China is still searching for a floor in its property market.
New-build sales are collapsing, second-hand prices are falling across the country and even major state-backed developers like Vanke are under strain. Beijing’s support measures have so far failed to restore confidence and demand.
Details
🏚️ Falling prices instead of stabilizing: In China’s 70 largest cities, residential-property prices are now about 20 to 40 percent below their 2021 peak. Even in top cities like Beijing and Shanghai, prices have dropped year-on-year.🏦 Homes in the red zone: According to UBS, by the end of 2025 roughly 700,000 apartments will be worth less than their outstanding mortgages. In 2026 the number could exceed 1.8 million. The resulting forced sales add further downward pressure on prices.
🧯 Fire extinguishers for a wildfire: Beijing is considering subsidies for mortgage interest and tax relief. But even a one-percentage-point cut in effective mortgage rates would free up at most 0.5 percent of GDP, according to analysts, which is far too little to unwind a bubble years in the making.
🏦 Proposed stimulus measures barely move the needle: Interest subsidies or tax breaks might reduce monthly payments, but Goldman Sachs says they are far from enough to restore lost confidence.
📆 Recovery measured in years, not quarters: Morgan Stanley and UBS expect sales, new starts and investment in the property sector to keep falling through 2026, stabilizing no earlier than 2027.
Why you should know Vanke
- Market barometer: Vanke was long considered the most stable major developer and a model case for solid balance sheets.
- State in the background: The largest shareholder is Shenzhen Metro. The city has already provided over 30 billion CNY in support but is signaling tougher conditions ahead.
- Rising stakes: Vanke alone must repay more than CNY 13 billion in debt by mid-next year. Markets doubt this can be done without a restructuring.
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