China’s struggling property market showed fresh signs of deterioration in May, reinforcing Premier Li Qiang’s recent call for “greater efforts” to halt its decline. New figures analyzed by the Financial Times paint a sobering picture for policymakers already grappling with a fragile post-pandemic recovery and global trade headwinds.
According to the Financial Times’ analysis of official data released Monday, new home prices across 70 major Chinese cities dropped 0.2% in May from the previous month — the steepest decline in seven months. Prices for second-hand homes fell by an even steeper 0.5%, the sharpest monthly fall in eight months. Real estate investment during the first five months of 2025 also plunged 10.7% year-on-year, underscoring the sector’s deepening crisis.
The numbers arrive amid lingering hopes that Beijing’s previous rounds of stimulus — including mortgage rate cuts, funding to complete unfinished housing, and plans to repurpose unsold units for social housing — might finally stabilize the market. Instead, economists warn that any recovery remains distant.
“A nationwide turnaround looks a distance away,” said Louise Loo, lead economist at Oxford Economics, in remarks cited by the Financial Times.
While early 2025 offered glimmers of hope — particularly in tier-one cities like Beijing and Shanghai — those gains appear to have reversed. Guangzhou, one of China’s most dynamic urban hubs, became the latest city to lift home purchase restrictions in a bid to revive buyer confidence. Yet even in top-tier cities, prices of both new and second-hand homes fell in May.
“Even the primary prices started to see some weakness,” noted Karl Choi, head of Greater China real estate research at Bank of America. “That was a bit of a difference from the last few months, when primary prices were relatively stable.”
The secondary housing market — where price controls are looser — is considered a clearer reflection of sentiment. In May, second-hand prices either stagnated or rose in just three of the 70 cities surveyed by the National Bureau of Statistics, the Financial Times reported.
“The market is still searching for a bottom,” said Jian Chang, chief China economist at Barclays, pointing to the latest declines in major cities following temporary stabilization in March.
Despite the gloomy short-term outlook, some analysts see tentative signs of recovery in the longer term. HSBC’s head of Asia real estate research, Michelle Kwok, said the worst of the crisis may have passed in large urban centers. “Big cities are leading the recovery,” she said, though she warned against expecting a uniform rebound across the country.
Indeed, conditions are even more precarious in smaller cities and rural areas. “We go as far as saying, just write off the lower tier,” Kwok added. “We just have to accept that it’s not going to be a ‘rising tide lifts all boats’ coming out of this crisis.”
Goldman Sachs on Monday forecast that China’s annual demand for new homes would remain below 5 million units in coming years — a dramatic fall from the 20 million-unit peak in 2017. Oversupply remains a key issue, particularly in lower-tier cities with shrinking populations and weaker economic prospects.
“Stabilization, much less recovery, is not expected in 2025,” said Yuhan Zhang, principal economist at the Conference Board’s China Center. Still, he acknowledged that inventory levels were expected to grow more slowly than in 2024.
Analysts at UBS and Goldman Sachs predict that home prices — both new and second-hand — are unlikely to stabilize until late 2025 or beyond, depending on macroeconomic conditions and the resolution of tensions with the United States.
Local voices echo the grim national trend. In Keqiao, a textile hub in Zhejiang province, housing prices have plunged nearly one-third from their peak, according to local business owner Han Jun. “They keep going down, and it doesn’t look like it’s turning around,” he told the Financial Times.
Premier Li, in remarks aired on state broadcaster CCTV, urged a long-term perspective to weather the storm. But with fresh data signaling renewed weakness and sentiment faltering even in China’s wealthiest cities, policymakers face intensifying pressure to stabilize the country’s largest economic sector — and fast.
