International rating agency FitchRatings recently predicted that the sales value of new buildings in China will decline by 15% next year, to 73 trillion yuan.
On November 25th, Fitch released a report stating that it expects Chinese real estate developers to continue facing challenges in 2025, forecasting a 15% decrease in the sales value of new buildings to around 73 trillion yuan. This is mainly due to a 10% decrease in the selling area and a 5% decrease in the average selling price.
The report pointed out that the Chinese government has introduced new supportive policies to stabilize the recent market sentiment. However, the sustainability of short-term recovery remains highly uncertain as the industry still faces structural issues, including high unsold housing inventory, uncertain employment situation, and low housing affordability. The low residential rental yield compared to mortgage rates also indicates further pressure on average selling prices.
Fitch mentioned in the report that half of the mainland property developers it rates have a negative outlook among issuers. Although the rate of rating downgrades has decreased, property developers, including state-owned enterprises, still face pressures on sales, profit margins, and cash generation. The negative outlook reflects the risk that sales in the industry and companies may not stabilize even with government support.