China's housing slump deepened in August as new home prices fell for a fourth straight month, underscoring the persistent weakness in the property sector that continues to weigh on economic growth despite repeated rounds of policy support from Beijing.
New home prices declined 0.3% month-over-month in August, matching July's drop, according to Reuters calculations based on National Bureau of Statistics data. Prices were down 2.5% compared with a year earlier, narrowing slightly from July's 2.8% annual decline but still marking one of the steepest downturns in years.
The property sector, which once contributed about a quarter of China's GDP, has been in crisis since 2021. Multiple rounds of stimulus - including mortgage rate cuts, easing homebuying restrictions, and urban village renovation programs - have yet to produce a sustained turnaround. "Based on current data and market trends, the real estate market is likely to face significant adjustment pressure in the near term," said Zhang Dawei, a property analyst at Centaline. Zhang added that the market is anticipating "stronger measures to stabilise the housing sector, including easing home purchase restrictions, looser credit policies, and, in particular, a potential interest rate cut on the Loan Prime Rate (LPR) on September 20."
Data showed that of 70 major cities surveyed, 57 recorded monthly declines in August, while 65 posted year-over-year drops. Resale prices fell sharply, down 3.5% in tier-one cities such as Beijing and Shanghai, 5.2% in tier-two cities, and 6.0% in smaller tier-three hubs.
Property investment plunged 12.9% in the January-August period compared with a year earlier, while floor-area sales dropped 4.7%, according to official data. The continued downturn weighed on equity markets Monday, with the Hang Seng China Mainland Property Index falling 2.3% and the CSI 300 Real Estate Index down 0.7%.
The housing slump has hit household balance sheets, eroding consumer confidence and dampening spending. Weak income expectations, elevated unemployment, and high secondary market inventory have kept prospective buyers on the sidelines, analysts said. Business sentiment has faltered as well, limiting hiring and wage growth.
Some local governments have ramped up efforts to revive demand. Shanghai and Shenzhen recently removed homebuying restrictions in certain districts for qualified buyers, a move aimed at supporting first-time homeowners and those upgrading to larger units.
Premier Li Qiang signaled Beijing's continued focus on stabilizing the sector, saying last month that China should "adopt forceful measures to consolidate the stabilising trend" and stimulate demand for housing upgrades. Economists in a Reuters poll expect home prices to bottom out no earlier than the second half of 2026 or 2027, about six months later than previously anticipated, suggesting that a prolonged recovery may lie ahead.
