The stagnation in the Chinese real estate market,ongoing for two years,persisted in May. Data released by the chinese Statistics Office on monday revealed a 0.2 percent decrease in new residential property prices compared to the previous month. Year-over-year,there was a 3.5 percent decline, following a 4.0 percent decrease in April.

The real estate sector, once a crucial driver for China’s economy, accounted for approximately a quarter of economic activity at its peak. With around 70 percent of Chinese households invested in real estate, the market experienced a downturn in 2021. Highly indebted developers struggled to complete pre-sold homes, eroding consumer confidence.

Politicians are implementing measures such as cheaper loans to stimulate the market. The China Index Academy reported a 0.3 percent increase in the average price of new houses in 100 cities in China during May, indicating potential early signs of recovery.

Lingering Concerns and Future Outlook

“At a cabinet meeting last Friday, Chinese top politicians promised to readjust politics. the aim is to boost demand, improve the supply and to stabilize the real estate market.”

However, a full recovery remains distant. Real estate investments from January to May decreased by 10.7 percent compared to the previous year, and the area sold declined by 2.9 percent. A Reuters survey of real estate experts projects a nearly five percent drop in residential property prices this year, with stagnation expected in 2026.

At a cabinet meeting last Friday, Chinese top politicians promised to readjust politics. The aim is to boost demand, improve the supply and to stabilize the real estate market.