China’s embattled real estate sector showed early signs of stabilization in September as government interventions helped boost developer revenue, though credit analysts project that a full price recovery across the country remains several years away.
Contracted sales among China’s top 100 property developers rose 13.5 percent in September compared to August, reaching 242.1 billion yuan, or about $36.1 billion, Yicai reported, citing figures from the China Index Academy. Total contracted sales for the first nine months of the year reached 2.26 trillion yuan, aided by an autumn sales surge and aggressive government interventions aimed at overhauling how residential properties are built and financed.
Policy Shifts and Supply Reductions
The recent pickup follows a sequence of regulatory moves from Beijing designed to curb excessive risk while encouraging prospective buyers. In late August, several government agencies, including the Ministry of Housing and Urban-Rural Development and the National Financial Regulatory Administration, introduced rules raising thresholds for pre-sales and prioritizing the sale of finished homes, Yicai reported. Major municipalities like Beijing, Shanghai and Guangzhou subsequently rolled out local rules restricting sales of incomplete units.
Subsidies quickly followed. Chinese Premier Li Qiang pledged measures to steady the market in September, leading to commercial mortgage rate subsidies that took effect Oct. 1 for eligible first-time buyers seeking smaller, moderately priced homes, according to CNBC and Yicai.
Analysts at S&P Global Ratings stated in an Oct. 8 report that residential housing prices nationwide could hit bottom by the third quarter of 2028, CNBC reported. That represents a marked change from earlier this year, when the ratings agency viewed a turnaround as out of reach due to deep inventory gluts.
“Developers will now be very cautious in buying land, so they will basically buy less land and develop less new projects going forward,” S&P credit analyst Edward Chan told CNBC. Chan noted that 2026 marks the first year of inventory destocking, adding that reduced supply will serve as the principal force steadying housing values over the next two years.
Divergence Across Cities
Market watchers anticipate that larger metropolitan centers will stabilize long before smaller provincial municipalities. Existing home prices in Beijing have already climbed 1.4 percent from their January low, while declines in Shanghai have narrowed, according to a report by Hao Zhou, chief economist at Guotai Junan International, cited by CNBC.
Zhou noted that the tech hub of Hangzhou recorded a record high in its new home sales index, bolstered partly by local artificial intelligence expansion. In contrast, smaller cities continue to grapple with severe supply overhangs that accumulated during years of debt-financed construction.
The broader restructuring also reflects a national strategic shift. Officials at China’s housing ministry announced in September that the property market has officially moved into an era focused on existing housing stock rather than unbridled new construction, CGTN reported. State Council guidelines for the 2026–2030 period emphasize urban renewal, including the modernization of aging apartment complexes and community services, rather than outward spatial expansion.
Lingering Debt and Uncertainties Ahead
Despite the recent uptick, substantial hurdles remain for the broader economy. Real estate firms accumulated massive liabilities during the boom years, with total developer debt estimated near $4 trillion, Eurasia Review reported, noting that more than half of that debt has defaulted following credit crackdowns that pushed dozens of developers into insolvency.
Market observers caution that recent sales momentum may also be short-lived. Morgan Stanley equity analyst Stephen Cheung warned that mortgage incentives might simply advance planned purchases rather than generate new long-term demand, pointing to holiday sales data showing a temporary spike, CNBC reported.
Whether the rebound can sustain itself will depend on the final months of the year. Economists are closely tracking municipal land auctions and fourth-quarter sales data in major hubs to determine if the sector has truly found a solid floor.
