BEIJING — In China, sales of new properties have fallen to their lowest level in more than 15 years, and prices for used apartments have plummeted. Millions of families, hit by the drop in the value of their properties, reduced spending. Local governments, which depend heavily on the real estate sector for revenue, face difficulties in paying their public servants.
Early last year, many in China feared that a trade war with President Donald Trump would be the biggest challenge to the economy. However, the country’s overall trade surplus increased last year, while the real problem for Beijing turned out to be the collapse of the property market, which began four years ago and worsened with each passing month.
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Despite all the economic problems triggered by the slow collapse of the country’s housing market, Chinese statisticians continue to report predictably stable economic growth, driven by a boom in exports that has produced a record trade surplus of $1.19 trillion in 2025.
On Monday (19), the National Bureau of Statistics reported that China’s economy grew 5% last year, exactly the same as the previous year. The official growth rate reached the government target, set in March, for the second year in a row.
The Chinese economy expanded from October to December at a pace that, if maintained for a full year, would represent a growth rate of 4.9%.
Robust exports are offsetting weak consumption by both urban and rural households. In November, retail sales barely grew compared to the previous year, marking the worst monthly consumption performance since the covid-19 pandemic. In December, retail sales fell 0.1%, even compared to the weak result in November.
Some Western economists now say the economy’s real growth could be half of what official statistics indicate. The Rhodium Group, a New York-based research firm specializing in China, estimates that the country’s economy grew 2.5% to 3% last year and is expected to slow further this year.
But Chinese officials offered upbeat assessments of the economy as part of a broader effort to boost consumer confidence, which government surveys have found to be very weak.
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“Overall, the national economy maintained a steady momentum of progress in 2025 despite multiple pressures,” said Kang Yi, commissioner of the statistics body, at a press conference to announce the economy’s performance.
Construction and other real estate activities accounted for about a quarter of the Chinese economy as of 2021. Thus, the sector’s sharp slowdown has hurt families and industries across the country.
Investment in new apartment complexes, office towers, factories and other fixed assets fell 3.8% last year, the statistics body said. It was the first decline since 1989, when the government held back investment amid inflationary pressures that contributed to the massive Tiananmen Square protests that year.
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“The sharp decline in the real estate sector can almost entirely explain the weak economic performance of the past three years,” wrote Zhu Tian, an economics professor at China Europe International Business School in Shanghai, in an analysis published in November.
The drop also provoked regret among buyers. Zoe Zhao, a 27-year-old civil servant in the central Chinese city of Xi’an, bought a property with her parents in October 2024 after prices had plummeted, only to see the values fall further.
“It’s difficult to say that I don’t regret it, but at least I can console myself by saying that this apartment is for me to live in,” he said. “It’s a good thing we didn’t buy at the peak.”
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Official data shows that prices have fallen by a fifth since 2021 — about the same as the national average decline in the United States during the housing market collapse from 2008 to 2010. Unofficial data, however, indicates that price drops in China are at least twice as steep.
The number of transactions has stagnated, especially in the case of newly built apartments. A report last month from China Index Academy, a real estate research firm, said properties put up for sale now remain on the market for an average of 22.2 months before the deal closes.
Buyers have demanded discounts of up to 80% compared to the market peak in 2021. Sellers are resistant to accepting such large losses, causing the apartment market to freeze in many cities.
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Sam Radwan, CEO of Enhance International, a Chicago real estate consultancy, said that in 45 years of tracking real estate markets in more than two dozen countries, he had never seen properties go unsold for as long as they have in China. During his recent travels across the country, he stated that real estate professionals remained extremely pessimistic.
“You talk to everyone, and everyone knows there is no solution,” Radwan said. “That’s not going to go away in the next decade.”
The collapse in prices has shaken confidence in the real estate market, once considered the safest place to invest family savings. Chinese leaders are now seeking to restore confidence in the market.
Government authorities began heavily censoring pessimistic online posts about the Beijing and Shanghai property markets late last year. Public disclosure of the most well-known private sector apartment price indices has also been suspended.
Local governments have tried to acquire unsold apartments from struggling developers to turn them into affordable housing. But falling tax collections and land sales mean these governments do not have the resources to subsidize these transactions.
Without major price reductions — something developers are reluctant to do — local governments will incur heavy losses when renting out the apartments, Radwan said.
Behind the housing market’s problems is a vast supply of newly built homes, coupled with a drop in the number of marriages and births each year, which has reduced the drive to buy new homes.
China had about 41 square meters of housing for every man, woman or child living in cities in 2024, compared with 32 square meters just 15 years earlier.
It was less than 9 square meters per person before Mao Zedong’s death in 1976.
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