Home Price Growth in China Decimated Back to 2005 Levels

Prices in China’s housing market are back to mid-2000s levels as the country’s ongoing price spiral shows no end in sight.

The real residential property price index was at more than 85.1 in the first quarter, down from its peak of 113 in 2021 and below the index’s starting level when tracking began in 2005, the Deep Dive reported, citing data from the Bank for International Settlements.

New home prices across 70 Chinese cities dropped 3.5 percent year over year in May, representing 35 consecutive months of declining prices and the steepest fall since May 2025. Prices on the secondary market have declined even further as resale prices across 100 large cities in China fell more than 0.4 percent month over month in June, according to Chinese Index Academy data, Caixin reported. Of those cities, only 12 saw gains in prices on the secondary market.

Overall, revenue from residential land sales tumbled approximately 65 percent from its 2020 peak in 2025. State-backed local government financing vehicles responded by retreating from the market after leaning on land auctions in the crash’s early years. Land-use rights sales once accounted for nearly 40 percent of local government revenue at their peak in 2021 but generated less than a third of that amount through most of 2025.

Local governments have responded to the crisis by slashing spending and issuing asset-backed securities with state-owned assets used as collateral. The city of Beijing is looking to tackle the problem by introducing targeted stimulus efforts such as a bank loan whitelist program that has so far approved more than 7 trillion yuan (upwards of $1 trillion) in financing for stalled projects. Still, home prices are expected to decline another 4 percent this year, though they’re expected to stabilize next year and tick up slightly in 2028, according to a Reuters poll of analysts.

The Chinese economy is in many ways propped up by the market, as residential real estate makes up about 70 percent of urban household assets in the country — much more than in the United States. Three straight years of declining prices has weighed down the economy in turn, with the property decline knocking off roughly 2 percentage points from annual GDP growth in both 2024 and 2025. In 2025 alone, property investment fell 17.2 percent.

China’s largest developers are suffering as a result of the worsening market. In 2024, Guangzhou-based Evergrande faced liquidation with approximately $300 billion in liabilities. Foshan-based Country Garden was once the largest home builder in the country and defaulted on its dollar bonds in 2023.

— Chris Malone Méndez