China’s residential property values continued to fall throughout the first half of 2026, as prospective purchasers exercised caution in anticipation of additional price declines. With both sales volumes and pricing metrics weakening, analysts see little prospect for a near‑term rebound.
Data released Wednesday by the China Index Academy indicated that secondary‑market home prices across 100 major Chinese cities slipped 0.42% month‑on‑month in June, averaging 12,639 yuan (US$1,750) per square metre. Eighty‑eight cities recorded reductions, while only twelve reported gains.
The downturn spanned all tier levels. In June, first‑tier cities saw second‑market prices fall 6.95% year‑on‑year; second‑tier cities dropped 8.21%; and smaller third‑ and fourth‑tier cities experienced 7.48% declines.
Within China’s top ten markets, Nanjing and Wuhan recorded the steepest year‑on‑year decreases in June, with 11.45% and 10.89% falls, respectively. Beijing, Tianjin, Guangzhou and Chongqing each experienced declines between 8% and 10%. Hangzhou, Shanghai, Chengdu and Shenzhen saw year‑on‑year drops ranging from 5% to 8%, with Shenzhen performing best at a 5.27% decline relative to the prior year.
Commentators interpret the first‑half figures as confirmation that the downward trajectory has not yet ended, foreseeing further contractions through the remainder of 2026.
Henan‑based columnist Qingjin Wenwang highlighted a noticeable shift in buyers’ sentiment. “A friend of mine began searching for a home in late 2025 before marriage. At that time, sellers were confident and rarely negotiated,” he recalls. “By June 2026, when he revisited the same district, sellers had softened their stance and awaited his commitment.”
This experience has intensified his friend’s concern that prices could still fall even after a purchase is made.
Citing figures from the National Bureau of Statistics (NBS) the previous month, he enumerates four key reasons why a genuine recovery remains elusive:
- Prices remain unstable: In May, only 16 of 70 major cities recorded month‑on‑month increases in new‑home prices, and merely 10 saw secondary‑market gains. Declines accelerated in third‑tier cities.
- Purchasers continue to withdraw: New‑home sales fell 10.8% year‑on‑year by floor area and 13.5% by value in the first five months of 2026. Many households are postponing purchases indefinitely.
- Developers are pulling back: Real‑estate investment dropped 16.2% year‑on‑year in January‑May, new construction starts fell 22.6%, and completions declined 23.4%.
- Secondary‑market confidence has eroded: Price anchors in many cities have quietly slipped lower, and once buyer psychology turns cautious, reversing that trend is a slow process.
On June 16, the NBS reported that only four of 70 cities posted a year‑on‑year increase in new‑home prices during the first five months of 2026. In the secondary market, no city recorded a price rise over the same period; most experienced year‑on‑year declines between 5% and 8%.
A Guangdong‑based property columnist noted that since 2021, China’s property market has undergone a dramatic shift. New‑home sales peaked at 1.79 billion square metres that year and have decreased annually thereafter, falling below one billion square metres in 2025. “In many cities, prices have dropped more than 40% from their peak, and some have fallen beyond 50%. Such steep declines in a short span are severe,” he observed.
The columnist identified three structural factors driving the downturn:
- China’s population entered negative growth in 2022 and is expected to remain so for the foreseeable future. Accounts from other countries suggest reversing a demographic decline is challenging.
- The era of rapid urbanisation that once spurred explosive housing demand is largely over. Decades of migratory inflows into cities solidified price growth, a wave that has now tapered.
- Overall housing supply is no longer scarce. After years of construction, China possesses sufficient homes nationwide, except in constrained supply within major cities and prime districts.
Back to 2006
Late April saw a wave of articles by Chinese commentators arguing that four consecutive years of declines have driven home prices back to levels observed around 2006, after adjusting for inflation and currency depreciation. These pieces, which drew data compiled by the Bank for International Settlements (BIS), ignited intense debate on Chinese social media regarding the true state of the property market.
The Federal Reserve Bank of St. Louis employed BIS figures to illustrate China’s home price trajectory relative to a 2010 baseline index of 100.
The first chart, tracking nominal residential property prices, traced China’s indices from 78 in 2006 to a peak of 145.9 in 2021, before slipping to 114 in the first quarter of 2026.
The second chart adjusts for inflation and currency depreciation. On that measure, the index rose from 88.5 in 2006 to 113 in 2021, then fell to 85.1 in the first quarter of 2026, positioning real home prices below their two‑decade‑ago levels.
This adjustment is analogous to the distinction between nominal and real gross domestic product (GDP) growth, where the latter excludes the effects of inflation or deflation to reflect genuine economic expansion.
Jiangsu‑based columnist Duanwei Liwen cautions against applying a single national figure uniformly across diverse regions.
“Home prices in Beijing, Shanghai and Shenzhen remain exceptionally high,” she observes. “A national average cannot capture the distinct realities of every Chinese city.”
She notes that first‑tier cities have demonstrated greater resilience, while pressure remains greatest in third‑ and fourth‑tier cities, where prices have fallen to levels a decade ago or lower. She adds that the real value of the BIS‑based index lies in serving as a warning signal for those who rush into the market under the assumption that a floor has been reached.
“In recent years, many investors have fallen into this trap,” she laments. “They see price retracements and presume a bottom, or they interpret modest policy easing as a sign of a forthcoming rebound. When prices continue to fall, they find themselves unable to sell.”
A reporter at Sina Finance, a Beijing‑based news outlet, questioned the inflation‑adjusted framing, arguing that nominal prices are more meaningful for the majority of consumers, as household incomes and daily expenses are not inflation‑adjusted. Based on the BIS nominal home‑price index, he asserts that China’s property prices in 2026 have returned to 2016 levels.
He maintains that any credible forecast for future price movements must consider a range of variables, including demographic trends, rental yields, income distribution, and supply‑demand balance.