China’s Property Crisis Deepens as S&P Global Slashes Growth Forecasts

China's real estate sector faces mounting pressure as global rating agency S&P Global revises its projections downward—signaling tougher times ahead for the world's second-largest economy.

Market Turbulence Intensifies

S&P's revised forecast points to steeper declines in housing prices and transaction volumes than previously anticipated. The adjustment reflects ongoing liquidity constraints, developer defaults, and weakened buyer confidence across major metropolitan areas.

Regulatory Response

Beijing continues grappling with balancing market stabilization efforts against its broader campaign to reduce speculative investment. Recent policy tweaks have done little to reverse the downward trend, leaving analysts questioning what tools remain in the government's toolkit.

Global Implications

The deepening property slump threatens to ripple through global markets—commodity prices, construction equipment manufacturers, and international lenders all face exposure to China's cooling real estate engine. Because nothing says 'global financial stability' like watching the world's largest property market teeter on the brink.

China’s property market weakens as policy easing slows

S&P pointed out that China’s five-year loan prime rate, which serves as the reference point for most home loans, has only dropped by 0.1% in 2025 so far. That compares to a much larger 0.6% cut throughout 2024, suggesting authorities aren’t loosening policy as forcefully as they did before, even with the housing sector still struggling.

Last August, three of the country’s biggest cities relaxed rules that had limited how many properties people could own. But these changes mainly affected homes in less attractive outer areas of cities, according to S&P’s analysis.

“If demand can be stabilized first in the higher-tier cities, particularly in the first-tier [largest] cities first, that would probably help the trajectory of the demand recovery to be more sustainable,” Chan noted.

The prospect of hitting bottom in China’s housing crisis now appears further away than before. At the current projection of 9 trillion yuan or below for this year, China’s property market will have shrunk by half within four years, down from 18.2 trillion yuan back in 2021, S&P’s figures show.

The firm anticipates an additional 6% to 7% drop next year, with home prices in the primary market falling 1.5% to 2.5%.

Government support fails to lift weak housing demand

For many years, Chinese homebuyers typically purchased apartments before construction finished. When developers hit money troubles and building work stalled, buyer confidence took a hit. This led authorities to create a “whitelist” last year to provide funding for approved unfinished developments.

By August, unsold housing stock ROSE to 762 million square meters, from 753 million square meters in December 2024, according to S&P data.

Chan said the government has been working hard to assure people that receiving their apartments is no longer a problem. He explained that the real issue is overall demand across the country appears weaker than anticipated.

Looking ahead, Chan believes authorities will continue stepping in with support measures, even if gradually, whenever the market shows signs of weakness.

Last August brought both the easing of some purchase restrictions and a notable public statement from Chinese Premier Li Qiang acknowledging the ongoing real estate problems and the need for greater action.

The month after that, sales among China’s top 100 developers increased 0.4% compared to the same period a year earlier, S&P reported, citing industry figures.

While developers fight to stay afloat, the report suggested that “the result may be a smaller market, but also a healthier and more resilient sector.”

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