China Property Woes Deepen: Sales Plunge Expected

S&P Global Ratings has revised its outlook for China's property market, now projecting a substantial 10% to 14% decrease in primary real estate sales for 2026. This updated forecast, released early in the year, is considerably more pessimistic than the 5% to 8% decline anticipated in October. The firm highlighted that the current property downturn is deeply entrenched, with only the government possessing the capacity to address the excess inventory.

Analysts suggest that while the state could acquire unsold properties to bolster affordable housing initiatives, current efforts have been fragmented. China's once-booming property sector, which previously constituted over a quarter of its economy, has seen its annual sales volume halved in just four years. Beijing's regulatory actions to curb developers' debt-fueled expansion initiated the slump, and consumer demand has not yet recovered.

Despite long-standing warnings from economists about overbuilding, developers have continued construction, leading to a sixth consecutive year of completed but unsold new housing. This persistent oversupply is cited as a primary reason why a market recovery remains out of reach, with S&P predicting further price declines of 2% to 4% this year, following a similar trend in the previous year.