1 July official data points to worsening of property slump
China’s property data for July and first 7 months of 2025
On Aug. 15, the PRC National Bureau of Statistics fixed-asset investment and real estate data for July and the first seven months of 2025.
Sales prices of commercial housing in 70 major Chinese cities
New housing
i) First-tier cities
- Month-on-month: Down 0.2 percent (growth decline narrowed by 0.1 percentage points from the previous month).
- Year-on-year: Down 1.1 percent (growth decline narrowed by 0.3 percentage points from the previous month).
- Beijing: MoM growth unchanged; YoY down 3.6 percent.
- Shanghai: MoM up 0.3 percent; YoY up 6.1 percent.
- Guangzhou: MoM down 0.3 percent; YoY down 4.6 percent.
- Shenzhen: MoM down 0.6 percent; YoY down 2.2 percent.
ii) Second-tier cities
- MoM: Down 0.4 percent (growth decline widened by 0.2 percentage points).
- YoY: Down 2.8 percent (growth decline narrowed by 0.2 percentage points).
iii) Third- and fourth-tier cities
- MoM: Down 0.3 percent (growth unchanged from the previous month).
- YoY: Down 4.2 percent (growth decline narrowed by 0.4 percentage points).
Second-hand housing
i) First-tier cities
- MoM: Down 1.0 percent (growth decline widened by 0.3 percentage points).
- YoY: Down 3.4 percent (growth decline widened by 0.4 percentage points).
- Beijing: MoM down 1.1 percent; YoY down 2.9 percent.
- Shanghai: MoM down 0.9 percent; YoY down 2.2 percent.
- Guangzhou: MoM down 1.0 percent; YoY down 6.0 percent.
- Shenzhen: MoM down 0.9 percent; YoY down 2.5 percent.
Second-tier cities
- MoM: Down 0.5 percent (growth decline narrowed by 0.1 percentage points)
- YoY: Down 5.6 percent (growth decline narrowed by 0.2 percentage points)
Third- and fourth-tier cities
- MoM: Down 0.5 percent (growth decline narrowed by 0.1 percentage points)
- YoY: Down 6.4 percent (growth decline narrowed by 0.3 percentage points)
National real estate market (January–July period)
- National real estate development investment decreased 12.0 percent YoY to 5.358 trillion yuan (calculated on a comparable caliber).
- Residential investment decreased 10.9 percent YoY to 4.1208 trillion yuan.
- Sales area of new commercial housing decreased 4.0 percent YoY to 515.6 million square meters.
- Residential sales area decreased 4.1 percent to 432.18 million square meters.
- Sales value of new commercial housing decreased 6.5 percent YoY to 4.9566 trillion yuan.
- Residential sales value decreased 6.2 percent to 4.3593 trillion yuan.
China’s fixed-asset investment data for July and first 7 months of 2025
Nationwide fixed-asset investment (excluding rural households) in China increased by 1.6 percent YoY to 28.8229 trillion yuan (calculated on a comparable caliber). Of the total:
- State-owned holding fixed-asset investment grew by 3.5 percent.
- Private fixed-asset investment fell by 1.5 percent.
- Fixed-asset investment by foreign-invested enterprises fell by 15.7 percent.
Beijing considers getting central firms to buy homes
Aug. 14
Bloomberg News reported that the CCP authorities are preparing to ask some of the biggest state-owned enterprises and bad-debt managers, including China Cinda Asset Management, to purchase unsold homes from distressed property developers, citing people familiar with the matter.
The people said that the move came after the limited success of a similar initiative that relied on local governments. Companies would be allowed to tap 300 billion yuan of funding that the People’s Bank of China earmarked for the program in 2024, according to one of the people.
The people said in March that PRC officials are considering removing a price cap for the program to accelerate the process and improve the economics of the plan for state buyers and developers. The central bank previously launched a nationwide relending program in May 2024 to aid local state-owned companies in buying unsold homes, and said a few months later that it would step up the initiative. However, progress has been slow with less than 6 percent of the announced loans approved thus far, per a Bloomberg Intelligence report in early August. The report said that acceleration of the program could be unlikely given a mismatch in the locations of unsold property and the demand for affordable housing.
Bloomberg Economics estimated in May 2024 that there were about 60 million unsold homes in China, and those homes will take more than four years to sell without government support.
Our take
China’s real estate market has been mired in a downward spiral since 2021, emerging as the economy’s largest drag. Despite the CCP authorities’ series of “historic” economic support measures issued in 2024 — including a 300 billion yuan affordable housing re-lending program, lowered down payment ratios, relaxed purchase restrictions, and recent consumer loan subsidies — the market’s decline has accelerated in the second half of 2025, with no signs of stabilization.
1. Beijing’s official real estate data for the Jan–July 2025 period shows that things are worsening for China’s property sector:
- Real estate development investment fell 12.0 percent year-on-year, slightly worse than 2024’s 10.2 percent decline.
- New commercial housing sales area dropped 4.0 percent and sales value fell 6.5 percent, an improvement from 2024’s 18.6 percent and 24.3 percent respectively. However, the declines still point to stagnation.
- Among 70 major cities, new home prices declined 0.3 percent month-on-month and 3.2 percent year-on-year in July, while second-hand home prices fell 0.7 percent month-on-month and 5.8 percent year-on-year.
First-tier cities — Beijing, Shanghai, Guangzhou, and Shenzhen — showed alarming deterioration. Despite state media claims of economic stability (“stable with positive momentum”) and real estate recovery, these economic hubs are leading the decline:
- New home prices in Shanghai rose 6.1 percent year-on-year, driven by high-end demand. Second-hand home prices, however, fell 2.2 percent, signaling limited premium market support.
- New and second-hand home prices dropped in other first-tier cities. Guangzhou’s second-hand market prices fell 6.0 percent year-on-year, exceeding the national average. Second-hand markets in these cities are declining faster than in tier two and tier three cities, reflecting weak demand and a strong “wait-and-see” sentiment.
The data underscores a structural mismatch. While pockets of high-end demand persist (i.e. in Shanghai), the overall market lacks the structural momentum to counterbalance widespread declines in lower-tier segments. The downturn is exacerbated by external and domestic pressures. Escalating U.S.-China trade tensions, including a recent 40 percent U.S. tariff on transshipped goods, have heightened uncertainty around household income expectations. Combined with persistently high home prices, this has driven buyers to the sidelines, particularly in lower-tier cities where demand remains notably weak. A Reuters survey in May 2025 projected a 4.8 percent year-on-year decline in Chinese home prices for 2025, a steeper drop than the 2.9 percent forecast in February, reflecting intensified trade frictions and subdued demand in lower-tier markets.
The extent of China’s real estate downturn may be significantly worse than official figures suggest. Starting Aug. 14, major Chinese real estate platforms, including Lianjia’s website, Lianjia app, and Beike, removed second-hand home transaction price data for the Shanghai region, following similar actions for Beijing, Guangzhou, Hangzhou, and Nanjing. This move, likely driven by official “window guidance,” aims to obscure steep price declines and avert market panic or a “stampede effect” of mass sell-offs.
Compounding concerns, social media reports indicate that property owners are unable to list homes on platforms like Beike if sale prices fall below government-set guidance levels. Such heavy-handed interventions by the CCP authorities — akin to “burying one’s head in the sand” — fail to stabilize the market and instead amplify investor and consumer unease. The suppression of transparent pricing data signals that price drops are severe enough to warrant official intervention, eroding trust in market dynamics.
2. July 2025 financial data from the PBoC mirrors the real estate slump, with credit contraction reinforcing market woes:
- From January to July 2025, household loans grew by 680.7 billion yuan, with mid-to-long-term loans (mostly mortgages) up 1.06 trillion yuan. However, July alone saw a 489.3 billion yuan decline in household loans, including a 110 billion yuan drop in mid-to-long-term loans, down 120 billion yuan year-on-year. This marks the second negative growth month since April, and the first overall new loan contraction (negative 49.9 billion yuan) in 20 years, driven by reduced loan issuance rather than early repayments.
- Beijing’s second-hand home transactions fell from 19,233 units in March to 12,784 in July (negative 15.56 percent month-on-month), and Shanghai’s dropped from 26,900 to 16,900 (negative 8.67 percent). Nationwide, new home price increases were limited to 13 cities in May, with 53 seeing declines, and 69 cities reported second-hand price drops in June. This confirms that falling transactions underpin loan contraction.
To stimulate consumption, the State Council introduced a loan subsidy policy in August 2025, offering a 1 percent interest subsidy (90 percent central, 10 percent local funding) on consumer and service-sector loans up to 50,000 yuan. The impact of the policy, however, is limited as consumers continue to prioritize debt reduction over borrowing in preparation for economic uncertainty.
3. The continued decline of China’s real estate market in July 2025 suggests that the CCP authorities’ attempt to stabilize the sector through a 300 billion yuan inventory acquisition policy, and without direct intervention, is insufficient. The ongoing slump, with new home prices down 3.2 percent year-on-year and second-hand prices down 5.8 percent, signals a deepening crisis that threatens broader economic stability.
Beijing’s 300 billion yuan affordable housing re-lending program, announced on May 17, 2024, aimed to support state-owned enterprises in acquiring unsold commercial housing for affordable units. Touted as a “historic shift” to clear inventory and stabilize prices, the policy has faltered, with only 6 percent of funds utilized by August 2025 per Bloomberg Intelligence. Execution is hampered by mismatched locations between unsold stock and affordable housing needs, slow approvals, and SOE reluctance due to high operational costs and low rental yields (<2 percent). While the program has eased liquidity for some developers, it has failed to address pre-sale delivery challenges, leaving the market in decline.
Recent proposals to encourage central SOEs like China Cinda to use the 300 billion yuan to acquire distressed developers’ stock of unsold homes are unlikely to succeed, given these firms’ strained finances. The “city-specific” policy approach is further constrained by high local government debt and declining land sale revenues, limiting officials’ willingness to take risks that could impact political performance. Without scaling special bonds to 500 billion–1 trillion yuan or establishing a 2–3 trillion yuan stabilization fund to absorb 9–11 percent of inventory (out of 60 million unsold homes), the market is unlikely to bottom out.
4. The real estate downturn is not isolated but intertwined with macroeconomic challenges, including U.S.-China trade tensions, mandatory social insurance contributions, and a deflationary spiral. Other recent signs of trouble include:
- Per official PRC data, China’s industrial value-added growth slowed from 7.7 percent in March to 5.7 percent in July, and retail sales growth fell from 6.4 percent in May to 3.7 percent in July. Despite a 7.2 percent export rise in July, overall demand remains weak.
- Beijing’s mandatory social insurance policy, effective Sept. 1, 2025, following an August 2025 Supreme Court ruling invalidating labor agreements that waive contributions, would significantly increase operating costs for small and medium enterprises. The ruling allows workers to claim back payments, triggering widespread anxiety among private firms. Many SMEs, facing soaring costs, have resorted to preemptive layoffs or closures before the policy’s implementation. While CITIC Securities estimates this measure could inject 870 billion yuan into social security funds, it exacerbates unemployment and reinforces deflationary pressures. Middle-class households, increasingly concerned about income stability, are curtailing consumption and home purchases, further weakening real estate demand.
- The real estate sector’s persistent decline — marked by a 12.0 percent drop in development investment and a 5.8 percent year-on-year fall in second-hand home prices in July 2025 — reflects these macroeconomic headwinds. The combination of trade uncertainties, rising SME costs, and deflation (evidenced by flat CPI at 0 percent and a 3.6 percent PPI decline in July) has eroded consumer confidence, stifling housing demand and challenging optimistic forecasts, such as CNBC’s prediction of a late-2025 stabilization.
What’s next
China’s real estate crisis, far from bottoming out, is poised to worsen. Investors should brace for prolonged real estate weakness, with ripple effects on construction, banking, and consumer sectors. Policy interventions, unless significantly scaled up, are unlikely to reverse the downturn. External trade risks and domestic cost pressures further cloud the outlook, warranting cautious positioning in China-exposed assets.
