China’s new home prices declined again in May, extending a two-year slump despite repeated efforts by policymakers to stabilise the embattled real estate sector.
According to official data just released by the National Bureau of Statistics (NBS), new home prices dropped by 0.2% month-on-month, following flat growth in April.
On an annual basis, prices were down 3.5%, softening slightly from a 4.0% year-on-year fall in April.
Reuters reports the downturn in prices, which resumed after a brief period of stability, reflects ongoing challenges in China’s housing market, including weak buyer confidence, regional disparities, and limited policy traction.
“Home prices are facing renewed downward pressure following the traditional peak season,” said Zhang Dawei, chief analyst at Centaline Property Agency told Rauters.
“It’s a complex mix of policy factors, market demand and shifting buyer sentiment.”
The real estate sector, once a cornerstone of China’s economic growth and accounting for nearly a quarter of GDP at its peak, remains under pressure.
The market’s descent began in 2021 amid developer debt woes and stalled home deliveries, severely denting public trust.
In the first five months of 2025, property investment fell 10.7% year-on-year, while sales by floor area declined 2.9%, highlighting continued strain on the sector despite policy interventions.
A Reuters poll conducted in May projected home prices to fall around 5% in 2025, with a stagnant outlook for 2026.
Signs of support – but patchy recovery
Some bright spots have emerged. A private survey by China Index Academy showed new home prices in 100 major cities increased 0.3% in May,more than double April’s pace. This uptick was buoyed in part by local policy adjustments and central bank rate cuts on housing provident fund loans.
In smaller tier 3 and tier 4 cities, however, price declines deepened. May saw a 0.3% fall, compared to a 0.2% drop in April, extending a year-long downward trend that began in May 2023.
Zhang cautioned that without stronger policy backing, the usual June–August seasonal slowdown could trigger steeper declines.
“In third- and fourth-tier cities, efforts should be intensified to support local industries and attract return migration to fundamentally address insufficient demand,” he said.
