Home prices in China continued to fall in the first half of 2026 as buyers held back, betting that values will fall further. With sales volumes and prices falling, analysts see little sign of a near-term recovery.
The data released on Wednesday by the China Index Academy showed that secondary market home prices in 100 major Chinese cities fell 0.42% month-on-month in June to an average of 12,639 yuan (US$1,750) per square meter. Of these cities, 88 recorded a decrease while only 12 saw an increase.
The slide of the secondary market was broad-based at all levels of the city. In June, Tier 1 city secondary housing prices fell 6.95% year-on-year. Second-tier cities fared worse, falling 8.21% year-on-year, while smaller third- and fourth-tier cities fell 7.48% year-on-year.
Among the 10 largest cities, Nanjing and Wuhan posted the biggest year-on-year declines in June, with secondary market prices falling 11.45% and 10.89%, respectively. Beijing, Tianjin, Guangzhou and Chongqing saw declines of between 8% and 10%. Hangzhou, Shanghai, Chengdu and Shenzhen recorded year-on-year declines of 5% to 8% in June. Shenzhen performed the best among the ten cities, with a 5.27% decline compared to a year ago.
Chinese commentators widely read the first-half data as confirmation that the downward trend in house prices has not yet run its course, with further declines expected through the remainder of 2026.
A columnist based in Henan who writes under the pen name Qingjin Wenwang describes how the mood among potential buyers had changed markedly.
“A friend of mine started looking for a house to buy before getting married in late 2025. At the time, sellers were confident and showed little willingness to negotiate,” he says. “By June 2026, when he returned to the same district to look at similar properties, the sellers had largely softened their tone and kept asking him when he could sign a deal.”
The experience left his friend with a growing fear that prices could fall further even after he commits to a purchase, he says.
Citing figures released by the National Bureau of Statistics (NBS) last month, he outlines four reasons why a true recovery remains elusive:
- Prices have not stabilized. In May, only 16 of the top 70 cities saw new home prices increase month-on-month, and only 10 recorded gains in the secondary market. Tier three cities saw accelerated decline.
- Buyers are still pulling away. New home sales fell 10.8% year over year by floor area and 13.5% by value in the first five months of 2026. Many households are putting off purchases indefinitely.
- Developers are pulling back. Real estate investment fell 16.2% year-over-year in January-May, new construction starts fell 22.6% and completions fell 23.4%.
- The confidence of the secondary market has been eroded. Price anchors in many cities have quietly shifted lower – and, as buyer psychology turns cautious, it is slow to reverse.
NBS said on June 16, only four of 70 cities recorded a year-over-year increase in new home prices in the first five months of 2026. In the secondary market, no cities saw price growth over the same period, with most cities posting year-over-year declines of between 5% and 8%.
“As of 2021, China’s property market has undergone a dramatic transformation. New home sales peaked at 1.79 billion square meters that year and have declined every year since then, falling below one billion square meters in 2025,” a Guangdong-based property columnist. says in an article published Wednesday. “In many cities, prices have fallen more than 40% from their peak and some have fallen more than 50%. Such a large drop in such a short period is by any measure severe.”
He points to three structural reasons behind the decline:
- China’s population entered negative growth in 2022 and has continued to shrink. Experience elsewhere shows that population decline is very difficult to reverse, and China is likely to remain in negative growth for the foreseeable future.
- The era of rapid urbanization that once fueled explosive housing demand is largely over. The millions of people who flocked to cities in recent decades fueled a surge in house prices, but the tide has run its course.
- The overall offer of housing is not less. After years of construction, China has plenty of houses in general, apart from the tight supply in big cities and key areas.
Back to 2006
In late April, a wave of articles by Chinese commentators attracted widespread attention online, arguing that four years of decline had pushed house prices back to levels last seen around 2006, after inflation and currency devaluation were stripped away. The articles cited data compiled by the Bank for International Settlements (BIS) and sparked a heated debate on Chinese social media about the true state of the property market.
The Federal Reserve Bank of St BIS figures to illustrate China’s house prices relative to a 2010 base index of 100.
The first graph, following the nominal prices of residential properties, showed China’s house price index climbed from 78 in 2006 to a peak of 145.9 in 2021, before slipping to 114 in the first quarter of 2026.
The second chart adjusts for inflation and currency depreciation. To this extent, the index pink from 88.5 in 2006 to 113 in 2021, then fell to 85.1 in the first quarter of 2026, putting real house prices below their level two decades ago.
The adjustment is analogous to the difference between nominal and real gross domestic product (GDP) growth, where the latter removes the effects of inflation or deflation to reflect actual economic expansion.
A columnist based in Jiangsu who writes under the pen name Duanwei Liwen says data should not be applied uniformly across the country.
“House prices in Beijing, Shanghai and Shenzhen are still absurdly high. I see no sign that their house prices have returned to any historic lows,” she says. “You can’t use a national figure to explain the situation in every Chinese city.”
She says first-tier cities have proven more resilient, while the pressure is much greater on third- and fourth-tier cities, where prices have fallen back to levels of a decade ago or lower. She adds that the real value of the BIS-based index lies in its role as a warning signal to those rushing into the market, betting on the bottom.
“Over the past few years, many people have already fallen into this trap,” she says. “They see prices pull back and assume the floor has been reached, or they see policy easing and conclude a rebound is coming. Then prices keep falling and they can’t sell their properties.”
A writer at Sina Finance, a Beijing-based news website, disputes the inflation-adjusted framework, arguing that nominal prices are more meaningful to most people since household incomes and daily expenses are not adjusted for inflation. Based on the BIS nominal house price index, he says, it is undeniable that China’s house prices in 2026 have returned to 2016 levels.
He says any reliable forecast of where prices will go in the coming years must weigh a number of factors, including demographic trends, rental yields, income distribution and the balance between supply and demand.
Read: China’s population falls for fourth year amid economic woes
Follow Jeff Pao on Twitter at @jeffpao3
