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Fitch Ratings just dialed back its expectations for China’s new home sales, now predicting a 7% drop in 2025 instead of a steeper 15% – pointing to hints of improvement in the country’s struggling housing market.
What does this mean?
China’s real estate sector, long stuck in a slump, is showing the faintest signs of a turnaround. Fitch is now looking for next year’s new residential sales by floor area to dip 5%, with average prices falling 2% – both milder than last year’s double-digit declines. While government stimulus has helped boost sales in early 2025, affordability barriers and bloated inventories are likely to slow momentum for the rest of the year. Risks are especially acute in lower-tier cities, where oversupply and weak demand remain headwinds. June data keeps things in perspective: sales values were still down 12.6% from a year ago, and prices in major cities slipped 0.3%, according to the National Bureau of Statistics.
The rosier forecast has sparked modest gains for Chinese property stocks, but investors aren’t celebrating just yet. Fragile confidence, shaky buyer demand, and high inventory levels mean that the road to recovery is still bumpier than most would like. With sales values still down by double digits, global investors exposed to China’s real estate or banking sectors are keeping a close eye on every policy tweak and data release.
The bigger picture: China’s real estate reset continues.
Housing’s woes continue to ripple through the world’s second-largest economy, since property and related industries account for about a quarter of China’s GDP. Even as government policies provide short-term relief, issues like affordability and overbuilding suggest these troubles could weigh on growth and jobs for a while yet – making China’s real estate recovery a global watchpoint.
