China’s Home Prices Continue to Fall as Property Recovery Remains Uneven
Prices in first-tier cities edged higher, while declines continued in smaller markets and property investment fell sharply during the first nine months of 2026.
China's housing market continued to struggle in September, with new-home prices declining nationwide even as some major cities showed signs of stabilization following government measures to support demand.
New-home prices across China's 70 major cities fell 0.1% month on month in September, matching the decline recorded in August. Prices dropped 2.8% year on year, narrowing from a 3.0% annual decline in August, according to Reuters calculations based on data released by the National Bureau of Statistics and reported by Reuters.
The latest figures indicate that the pace of the downturn has eased slightly, but a broad recovery remains elusive. China's housing market has been under pressure since the property-sector crisis intensified, weakening developer finances, reducing household confidence and weighing on construction activity.
The picture varies considerably by city. According to the National Bureau of Statistics, new-home prices in first-tier cities rose 0.1% month on month in September. Shanghai, Guangzhou and Shenzhen recorded increases of 0.2%, 0.2% and 0.3%, respectively, while Beijing saw a 0.2% decline.
Prices in second-tier cities were unchanged on a monthly basis, reversing a 0.1% decline in August. Third-tier cities continued to experience a 0.2% monthly decrease. The figures suggest that stronger demand and policy support in some of China's largest urban markets have not yet translated into a nationwide rebound.
The second-hand housing market showed a similar pattern. Prices for resale homes in first-tier cities rose 0.2% month on month, while prices in second- and third-tier cities fell 0.2% and 0.3%, respectively. The number of cities reporting monthly increases in resale prices rose to nine, six more than in August.
Several major cities have adjusted home-purchase restrictions or introduced incentives to support transactions. Shanghai has eased some restrictions, while policymakers have also promoted mortgage-related support. In late September, the central bank and financial regulator announced measures involving mortgage-interest subsidies for eligible buyers, according to Reuters.
However, affordability and confidence remain important constraints. Buyers may delay purchases if they expect prices to fall further or are uncertain about their employment and income prospects. Homebuyers may also be concerned about the financial condition of developers and the timely delivery of properties.
The housing downturn has implications beyond the real estate industry. Property has traditionally represented a significant part of household wealth in China, so declining home values can affect consumer confidence and spending. Weak sales also reduce demand for construction materials, furniture, appliances and related services.
Local governments face additional pressure because land sales have been an important source of revenue in many regions. Lower property activity can restrict local fiscal resources and make it more difficult to finance infrastructure and public services.
The broader economic data underline the scale of the challenge. China's real estate development investment fell 20.6% year on year during the first nine months of 2026, according to the National Bureau of Statistics. The decline suggests that developers remain cautious about committing capital despite policy efforts to stabilize the sector.
A sustainable recovery would likely require more than a temporary rise in transactions. Buyers need confidence that homes will be delivered, financing remains accessible and prices are stabilizing. Developers also need sufficient sales and funding to complete projects and manage existing debt.
For policymakers, the task is to support housing demand without recreating the excessive leverage that contributed to the sector's problems. Measures may help stabilize selected markets, but conditions in smaller cities can differ significantly from those in major economic centers.
September's data offer limited signs of improvement in some urban markets, yet the nationwide picture remains weak. Whether the downturn is approaching a turning point will depend on future sales, developer investment, household confidence and the effectiveness of policy support.