Real Estate: China’s Economic Growth Ace Turns into a Rotting Card
Real estate, once the absolute trump card of China’s economic growth, has now been played as a rotten hand by the Chinese Communist Party (CCP). From the general public to real estate enterprises to the government, there are no longer high expectations for the property sector. Even the National Bureau of Statistics of China holds a pessimistic view on the real estate industry.
According to the basic situation of the mainland real estate market in the first half of the year released by the National Bureau of Statistics on July 15:
From January to June, the national real estate development investment was 4.6658 trillion yuan, a year-on-year decrease of 11.2%. The new construction area of houses in January to June was 303.64 million square meters, down by 20.0%. Among them, the new construction area of residential buildings was 222.88 million square meters, down by 19.6%; the sales area of newly-built commercial buildings from January to June was 458.51 million square meters, a year-on-year decrease of 3.5%; and the total completed area of houses nationwide in January to June was 226 million square meters, down by 14.8%.
In January to June, the actual funds of real estate development enterprises reached 5.0202 trillion yuan, down by 6.2% compared to the same period last year.
Regionally, in January to June, the real estate development investment and sales in eastern, central, western, and northeastern regions of China all showed a uniformly negative growth trend, with the Northeast region experiencing a growth rate of -22.5% in real estate development investment.
China’s real estate sector, after two to three decades of rapid development, once contributed 30% of China’s GDP. Local governments, in order to achieve performance assessments, established numerous urban investment platforms and accumulated massive debts for real estate development. Companies like Evergrande incurred debts in trillions to speculate on land and houses. The CCP emptied the coffers of Chinese families over generations by pouring money into real estate, creating a “myth” of continuous growth in the Chinese property market for over 20 years.
From the housing reform in 1998 to 2021, the average housing price in China soared from 2,000 yuan/square meter to 11,000 yuan/square meter, an increase of 5.5 times. In first-tier cities like Shanghai and Shenzhen, the average housing price surged from 3,000 yuan/square meter to 65,000 yuan/square meter, a more than 20-fold increase.
While the real estate myth continued, the sudden outbreak of the Wuhan virus pandemic and the CCP’s brutal handling of the situation led to a large number of casualties. The rapid decrease in China’s population and a sharp contraction in consumption further worsened the CCP’s overall economic decline, with the real estate sector bearing the brunt.
Between 2020 and 2024, the trends of new housing construction and sales were continuously declining. The construction volume of the real estate sector plummeted from 2.2 billion square meters to around 600 million square meters, a decrease of about 65%; the sales area of new commercial buildings dropped from 1.8 billion square meters to 500 million square meters, a decrease of over 60%; and land lease fees also significantly decreased by about 60%. In 2024, the sales area of new residential buildings fell by 12.9% year-on-year, and residential sales area declined by 14.1%, with a 17.6% drop in sales revenue for the year.
In September 2024, the CCP introduced a series of new real estate stimulus policies, leading to a slight recovery in the housing market. Unfortunately, the good times were short-lived. By the end of 2024, there was indeed a brief resurgence in first-tier cities—Beijing saw a three-month consecutive increase in the average price of second-hand houses from October to December. However, as 2025 began, the policy effects quickly dissipated.
In January 2025, the volume of signed second-hand residential homes in Beijing plummeted by 42.1% compared to the previous month, with a marginal 0.3% year-on-year growth, which was more of a seasonal fluctuation rather than a substantial recovery. The core urban areas, once seen as “strongholds against price drops,” entirely surrendered—with the average price in Xicheng District dropping to 126,300 yuan/square meter (down by 1.15% month-on-month), Dongcheng District falling to 106,900 yuan/square meter (down by 1.24% month-on-month), and Haidian District breaking the 100,000-yuan mark to 97,800 yuan/square meter (down by 1.15% month-on-month).
However, experts noted that the price decline in second-hand housing in Beijing was narrowing. Looking at the second quarter of the year, in April 2025, the average price of second-hand homes in Beijing fell by 0.6% compared to the previous month, widened to 0.8% in May, and further expanded to 1.0% in June, ending an eight-month trend of narrowing price declines. Since March 2023, Beijing’s second-hand housing prices had experienced a prolonged 19-month decline until the “924 New Policy” stimulus in October 2024 led to a gradual market recovery. But just six months later, the Beijing second-hand housing market began to collapse again.
In June 2025, the average listing price of second-hand homes in Beijing was 42,940 yuan/square meter, a 12.86% drop compared to the same period last year, with only 2 districts showing an increase while prices in 14 districts were falling!
With Beijing leading the way, other regions followed suit. In June, the overall sale prices of second-hand residential homes in first-tier cities dropped by 0.7% month-on-month, and second and third-tier cities also saw a 0.6% decrease. According to the China Real Estate Index System, in June 2025, the average price of second-hand residential homes in 100 cities dropped by 0.75% compared to the previous month and by 7.26% year-on-year; in 70 major and medium-sized cities, the sales prices of commercial residential homes showed a comprehensive decline month-on-month, with only Xining recording a slight increase of 0.1%.
In June 2025, the average price of second-hand residential homes in the top 10 cities decreased by 0.60% month-on-month and by 5.29% year-on-year. Wuhan and Nanjing saw declines of 1.18% and 0.96%, respectively; while Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chongqing (main urban area), and Hangzhou recorded declines ranging from 0.5% to 0.7% month-on-month. Year-on-year, Wuhan and Nanjing had declines of 9.75% and 9.47%, respectively; Beijing, Chongqing (main urban area), Tianjin, Hangzhou, and Guangzhou saw declines in the range of 5% to 7%; and Shanghai’s decline was 4.71%.
In July, the housing market plunged into a cold winter. The latest weekly data has sent out warning signals. In the second week of July (7th to 13th), the number of second-hand homes sold in Beijing dropped sharply to 2,173 units, a plummet of 55.5% compared to the previous week and far below the average of 3,542 units sold per week in the past four weeks. If this trend continues, the second-hand housing market in Beijing may face a severe situation of simultaneous drops in both sales volume and prices.
Key cities like Shanghai, Shenzhen, Hangzhou, and Chengdu also experienced a continued decline in sales volume. In the most recent week, Shanghai saw a decrease of 19.6%, with the number of homes sold dropping to 4,104 units, showing a 23.7% decline from the peak six weeks earlier.
Not only are prices of ordinary residential homes continuously falling, even high-end luxury homes in prime locations are unable to withstand the collapse of the property market.
Located in the core of Haidian District, Beijing, at the northwest corner of the Fourth Ring Road, Wanliu Academy is surrounded by lush greenery near the Summer Palace, with renowned schools like Zhongguancun Third Primary School, Renmin University Affiliated School, and Peking University Affiliated High School in the vicinity, making it an exclusive “luxury education district.” With a total of only 308 units, all boasting spacious layouts of over 210 square meters, Wanliu Academy was rumored to have parking spaces selling for 2 million yuan, more expensive than a house in a second or third-tier city.
In May 2022, two properties in Wanliu Academy were successfully auctioned on Alibaba’s property auction platform, with one selling for around 109 million yuan and the other for about 76 million yuan. In June 2025, a second-hand property in Wanliu Academy was sold for just 20,000 yuan/square meter, with even those priced at 140,000 yuan per square meter not attracting buyers – some properties listed in January remained unsold after six months. The prices of properties in Wanliu Academy had almost halved compared to three years ago. Top-tier luxury homes in Shanghai now face a fragile resistance to price declines, similar to those in Beijing. In June of this year, the price per square meter of top property Gu Bei No.1 in Shanghai had plummeted to 210,000 yuan.
Nomura Securities recently analyzed that in 2025, China’s economy may experience a turning point again in the middle of the year, with demand possibly plummeting.
The weakening of export demand, the slowdown in the “replacement of the old with the new” of consumer goods, the sharp decline in mid- to high-end consumption and dining demands, and the pressure of mortgage repayments are unfavorable factors that will lead to a cliff-like collapse in demand for the Chinese economy, plunging the real estate industry into distress, with conditions in most cities likely to further deteriorate.
The economic downturn leads to a reduction in land sales revenue for local governments, a decrease in the proportion of fiscal revenue to GDP, and the inability to resolve local debts, with Goldman Sachs recently pointing out that the debt of the CCP government has reached a staggering 179 trillion yuan. Meanwhile, high unemployment rates and a declining population will further hamper any recovery in the real estate industry.
Analysts suggest that Chinese property prices still have a downward potential of 30% to 50%.
On July 14 to 15, 2025, the CCP held a high-level Central Urban Work Conference in Beijing, with top CCP central and provincial-level leaders in attendance. A week before, there were speculations online that the CCP would introduce the second version of urban renewal during this conference. However, after the conference, no specific measures were announced, only discussions surrounding urban revitalization plans, with the anticipated impactful measures missing, leaving the stimulus plan unaccounted for.
Official data from the CCP shows that the per capita housing construction area in China has reached 40 square meters, with an average of one housing unit per family. There are approximately 65 million empty housing units providing living space for 210 million people. At the same time, China is entering an era of aging and declining birth rates. By the end of 2024, the number of elderly people aged 60 and above in China had reached 310 million, accounting for 22% of the total population. It is estimated that by 2035, the elderly population aged 60 and above will surpass 400 million. The projected birth rate for 2025 is less than 8 million, indicating that without population growth, there will be no demand for housing.
Data shows that household debt as a proportion of GDP in China has risen from 19% in 2010 to 62% in 2024, with about 70% of it being mortgage debt. Real estate accounts for 77% of household total assets, and with the economic downturn and the collapse of the property market, household wealth is shrinking, leading to a rise in household debt. Furthermore, China’s urbanization rate has reached 70%, leaving little room for further growth.
China’s real estate sector is rapidly heading towards a cliff and an abyss.
To learn more, please click on the link below:
https://www.ganjingworld.com/en/live/1hqhsu848tp2lZ3GZQ2UYDL0H1do1c