China’s property slump deepens despite fresh easing measures

China’s property sector remained mired in a prolonged downturn in July, with fresh data showing sharp declines in investment, sales, and prices despite a steady rollout of easing measures by local authorities. Figures from the National Bureau of Statistics (NBS) on August 15 showed property investment fell 12 per cent in the first seven months of 2025 compared with the same period a year earlier, a steeper drop than the 11.2 per cent decline recorded in the first half. Property sales by floor area were down 4 per cent year-on-year, following a 3.5 per cent fall in January-June. New construction starts plunged 19.4 per cent, while funds raised by developers dropped 7.5 per cent.

New-home prices in 70 major cities fell 0.3 per cent month-on-month in July, matching June’s decline. On an annual basis, prices were down 2.8 per cent, slightly less than the 3.2 per cent fall in June, with modest narrowing of declines across tier-one to tier-three cities. Resale home prices also weakened, with tier-two and tier-three cities showing smaller drops but tier-one cities seeing wider falls.

Policy push meets market skepticism

The persistent weakness has added urgency to government efforts to stabilise the sector, which once accounted for roughly a quarter of China’s economic output. In recent months, more local governments have eased restrictions, including allowing greater use of housing provident funds and offering subsidies to buyers. In a notable step, Beijing last week scrapped purchase limits for qualified buyers in suburban areas outside the capital’s fifth ring road, though curbs remain in place closer to the city center.

Analysts expect Shanghai and Shenzhen may follow. However, HSBC Holdings analysts cautioned the change is “not meaningful,” noting that buyers seeking multiple properties are more likely to target prime locations. Despite the policy push, analysts remain wary about the near-term outlook. “A clear turnaround and stabilisation are not yet in sight,” said Li Kai, founding partner at Beijing Shengao Fund Management. ING analysts stressed that price stabilization is critical for restoring household confidence and reviving consumption.

Developers under pressure

The deepening slump has accelerated the financial strain on developers. Mid-sized builder China South City Holdings was ordered to liquidate by Hong Kong’s High Court this week after defaulting more than a year ago. Since the crisis began in 2021, at least six Chinese developers have received wind-up orders from Hong Kong courts. China Evergrande Group, once the country’s largest developer, confirmed its Hong Kong stock will be delisted, marking a symbolic end to an era of rapid expansion.

Global banks remain split on the outlook. HSBC sees a “highly divergent” recovery favoring state-backed developers with strong pipelines, while UBS has pushed back its recovery forecast after a renewed sales slowdown in the second quarter. Fitch Ratings expects the market to weaken further in the second half, with recovery hinging on broader economic conditions, labor market stability, and household income growth.

(With inputs from agencies)