China's housing market remains in a deep downturn as home prices continued to fall in the first half of 2026, with buyers holding back in anticipation of further declines. Data released Wednesday by the China Index Academy showed secondary-market home prices across 100 major Chinese cities fell 0.42% month-on-month in June, to an average of 12,639 yuan (US$1,750) per square meter. Of those cities, 88 recorded declines while only 12 saw gains.
The slide was broad-based across city tiers. In June, first-tier city secondary home prices fell 6.95% year-on-year. Second-tier cities fared worse, dropping 8.21% on the year, while smaller third- and fourth-tier cities fell 7.48% year-on-year. Among the 10 largest cities, Nanjing and Wuhan posted the steepest year-on-year declines, with secondary market prices dropping 11.45% and 10.89%, respectively. Beijing, Tianjin, Guangzhou and Chongqing all saw falls of between 8% and 10%. Hangzhou, Shanghai, Chengdu and Shenzhen recorded year-on-year declines of between 5% and 8% in June. Shenzhen performed best among the ten cities, with a 5.27% drop compared with a year earlier.
Buyer Psychology Shifts
Chinese commentators widely read the first-half data as confirmation that the downward trend in home prices has yet to run its course, with further declines expected through the remainder of 2026. A Henan-based columnist writing under the pen name Qingjin Wenwang describes how the mood among prospective buyers had visibly shifted. “A friend of mine started looking for a home to buy ahead of marriage in late 2025. Back then, sellers were confident and showed little willingness to negotiate,” he says. “By June 2026, when he returned to the same district to look at similar properties, sellers had largely softened their tone and kept asking him when he could sign a deal.” The experience left his friend with a growing fear that prices could fall farther even after he commits to a purchase, he says.
Citing figures released by the National Bureau of Statistics (NBS) last month, he outlines four reasons why a genuine recovery remains out of reach: Prices have not stabilized. In May, only 16 of 70 major cities saw new-home prices rise month on month and just 10 recorded secondary-market gains. Third-tier cities saw declines accelerate. Buyers are still retreating. New housing 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 deferring 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 shifted lower – and, once buyer psychology turns cautious, it is slow to reverse.
The NBS said on June 16 that only four of 70 cities recorded a year-on-year increase in new home prices in the first five months of 2026. In the secondary market, no city saw prices rise over the same period, with most cities recording year-on-year declines of between 5% and 8%.
Structural Factors at Play
“Since 2021, China’s property market has undergone a dramatic transformation. New home sales peaked at 1.79 billion square meters that year and have fallen every year since, dropping below one billion square meters in 2025,” a Guangdong-based property columnist says in an article published Wednesday. “In many cities, prices have fallen more than 40% from their peak, and some have dropped more than 50%. Such a steep decline in such a short period is by any measure severe.” He points to three structural reasons behind the downturn: China’s population entered negative growth in 2022 and has continued to shrink. Experience elsewhere shows population decline is very hard to reverse, and China is likely to remain in negative growth for the foreseeable future. The era of rapid urbanization that once drove explosive housing demand is largely over. Millions of people flocking to cities in the past decades fueled a surge in home prices, but that wave has run its course. Overall housing supply is no longer scarce. After years of construction, China has enough homes overall, except for tight supply in major cities and prime areas.
In late April, a wave of articles by Chinese commentators drew wide attention online, arguing that four years of declines had pushed home prices back to levels last seen around 2006, once inflation and currency depreciation were stripped out. The articles cited data compiled by the Bank for International Settlements (BIS) and sparked a heated debate on Chinese social media about the true state of the property market. The Federal Reserve Bank of St. Louis used BIS figures to illustrate China’s home prices relative to a 2010 baseline index of 100. The first chart, tracking nominal residential property prices, showed China’s home price index climbing from 78 in 2006 to a peak of 145.9 in 2021, before sliding back 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, putting real home prices below their level two decades ago.
A Jiangsu-based columnist writing under the pen name Duanwei Liwen says the data should not be applied uniformly nationwide. “Home prices in different cities have diverged significantly,” he notes, warning that aggregate figures can mask local realities. Meanwhile, the broader economic implications are clear: as China's housing market continues its free fall, the ripple effects are being felt across sectors, from construction to consumer spending. For a related perspective on how China's industrial output is adapting to global demand shifts, see our analysis on Europe's Heat Wave Reveals a Cooling Gap That China's AC Makers Are Filling. Additionally, the ongoing trade tensions with the US and Europe are adding pressure, as discussed in US Agriculture Urges Fixing USMCA as China Cuts American Imports.
