BEIJING, May 29 - China’s property market appears to be on a path of gentler adjustment, with home prices now forecast to decline by 3.5% in 2026 rather than the 4.0% drop projected in a March survey, and to post a small rise of 0.3% in 2027, according to a housing market poll conducted May 18-28. The same poll expects prices to climb 1.8% in 2028, an upward revision from a 0.5% increase previously projected.
While the figures point to a market that remains under strain, they also suggest the pace of deterioration could be easing. Analysts attribute the tempering of the downturn to continued policy support, a reduction in default-contagion risks, and new-home sales trending closer to long-term sustainable volumes.
"The home building industry is likely to remain in contraction in 2026, but the pace of decline should gradually slow as policy support continues, default-contagion risks ease, and new-home sales volumes approach long-term sustainable levels," said Lulu Shi, director of Asia-Pacific corporate ratings at Fitch Ratings.
Policy actions at both central and local levels have been a key factor in the revised outlook. After the central government's renewed emphasis on limiting new projects and reducing housing inventory at the annual parliamentary meeting in early March, several cities implemented local incentives aimed at supporting demand. In late April, Shenzhen eased home-purchase restrictions in its core districts and Guangzhou introduced home-buying subsidies. Analysts say these measures could help accelerate stabilization in central areas of higher-tier cities.
However, the benefits of recent policy moves are not uniform across the country. "Suburban districts and lower-tier cities facing population outflows and industrial decline may remain under greater pressure," Shi said, noting a divergence between core urban centers and regions with demographic and economic headwinds.
The poll also points to sharper contractions in key market measures than previously expected. Property investment is now forecast to fall 12.0% this year, compared with a 10.3% decline predicted in March. Home sales are seen dropping 8.3% in 2026, a deeper slump than the 6.5% fall anticipated earlier.
Weak household confidence in employment, incomes, and expectations for home-price movements continues to weigh on demand, Huang Yu, executive vice president of the China Index Academy, said. That fragility in consumer sentiment is a central constraint on a quick rebound in housing activity.
Analysts describe the policy posture as aimed at stabilisation rather than a forceful revival of the sector. The priority, they say, is to prevent a disorderly slowdown and avoid a sharp loss of momentum. "The key policy objective is to prevent the risk of a sharp loss of momentum," said Yingxue Ren, associate director of corporate ratings at S&P Global (China) Ratings, adding that authorities retain scope to step up support if necessary.
For now, the expected path is one of continued contraction in 2026 with the pace of decline moderating over time as the combination of central guidance and local incentives takes hold in stronger urban markets, while weaker regions face more persistent strains.
Data points from the poll (May 18-28):
- Home prices: -3.5% in 2026 (previous forecast -4.0%), +0.3% in 2027 (previously 0.0%), +1.8% in 2028 (previously +0.5%).
- Property investment: -12.0% in 2026 (previous forecast -10.3%).
- Home sales: -8.3% in 2026 (previous forecast -6.5%).