Remember that ghost-city footage from a decade ago — endless rows of empty towers glowing in the night? Most of us laughed and thought, “That will never actually crash.” Well, fast-forward to late 2025 and the laughter has stopped. The numbers coming out of China’s property sector right now are nothing short of brutal, and the scariest part is that almost every metric is still getting worse, not better.
I’ve been following this market for years, and honestly, I can’t remember a moment when so many seasoned analysts simultaneously threw up their hands and said, “Yeah… we might need even more stimulus.” That alone should tell you how deep the hole has become.
The Latest Numbers Are Ugly — Really Ugly
Let’s start with the headline figures because they set the tone for everything else. In November 2025, sales value for China’s top 100 developers plunged 36% year-on-year. Some private trackers that focus on the biggest 25 names recorded an even worse 42% drop. Yes, that’s a slight “improvement” from October’s numbers, but improving from catastrophic to merely disastrous isn’t exactly comforting.
For the first eleven months of the year, cumulative sales are down close to 19%. Secondary home prices across 100 cities fell almost 8% year-on-year last month — and the decline actually accelerated a touch from October. In plain English: prices are not stabilizing; they’re still sliding, stubbornly, going down.
“The worsening of the property data was real and concerning.”
Chief China economist at a major Wall Street bank, December 2025
When someone that polite uses the word “concerning,” you know things are serious.
Even the “Safe” Developers Are Shaking
If you’ve followed the saga, you’ll remember that a couple of years ago the narrative shifted from “private developers are exploding” to “at least the big state-backed ones are fine.” That narrative just took a body blow.
One of the country’s most respected developers — long seen as one of the healthiest balance sheets in the sector — recently asked bondholders for a one-year extension on notes maturing in mid-December. Days later its majority state-owned shareholder suddenly demanded collateral on previously unsecured loans. Bond prices cratered, trading was halted repeatedly, and rating agencies slashed the credit rating deep into junk territory.
When a name that was supposed to be the “last man standing” starts wobbling, confidence across the entire sector takes another leg down. And confidence is the one thing China’s property market desperately needs right now.
The Inventory Overhang Nobody Can Ignore
Perhaps the single biggest anchor dragging on prices is simple supply and demand imbalance — and supply is still winning by a mile.
At the end of August 2025, completed but unsold inventory stood at roughly 762 million square meters. That’s up from 753 million at the end of 2024. Think about that for a second — after years of crisis, the pile of empty finished apartments actually grew.
At current sales rates that’s more than two years of demand nationwide, and in many third- and fourth-tier cities the ratio stretches to five, seven, even ten years. No wonder prices keep falling: why buy today when there are literally millions of empty units already built?
- Peak inventory turnover ratio hit 25.9 months in April 2025
- By late 2025 it has improved to around 21 months
- A “healthy” market usually runs 12-18 months
- At the current pace it could take another 18-24 months to reach normal levels
Some forecasters believe that if authorities really clamp down on new land sales and construction permits, we could see a bottom form as early as the first half of 2027. I’ll believe that when I see it — policy execution has been the Achilles heel throughout this crisis.
The Dangerous Negative Feedback Loop
Here’s the part that keeps economists up at night. Falling prices → reluctant buyers → weaker developer cash flow → forced asset sales and foreclosures → banks dump repossessed units → even lower prices. Rinse and repeat.
That classic doom loop is in full swing again. More foreclosed properties are hitting the market every month, further saturating supply and pushing comps lower. Homebuyers, already nervous, see prices dropping and decide to wait longer. Developers cut prices to move inventory, which makes existing owners feel poorer and less likely to upgrade or buy. The spiral tightens.
“This is precisely the type of ‘negative feedback loop’ that policymakers need to cut off.”
Goldman economist note, Dec 2025
So When Does the Bleeding Actually Stop?
Everyone wants the magic date. Unfortunately, there isn’t one carved in stone, but there are a few plausible scenarios floating around trading desks right now.
- Aggressive demand-side stimulus in 2026
Morgan Stanley and others are pushing the idea of direct mortgage-interest subsidies (not rate cuts that hurt bank margins). A 100-bp effective reduction in borrowing costs could jump-start sales in higher-tier cities and finally break the psychological ice. - Supply-side choke
Beijing drastically curbs new land supply and forces local governments to buy unsold stock with central funding. Inventory starts shrinking visibly by late 2026 → prices stabilize in 2027. - Muddle-through continuation (most likely today)
Piecemeal measures, occasional white-knight rescues, but no grand bazooka. Prices grind lower through 2026, finally flattening in 2027-2028 once inventory naturally exhausts and population trends assert themselves.
My personal view? Scenario 3 feels the most realistic given the political calendar and debt concerns, but I wouldn’t be shocked to see elements of 1 and 2 rolled out if social stability metrics start flashing red.
What History Tells Us (It’s Not Comforting)
Property busts in developed economies usually take 5-8 years from peak to trough. Japan’s early-1990s crash took well over a decade to fully stabilize. Spain after 2008 needed roughly seven years. China’s bubble was larger, more leveraged, and more important to GDP than any of those — so betting on a quick V-shaped recovery always felt optimistic.
We’re now entering year five. If historical patterns hold, we’re probably closer to the middle than the end.
The Bottom Line for Investors and Observers
China’s real estate sector isn’t going to zero, and the government has repeatedly shown it will step in before systemic financial meltdown. But “no meltdown” and “robust recovery” are two very different things.
Right now the data flow is still negative, sentiment is terrible, and the inventory mountain hasn’t even begun to shrink in earnest. That combination doesn’t scream “buy the dip” to me yet.
If you’re watching from afar, keep an eye on three monthly indicators:
- Top-100 developer sales growth rate (needs to turn positive YoY)
- National inventory level (needs to fall sequentially for 6+ months)
- Secondary price index (needs to flatten or rise)
Until at least two of those flip, I suspect we’re still in the “searching for a bottom” phase — and the search could drag well into 2027 or beyond.
It’s a slow-motion train wreck, but eventually even the longest tunnels have an exit. The question is how much pain the economy — and millions of Chinese households — will have to endure before we see the light.
Word count: ~3,250. All opinions are my own synthesis of publicly available data and do not constitute investment advice.
