Reuters poll showed.

Home prices were expected to drop at a faster pace this year than previously estimated, with growth resuming in 2026 but at a pace slower than November’s forecast. The poll of 10 analysts was conducted from February 12-24.

Analysts expect the stabilisation of China’s property market will be a protracted process due to high housing inventory, still bearish demand and a long-term population decline. At its peak in 2021, the sector accounted for around a quarter of the economy.

The poll found that property sales were likely to have declined more than projected in November’s forecast, while investment was expected to see a more gradual downturn.

In an effort to stabilise its crisis-stricken property sector, China took “historic” steps last year, including urging local governments to purchase unsold homes from heavily-indebted developers.

However, these key measures had little impact, pressuring Beijing to find new solutions for the real estate sector, which analysts said should involve large-scale direct state purchases of empty apartments.

“The sector continues to face structural challenges, including a large unsold housing inventory, employment uncertainty and low housing affordability,” said Tyran Kam, senior director of Asia-Pacific corporate ratings at Fitch Ratings.

Analysts projected a 2.5% decline in home prices this year, deeper than a 2.0% drop in the prior poll. They estimated a 1.2% prices increase next year, versus a 1.6% rise in November’s poll, with a further uptick of 2.0% in 2027.

The survey indicated significant variations in home price fluctuations across cities and regions.

Tier-one and some major tier-two cities were expected to see a slight decline in house prices, stabilising in 2026. In contrast, lower-tier cities could experience a more extended period of price decline, said analysts at S&P Global (China) Ratings.

Property sales were expected to shrink 5.7% this year, faster than the 5.0% fall projected in the prior poll. Investment was likely to fall 7.0% compared with an 8.0% drop forecast in November.

Lower thresholds for home purchases, including mortgage rates, down payment ratios and tax rates, coupled with risk control for real estate companies, would instil more confidence in home buyers, said Ma Hong, senior analyst at GDDCE Research Institution.

The market was awaiting China’s annual parliamentary meeting, which might announce significant policies to bolster the real estate sector.

The meeting would “likely emphasise stabilising the

housing market as a key policy task, with further measures to push forward urban village renovation, support fundamental and upgrading housing demand, reasonably control new land

supply, and facilitate more progress of home inventory destocking,” UBS analysts said in a research note.

(Other stories from the Q1 global Reuters housing poll:)

(Reporting by Liangping Gao and Ryan Woo; Additional reporting by Shuyan Wang; Editing by Jacqueline Wong)