China needs to trim housing glut as priority to repair confidence, analysts say
Analysts see destocking as a priority for Chinese authorities to stem another year of decline in home prices
China’s beleaguered housing market is likely to endure another chastening year as some analysts forecast home prices to weaken further in 2025, after a mixed bag of results from various attempts to trim excess supply over the past 12 months.
Since Beijing unveiled in May 2024 a 300 billion yuan (US$40.9 billion) fund to help local governments buy unsold properties, authorities in more than 30 mainland cities have managed to either reduce or control the glut, while others missed their targets.
That makes dest0cking an unmistakable urgency for the sector to stem a four-year slump that has weakened one pillar of the nation’s economy, according to analysts.
“Buying housing stocks remains one of the top priorities this year,” said John Lam, head of China and Hong Kong property research at UBS. The inventory would be reduced to a healthy level by mid-2026, he forecasts, assuming no more defaults among major property developers.
Supply in major 50 mainland cities shrank by about 30 per cent on average in 2024, according to China Index Academy. It will take slightly more than 21 months to clear the glut, and more than 30 months in some representative tier-3 and tier-4 cities, it added.
10:57
Boom, bust and borrow: Has China’s housing market tanked?
