S&P Sees China Home Prices Bottoming in 2028 as Supply Cuts Bite

CNBC·8 Oct 2026·

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S&P Global Ratings analysts said in a report distributed Thursday that China's yearslong property market slump may be nearing an end, with residential real estate prices potentially hitting a bottom in the third quarter of 2028 and prices in the largest cities such as Beijing and Shanghai likely recovering as soon as next year. The shift follows two government policies, according to report author Edward Chan, a credit analyst at S&P Global Ratings: Beijing's August restrictions on developers' ability to sell unfinished properties, and Premier Li Qiang's September pledge to roll out policies for stabilizing the real estate sector, after which Beijing launched a mortgage rate subsidy for first-time homebuyers of units less than 1.5 million yuan ($220,000) and smaller than 120 square meters (1291.67 square feet). Chan said developers will now be very cautious in buying land and will basically buy less land and develop less new projects going forward, adding that the continued reduction of supply will be the major factor stabilizing China's home prices over the next one to two years and that 2026 is the first year of real estate inventory destocking. The report compared China's downturn with housing crises in Japan, the U.S. and Spain, noting China's residential prices have already fallen 22% since a 2021 peak, versus a 67% drop in Japan and a 26% drop in the U.S. around the financial crisis, and said China's supply contraction is occurring much earlier and with greater magnitude than Japan's 1991 to 2014 crisis. Also on Thursday, Guotai Junan International Chief Economist Hao Zhou published a report predicting the fourth quarter of this year could see the first growth in existing home prices for tier-one cities since the 2021 to 2023 slump, noting Beijing prices have risen 1.4% from a January low and calling the next three months a key window. Morgan Stanley equity analyst Stephen Cheung cautioned in a report Wednesday that the mortgage subsidy will bring forward planned purchases rather than create substantial new demand, citing Bingshan data showing existing home sales in 25 cities rose 50% from a year ago during the Oct. 1 to 6 public holiday period, up from 20% growth in September.

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