Will China's Primary Home Sales Decline by 10-14% Due to Oversupply?
Synopsis
Are China's primary home sales really set to drop by 10-14%? A new report unveils alarming trends in the housing market, indicating an oversupply that could hamper recovery. Read on to discover the details.
Key Takeaways
China's primary property sales are set to decline by 10-14%.
Completed inventory is at a record high of 766 million square meters.
Major cities like Beijing and Shenzhen are experiencing significant price drops.
Local regulations may help stabilize home prices.
Foreclosed properties could exacerbate the oversupply situation.
Mumbai, Feb 13 (NationPress) A recent report indicates that China's primary property sales are likely to decrease between 10–14 percent as an ongoing surplus of completed housing hampers any potential market recovery. The analysis from S&P Global revealed that the total primary inventory has expanded for the sixth consecutive year, reaching 766 million square meters by the end of 2025, reflecting a year-on-year increase of 1.6 percent.
The report noted that the completed inventory at the end of 2025 is 45 percent above the average seen over the past decade prior to the downturn. It also highlighted a gradual destocking trend, pointing out that completed inventory fell by 4 percent from its peak in February 2025, but warned that without significant national policies to address the excess supply, sales are expected to continue on a downward trajectory.
S&P Global also indicated that price declines for both primary and secondary homes have affected tier-one cities in the last quarter of 2025. “Previously, we considered these markets to be robust and likely the starting point for any national property recovery,” the report stated, noting that Shanghai was the only city that experienced a rise in primary property prices.
In contrast, cities like Beijing, Guangzhou, and Shenzhen saw their primary home prices drop by 3.2–5.6 percent year-on-year in 2025, according to the report. It predicts that primary home prices may fall by 2-4 percent in 2026, while secondary home prices could decline by 5–8 percent.
The report further suggested that potential price regulations from local governments might mitigate drastic drops in primary home prices. Additionally, according to the National Bureau of Statistics, secondary home prices decreased in all of China's 70 mid to large cities in 2025.
Furthermore, the ratings agency cautioned that if contracted sales decline by an additional 10 percentage points, approximately 40 percent of Chinese developers (excluding China Vanke) could face downward rating pressures. In 2025, around 700,000 to 1.3 million units were reported for sale as Chinese banks began offloading foreclosed properties in select regions.
The report concluded by stating, “We believe that foreclosed properties could contribute to further oversupply and may exert additional downward pressure on home prices.”
Point of View
It is crucial to recognize the significant implications of the ongoing trends in China's housing market. With a projected decline in primary home sales, stakeholders must remain vigilant about potential challenges ahead. The nation's focus should remain on implementing effective policies to address the oversupply issue and stabilize the market.
NationPress
11 May 2026
Frequently Asked Questions
What is causing the decline in China's primary home sales?
The decline is primarily attributed to a persistent oversupply of completed housing units, which has created a market imbalance.
How much are primary home prices expected to fall?
Predictions suggest that primary home prices may drop by 2-4% in 2026, with secondary home prices potentially decreasing by 5-8%.
Which cities are most affected by declining home prices?
Cities like Beijing, Guangzhou, and Shenzhen have experienced significant declines in primary home prices, ranging from 3.2% to 5.6% year-on-year.
What measures can local governments take to stabilize the market?
Local governments may implement price regulations to prevent drastic drops in primary home prices and encourage a more balanced market.
What is the outlook for developers in light of these trends?
If contracted sales continue to decline significantly, many developers could face downward rating pressures, complicating their financial situations.
