China's Home Prices Decline for Fourth Consecutive Month Amid Escalating Calls for Policy Intervention

Home prices in China’s 70 major cities declined by 1.8% year-on-year in December 2025, marking the fourth consecutive monthly drop and underscoring deepening challenges in the real estate sector. The data reflects widening price pressures, particularly in second- and third-tier cities, where declines exceeded 3% in several regions. This follows a 1.4% annual decline in November and signals a sustained weakening trend not seen since the early 2010s. The downturn is driven by weak demand, rising developer defaults, and a prolonged correction in speculative investment. Major developers such as Evergrande and Country Garden remain under financial strain, with debt restructuring efforts still unresolved. At the same time, new home sales volumes fell 22% year-on-year in December, while existing home transactions dropped 16%, indicating broad-based stagnation in buyer activity. Government officials have begun signaling readiness for expanded support measures. Local authorities in Guangzhou, Chengdu, and Hangzhou have relaxed purchase restrictions and cut down payment requirements for first-time buyers. However, economists emphasize that current actions fall short of addressing structural imbalances. A recent survey of 120 financial institutions indicated that nearly 70% believe additional fiscal incentives—such as mortgage rate cuts and expanded urban housing subsidies—are necessary to stabilize sentiment. The property slump is reverberating through broader economic indicators. Fixed asset investment in real estate dropped 14% annually in Q4 2025, contributing to a 4.9% contraction in construction output. Financial markets reacted cautiously: the CSI 300 Real Estate Index fell 9.2% in December, while real estate-related bonds experienced increased credit spreads.