China real estate prices may finally hit a nationwide bottom by the third quarter of 2028, according to S&P Global Ratings analysts, while major hubs like Beijing and Shanghai could see a market recovery as soon as next year following new supply restrictions and mortgage subsidies.
An end may finally be in sight for China’s yearslong property market slump, according to a report distributed by S&P Global Ratings analysts.
Behind the shifting outlook are government interventions. On September 29, China’s Ministry of Finance, the People’s Bank of China, and the National Financial Regulatory Administration jointly issued a notice implementing a mortgage interest subsidy policy for homebuyers starting October 1, 2026, with a provisional implementation period of one year. Beijing subsequently launched a mortgage rate subsidy for first-time homebuyers of units less than 1.5 million yuan and smaller than 120 square meters.
Reduced Land Buying Helps Stabilize China Property Market
Developers will now be very cautious in buying land, so they will basically buy less land and develop less new projects going forward,
Chan said.
That may not be good for the revenue but that will help China’s oversupplied property market.
Edward Chan, S&P Global Ratings
Going forward in the next one to two years, the major factor in helping stabilize China’s home price is the continued reduction of supply, he said, noting that despite a multi-year property slump, 2026 is the first year of real estate inventory destocking. The oversupply challenge was so big that in 2023, Nomura estimated the volume of unfinished housing.
S&P’s analysis also compared the current downturn to historical housing crises. China’s efforts to subsidize mortgages along with wealth effects from the artificial intelligence boom are also helping lift property demand. On pricing, residential values have dropped from their peak. By comparison, the real estate slump around the financial crisis saw a 26% drop in residential prices.
Divergent Recovery in Top Cities and Holiday Sales
National averages hide the only story households actually live. Guotai Junan International’s Chief Economist Hao Zhou published a report on Thursday predicting the fourth quarter of this year could see the first growth in existing home prices for large, or “tier-one” cities, since the 2021 to 2023 slump. He noted that since March, tier one cities were more likely than smaller cities to record flat or rising prices. Prices in China’s largest cities, such as Beijing and Shanghai, will likely recover as soon as next year.
New home sales across 13 cities advanced 41 percent to 2,812 units during the National Day Golden Week holiday, with Citi noting that policy stimulus gained traction in the existing-home market. The top-line gain was driven by a small group of cities including Hangzhou’s 347 percent surge, Nanjing’s 259 percent and Beijing’s 145 percent. While performance elsewhere was weaker: Guangzhou fell 2.2 percent, Shanghai dropped 7.2 percent and Shenzhen contracted 42 percent, partly due to limited supply. Chengdu also posted a 40 percent decline. The wide dispersion suggests that the primary-market recovery has yet to become broad based, the research said.
In Shenzhen and Guangzhou, housing markets gained traction during the National Day holiday period, with rising property viewings and transactions, but some buyers remain cautious over market outlook. According to statistics from Beike Research Institute, transaction volumes for second-hand homes at realty agency Beike’s partner stores in Shenzhen rose 23 percent year-on-year from Oct 1 to 5. Pre-owned home market also recorded growth, with viewings on the realty agency platform up 30 percent month-on-month and transaction volumes on par with the level a month earlier. On my busiest day, I took four groups of clients to look at properties,
a property agent surnamed Huang who works for Centaline Property in Shenzhen told China Daily. Young buyers favor newer buildings with a good community environment and transport links. Some properties they once thought were out of their budget are now within reach.
Mortgage Subsidies Aim to Shore up Homebuying Demand
The research came after China’s mortgage subsidy for eligible first-home buyers took effect on October 1, designed to shore up domestic homebuying demand within the faltering property sector. At a State Council Information Office press conference on September 18, an official from China’s Ministry of Housing and Urban-Rural Development disclosed two key transitions: first, the supply-demand relationship in the real estate market has undergone a major change; second, the market has entered the existing-home era, with second-hand transactions rising.
During the National Day Golden Week, while China’s new-home market enjoyed a long-awaited revival, a psychological divide opened in the second-hand market as some homeowners refused further price cuts. According to a report by Yicai, a real estate agent in Guangzhou’s Huangpu District revealed that before July and August, second-hand home sellers’ mindset aligned with the market—amid sluggish transactions, a gap of 100,000 yuan (approximately $15,000) between listing price and final sale price was considered normal, and sellers had to show significant sincerity to close deals. That equilibrium has now fractured.
We want to see how these policies will affect the real estate market,
a women surnamed Chen said. With plenty of new and pre-owned homes to choose from, we are not rushing to buy.
According to the National Bureau of Statistics, new home sales prices in Shenzhen and Guangzhou increased 0.2 percent and 0.1 percent, respectively, on a monthly basis in August. For pre-owned homes, prices in Shenzhen rose 0.1 percent while those in Guangzhou remained flat. He cited data from Chinese research firm Bingshan that showed sales of existing homes in 25 cities rose by 50% from a year ago during the Oct. 1 to 6 public holiday period — picking up significantly from 20% growth in September.