Under the neutral scenario, the bank forecasts a slight narrowing in the decline of total housing sales by 2026, with the drop in real estate investment potentially stabilizing. In an optimistic scenario, land acquisition and new project starts would exhibit resilience first and could serve as leading indicators to monitor.
According to a research report released by CICC via the Zhitong Finance app, the volume and price performance of the real estate market in 2025 will be in the “moderating decline” phase at the initial stage of “stabilizing after a downturn.” To accelerate the market’s transition from “moderating decline” to “stabilization,” bottlenecks in implementing various supply and demand adjustment policies still need to be addressed. In a neutral scenario, the bank predicts that the overall decline in housing sales volume will narrow slightly in 2026, while the decline in real estate investment may stabilize. In an optimistic scenario, land acquisition and construction starts will show elastic performance first and can be regarded as leading indicators.
CICC's main viewpoints are as follows:
The volume and price performance of the real estate market in 2025 will be in the “moderating decline” phase at the initial stage of “stabilizing after a downturn.” At the beginning of this year, driven by expectations of “stabilizing after a downturn,” the overall performance of the real estate market was positive, but it weakened marginally in the second quarter. The bank estimates that the total trading volume of primary and secondary housing markets in 2025 will see a slightly narrower year-on-year decline compared to 2024, with cumulative price declines for comparable properties in the secondary market remaining consistent. Meanwhile, average new home prices are expected to narrow somewhat due to structural factors brought about by high-quality housing. The bank views the process of the real estate industry moving toward “stabilizing after a downturn” as a three-step progression: “trading volume – housing prices – real estate investment.” Currently, the market is still in the first step, which is the bottoming-out phase of trading volume showing “moderating decline.”
To accelerate the market’s transition from “moderating decline” to “stabilization,” bottlenecks in implementing various supply and demand adjustment policies remain to be resolved. For example, ongoing efforts to repurchase idle land have struggled to effectively reduce inventory levels, while urban village redevelopment and the repurchasing of existing housing have progressed slowly due to challenges in balancing costs and benefits. Additionally, the bank highlights the need for proactive measures to address potential derivative risks, including credit risks among smaller property developers, passive mortgage defaults, and declining land sale revenues.
In a neutral scenario, the bank expects the decline in total housing sales volume to narrow slightly in 2026. Assuming policymakers maintain a prudent stance similar to this year’s pace and intensity, and considering that inventory destocking cycles may not return to reasonable levels during this period, the real estate market will likely remain in the first step of “stabilizing after a downturn,” i.e., the bottoming-out phase of trading volume. This corresponds to a 5.0% decline in total housing transaction volume (compared to -6.8% in 2025E), with new homes and secondary homes declining by 6.9% and 2.6%, respectively (compared to -9.8% and -2.9% in 2025E). Housing prices may exhibit some inertia in their trends. If unexpected policy measures drive a recovery in month-on-month housing prices within the year, it would signal the market entering the second step of “stabilizing after a downturn,” representing an optimistic scenario. Conversely, if derivative risks materialize, driving expectations of accelerated housing price declines, achieving “stabilization” will require more time.
The decline in real estate investment may stabilize in 2026; attention should be paid to leading indicators such as land acquisition and construction starts. In a neutral scenario, the bank anticipates that developers’ willingness to acquire land and commence projects will remain under pressure, with the year-on-year decline in new construction starts narrowing only slightly by 3.6 percentage points to -16.1%. Despite a lower base, slower completion rates and reduced engineering intensity will result in a 9.3% and 6.7% year-on-year decline in construction area and physical completions, respectively (compared to -9.7% and -15.2% in 2025). Ultimately, the decline in real estate investment is expected to stabilize at approximately -14.9% (compared to -15.2% in 2025). In an optimistic scenario, land acquisition and construction starts will exhibit elastic performance and can serve as leading indicators to monitor.
Risk Warning: Policy measures may fall short of expectations, and derivative risks in the real estate sector could escalate.