By Liangping Gao and Ryan Woo
BEIJING, Oct 19 (Reuters) – China’s new home prices fell again in September, extending a more than three-year slump and suggesting policy support has yet to spark a broad-based recovery in housing demand.
New home prices dropped 0.1% month on month, matching the pace of decline in August, according to Reuters calculations based on data released by the National Bureau of Statistics.
On an annual basis, prices fell 2.8%, narrowing from a 3.0% drop in August, extending a decline since June 2023.
The housing market’s prolonged downturn has become one of China’s biggest economic challenges, depressing consumer confidence and local government revenues.
Unlike in past years, when prices moved broadly in tandem, the housing market has become increasingly divided, said Zhang Dawei, analyst with property agency Centaline.
“The era of widespread housing price hikes has completely ended, and structural market trends will become the norm,” Zhang said.
Major tier-one cities such as financial hub Shanghai are recovering steadily, led by resale homes. Second-tier cities are stabilising with policy support, while smaller cities remain weak, with little prospect of a near-term rebound.
Prices of new and resale homes in the country’s biggest cities continued to show signs of stabilisation, likely boosted by Shanghai’s further easing of homebuying restrictions and incentives such as subsidies announced in August.
In smaller cities, however, both new and resale home prices continued to fall month on month and year on year.
Following years of contraction, the market is “on the eve of a cyclical inflection point”, said Zhe Lu, chief economist and co-head of research at Soochow Securities, adding that while the exact path and size of any rebound remain to be determined, “further downside is far more limited than in prior years”.
“We anticipate nationwide home prices will stabilise over the next one to two years,” Lu said, citing seven straight months of resale price gains in overall tier-one cities since February.
Analysis of 190 property downcycles across 57 economies between 1970 and 2025 shows such slumps last about 23 quarters on average, with most ending within 30 quarters. China’s housing sector has been adjusting for 20 quarters.
Based on this precedent, Lu said the Chinese property market could bottom out in the next 12 to 24 months.
In a sign that policymakers are seeking to prop up the housing market in smaller cities, the central bank and financial regulator unveiled in late September policies for subsidising mortgage interest payments for eligible homebuyers.
The policy capped the purchase price of eligible homes at 1.5 million yuan ($224,417), hardly enough to pay for even a one-bedroom apartment in a tier-one city.
Market woes continue to act as a drag on domestic demand, as many homeowners, seeing the value of their homes fall, opt to save money rather than spend.
Separate data showed property investment and home sales both contracted at a faster pace in the first nine months of the year.
China’s economy grew faster than expected in the third quarter, buoyed by a surge in exports and strong factory activity.
“State-led investment and high-tech exports are likely to remain key supports for growth in 2027. But subdued household consumption and the prolonged property downturn looks set to weigh on the domestic economy for a while longer, limiting broader spillovers from these growth drivers,” Sheana Yue, senior economist at Oxford Economics, said in a research note.
($1 = 6.6840 Chinese yuan)
(Additional reporting by Yukun Zhang; Editing by Jacqueline Wong)
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