This is a summary of a longer Chinese essay synthesizing multiple analyses by Bilibili creator CLS同学 on China’s housing market.
Source videos:
- Housing market falling, three top signals for A-shares
- Distressed home sales plummet — the truth about banks “hiding” homes
- 2026 China top-ten economic predictions (FX, stocks, housing)
- A city’s housing prices were rescued — will it spread?
- After 30 years of falling prices, why do Japanese developers thrive?
- Property tax imminent — two possible paths within 5 years
Where we are#
China’s housing prices entered a downturn in 2021 and have now fallen for about 5 years:
- First-tier cities back to 2017 levels; the national 40-city average back to 2016, down ~40% from the 2021 peak
- Real-estate investment down 17.2% and sales down 12.6% in 2025 (fourth straight year of accelerating contraction)
Distressed sales and “hidden” homes#
Distressed (foreclosure) listings surged from 447,000 (2021) to 768,000 (2024), up 71.8%. Yet in 2025 they fell — not because the market stabilized, but because banks began hiding homes: preferring negotiation and delay over selling at a loss, and quietly transferring portfolios to AMCs or selling directly.
Shifting policy#
In 2025, against a backdrop of large price falls, Beijing issued no rescue policy at all. The stance moved from “stabilizing prices” to “letting risk unwind so a property tax can finally be introduced.” Second-hand prices fell over 1% monthly while new homes held up.
Two reference points#
- Hong Kong rebounded on a five-fold confluence: tax cuts, lower rates, rising rents (better yield), talent inflow, and land-supply cuts. But China’s mainland lacks all three core conditions — so the rebound won’t spread.
- Japan survived after its bubble via three tricks: backing from zaibatsu, aggressive asset sales, and business transformation (REITs, property management). China’s private developers are in Japan’s early “crisis” phase, but the Japanese path may not fully apply.
The endgame: the property tax#
The property tax is the key to the final drop. Two possible paths:
- Recovery path: after deflation ends and returns normalize, within 3–5 years
- Market-bottom path: after prices fall another 20% and rental yields reach ~3%
Either way, a property tax likely lands within 5 years, completing the shift from “prices never fall” to yield-based pricing.
Key takeaway: Housing in China is moving from an investment asset back to a consumption good. Cash flow and rental yield matter more than leverage and faith.
This is a synthesis of CLS同学’s housing analyses, for information only — not investment advice.
