China’s property market showed broad-based contraction through 2025, underscoring an economy still grappling with a long, uneven correction. Nationwide real-estate development investment fell by 17.2% year-on-year to 82,788 billion yuan (about CNY 8.28 trillion), with residential investment down 16.3% to 63,514 billion yuan. Construction activity and new supply also shrank: developers’ construction area declined 10.0% and new housing starts plunged 20.4%.
Home sales weakened alongside construction. New commercial housing sales area dropped 8.7% and sales value fell 12.6% year-on-year, with the residential component underperforming slightly more. Completions were down too, with finished housing area falling 18.1% overall and residential completions down 20.2%, contributing to slower delivery of new homes to the market.
Financing conditions for developers and buyers tightened in tandem. Funds available to property developers were 93,117 billion yuan (about CNY 9.31 trillion), a 13.4% decline from the prior year. Domestic loans to developers fell 7.3%, pre-sale deposits and advance receipts dropped 16.2%, and personal mortgage disbursements fell 17.8% — a clear signal that both institutional and household demand for credit in the sector remained weak.
Inventory dynamics show mixed signals: by the end of 2025, the area of commercial housing for sale rose 1.6% year-on-year, while residential inventory increased 2.8%. That modest rise in unsold stock, set against sharp declines in starts and completions, implies an ongoing mismatch between where supply has accumulated and where construction has been curtailed.
Sentiment within the sector also remained subdued. The national real-estate development prosperity index stood at 91.45 in December 2025, below a neutral 100 benchmark and consistent with a sector operating under stress rather than expansion. Taken together, the data point to a market still unwinding excesses from the previous decade and adjusting to structurally lower demand.
This sustained slowdown matters because property has been a primary engine of Chinese growth for years. Construction, materials, household borrowing and local government revenues are tightly linked to building activity. A multi-year contraction depresses employment in construction and related industries, squeezes bank and bond creditors to developers, and transfers wealth effects to household balance sheets — all of which can weigh on consumption and broader economic momentum.
Policy responses will determine how protracted this adjustment becomes. Beijing has intermittently eased mortgage and purchase rules and directed state banks to support viable projects, but the 2025 numbers suggest those measures have had limited reach so far. The sector is now likely to evolve into a two-track market: stabilisation in first-tier cities with liquid demand and more persistent pain in lower-tier locations where oversupply and fiscal strain are greater.
For international investors and lenders, the results reinforce the need to discriminate by geography, developer balance-sheet strength and exposure to presold projects. While systemic spillovers to global markets remain contained, the sector’s scale means shocks can ripple through commodity markets, regional trade and financial exposures if a disorderly wave of defaults or unemployment were to occur. Close monitoring of developer cash flows, presale receipts and local government support measures will be critical in 2026.