BEIJING — S&P Global Ratings has revised its outlook for China's real estate market, cutting its forecast for property sales just two months into 2026. The firm announced on Sunday that it now expects primary real estate sales to decline by 10% to 14% this year. This projection marks a more significant drop compared to the 5% to 8% decline predicted back in October.
The analysts noted that the ongoing downturn is so deeply entrenched that only governmental measures could potentially manage the excess inventory. They suggested that the state might purchase unsold properties to provide affordable housing, though such initiatives have been limited.
China's property market, once responsible for over a quarter of the nation's economy, has experienced a dramatic reduction in annual sales volume, having halved in just four years. The initial decline was triggered by Beijing's measures to curb developers' dependence on debt for expansion, and the anticipated recovery in consumer demand for housing has yet to materialize.
Economists have issued warnings about excessive development in China's property market for some time. However, construction has continued despite sluggish sales, leading to a sixth consecutive year of surplus new housing, as detailed by the ratings agency.
"China's glut of primary housing is keeping a property market recovery out of reach," S&P analysts commented, highlighting that the oversupply is exerting pressure on prices, which they predict will fall by an additional 2% to 4% this year after a similar decrease last year.