China’s real estate sector continues to decline, hitting new lows even as the country’s trade revenues expand.
According to the New York Times, new home sales nationwide have dropped to the lowest level in over 15 years, while prices for existing apartments are falling sharply.
Although China faced a trade war with President Trump last year, its overall trade surplus rose to nearly $1.2 trillion, leaving the housing market downturn as the more pressing economic concern.
China’s National Bureau of Statistics reported that the economy grew by 5% last year, the same rate as the previous year. In the fourth quarter, output rose at an annualized pace of 4.9%.
At the same time, households in both urban and rural areas have been cutting back on spending. In November, retail sales saw only a marginal rise compared with the same month the previous year, marking the weakest monthly performance in consumer spending since the Covid pandemic.
In December, retail sales slipped 0.1% from November’s already subdued figures.
The downturn in China’s housing market began four years ago and has steadily worsened each month. In 2021, construction and related real estate activities accounted for roughly a quarter of the country’s economy.
However, investment in new residential buildings, office towers, factories, and other assets fell by 3.8%, according to the National Bureau of Statistics—the first decline since 1989, when the government curbed investment to contain inflation.
Homebuyers have been seeking discounts of up to 80% off the 2021 market peak, which many sellers have been reluctant to offer, stalling apartment sales in numerous cities. Furthermore, the market is flooded with newly constructed housing, while buyers tend to prefer older, more affordable homes over new builds.
Meanwhile, economists outside China argue that the country’s real growth may be only half of the official figures. According to New York-based research firm Rhodium Group, China’s economy grew just 2.5–3% last year and is expected to slow further this year.
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