Challenging times lie in store for China’s real estate market. China’s long-standing struggle to stabilize its fragile housing market continued in May 2025. According to recent reports, new home prices in the country fell by 0.2% from a month ago. 

This decline followed a stagnant performance in April, raising concerns among analysts. According to the National Bureau of Statistics of China, nearly 70% of Chinese household wealth is tied to real estate, underscoring the sector’s critical role in the national economy.

Currently, China's property sector is crippled by weakening market demand and changing buyer sentiment. This downturn has been lingering for several years, despite Beijing’s efforts to boost demand. “The catalyst was the unprecedented tightening of real estate policies in 2021, followed by strict COVID lockdowns in 2022,” analysts at Goldman Sachs say.

Experts surveyed by Reuters forecast a 5% decline in home prices in China for 2025, with stagnation likely in 2026. Some experts even believe the housing crisis could persist until 2027. Goldman Sachs analysts underscore a significant drop in the number of new construction projects—a trend that continues to intensify. “The ongoing correction in China’s housing market represents one of the most significant economic events of the decade,” the experts assert.

At the same time, Goldman Sachs analysts warn that insufficient monetary easing could lead to “a sustained erosion of confidence and private demand, as well as prolonged deflation.” In their view, additional stimulus measures from Beijing are fully justified under the current circumstances.