House prices continue to slide for China’s cities
While the property market downturn has been universal, the scale and depth has been varied for different cities and regions.
House prices are continuing their descent across China’s cities, signalling the country’s ongoing property market downturn still has distance left to run. While the property market downturn has been universal, the scale and depth has been varied for different cities and regions. The largest and most affluent cities have so far experienced much shallower declines in house prices. Compared to their peak in 2021, house prices in the smaller tier-3 cities are down by as much as 30%, while prices for the country’s major cities, like Beijing and Shanghai, are down by less than 10%.
Income growth rates are a core factor influencing each city’s individual experience of the downturn, with cities experiencing the slowest household income growth witnessing the largest decline in house prices. The prospect of higher US tariffs and weaker global trade will likely apply further downward pressure to incomes and could lead to a longer drag on the property market, particularly in the export-oriented east coast regions that are the most exposed to current trade tensions.
China’s deteriorating demographics will also place increasing, but uneven, strain on the structural demand for housing in different cities and regions. This issue is particularly acute for the north and northeast cities and regions, as well as non-provincial capitals in other parts of the country. Downward corrections in house prices look likely to continue for several years, but signs of recovery will probably emerge first where demographic fundamentals for housing demand are stronger, such as in tier-1 cities and provincial capitals.
