China’s struggling property market may be starting to stabilise, with improved credit access for developers and falling housing inventory pointing to a potential bottoming out.
On Tuesday, Fitch Ratings revised an earlier forecast for a 15 percent year-on-year slump in the market up to 7 percent – citing a stronger-than-expected performance in the first half of 2025. Fitch’s projection was reported in the South China Morning Post.
The credit-rating agency also adjusted its projected drop in sales by floor area to 5 percent, a less dramatic slide than its previous 10 percent prediction.
According to HSBC analysts cited by the Post, five early signs of recovery are showing: improved credit access for developers; industry consolidation; inventory reduction; stronger land sales; and market-driven home pricing in higher-tier cities.
“The downturn has been shorter than the ‘lost decade’ rhetoric that some investors embraced,” the analysts wrote.
[See more: Macao’s residential property price index continues its steady decline]
China’s property crisis started in 2021 and since then, the analysts noted, the country’s top 15 state-owned developers have expanded their market share from 15 percent to 23 percent.
HSBC said this has been instrumental in stabilising the market, as has a shift in banks’ expectations – they have “become more accommodative”, according to the analysts. “We believe banks’ changes in attitude will facilitate more developers restructuring, and ultimately help achieve faster market clearance and risk resolution in the property sector.”
Despite these positive signals, official data shows ongoing fragility. New home sales continue to drop, as have home prices across 70 major cities.
“The latest data highlight that the sector’s recovery remains tentative and is contingent on economic conditions, the job market’s performance and household income prospects,” wrote Fitch Ratings. The agency also noted that US tariffs on Chinese imports posed challenges to the property market and broader economy.
