China is stepping up efforts to rescue its struggling property sector, unveiling a series of fresh policies aimed at reviving buyer confidence and stabilizing developers teetering on the brink. But after years of overbuilding, debt, and evaporating trust, will it be enough?
Beijing Shifts Gears After Months of Tepid Moves
China’s central government announced an expanded stimulus push over the weekend, signaling a more aggressive approach to managing the ongoing property slump. It’s the latest pivot after nearly three years of cautious tinkering.
Two key levers are now being pulled harder: easing home-buying restrictions in major cities and injecting liquidity into local governments and developers.
The new batch of measures includes allowing first-time homebuyers in several cities to qualify for mortgage discounts and encouraging banks to offer lower interest rates. The People’s Bank of China is also working with state-backed lenders to create a refinancing platform to help developers complete stalled housing projects.
Analysts say this marks the clearest acknowledgment yet from Beijing that the property malaise is dragging down broader economic growth.
Housing Starts Keep Falling Despite Earlier Stimulus
Official data tells the real story. Housing starts in China have dropped by more than 50% from their 2021 peak. Even after a raft of previous support policies, new construction hasn’t picked up.
Developers are still sitting on piles of debt, and many buyers simply don’t trust that unfinished homes will ever be completed.
• According to China’s National Bureau of Statistics, property investment fell 10.1% year-on-year in the first half of 2025.
• Home sales slid 13.4% over the same period.
• Average housing prices in Tier-2 cities have now fallen for 16 straight months.
That has created a dangerous feedback loop: developers can’t sell homes, which means they can’t repay loans or finish projects, which then causes more buyers to stay away.
Local Governments Struggle Under the Weight of Land Revenue Collapse
There’s another dimension to this crisis — China’s local governments, many of which rely heavily on land sales for revenue, are taking a direct hit.
Back in the boom years, local authorities sold land use rights to developers to fund infrastructure and services. Now, with developers on life support, land sales are drying up fast.
In the first six months of 2025, land sale revenue dropped by over 20% across most provinces, with some smaller cities seeing declines above 40%.
In places like Zhengzhou and Shenyang, projects that once symbolized urban ambition are now deserted construction sites fenced off with rusted corrugated steel.
Major Banks Step In, But Private Developers Remain Frozen
While state-run developers like China Vanke and Poly Group are still managing to raise funds and complete projects, privately owned firms remain largely frozen out.
Take Country Garden — once considered a safe bet in China’s housing boom. It defaulted on several offshore bonds last year and has since been racing to offload assets and delay payments. So far, little progress.
To address this, regulators are asking banks to ramp up support for “qualified” developers — a term that, conveniently, remains vague.
But here’s the tricky part: even as credit conditions ease slightly, lenders are extremely cautious. Few want to take on risk unless they’re directed to by central authorities.
One banker told Bloomberg anonymously: “We’re told to support the industry, but we’re also told to protect our balance sheets. It’s a tightrope.”
Can Confidence Be Rebuilt? Buyers Remain Skeptical
Ultimately, it all boils down to confidence. And right now, Chinese homebuyers aren’t biting.
Many families who bought pre-sale apartments during the boom are still waiting for keys years later. Some were forced to stop mortgage payments in protest. That memory still stings.
A July consumer survey by China Beige Book showed that only 8% of urban households plan to buy property in the next 12 months. That’s down from 19% in early 2021.
A table of current sentiment:
| Metric | 2021 (Q1) | 2025 (Q2) |
|---|---|---|
| Urban Home Purchase Intentions | 19% | 8% |
| Average Mortgage Rate | 4.5% | 3.6% |
| Pre-sale Abandonment Rate | 5% | 23% |
Even with incentives, the fear of “paying for a ghost shell” still haunts potential buyers.
One couple in Guangzhou told local media they’ve saved for years but won’t buy until they see real progress: “We’ve been burned once,” they said. “We’re not taking another chance.”
What Happens Next? Growth Targets and Political Pressure
The stakes are high. Premier Li Qiang is under pressure to meet a 5% annual GDP growth target, and the property sector — directly or indirectly — still makes up around a quarter of China’s economy.
So far, GDP growth is tracking below that target. The second quarter came in at just 4.6%, weighed down heavily by weak housing data and tepid consumer demand.
That may explain the new urgency. With limited appetite for another massive stimulus package like the one post-2008, China is experimenting with targeted bailouts, piecemeal policy tweaks, and soft regulatory nudges.
Still, one question looms large: can China thread the needle between avoiding a financial crisis and keeping growth alive — all without triggering moral hazard?
No one really knows yet. But with tens of millions of jobs tied to housing and construction, it’s clear that letting the sector collapse is not an option Beijing is willing to entertain.
