China's property slump could extend into 2027 with further price drops: Goldman Sachs
China's prolonged
property downturn could extend into 2027 with another 10 per cent decline in real home prices, as policymakers maintain a cautious stance despite mounting risks to the broader economy,
Goldman Sachs said.
In a report on Wednesday, the Wall Street bank compared China's property slump with 21 major housing busts from history in both developed and emerging markets, finding that such downturns typically lasted six years and involved a median real price drop of 30 per cent.
China's real home prices have fallen by about 20 per cent since late 2021, and they 'could see another 10 per cent correction before stabilising around 2027 if China follows a typical housing bust path', Goldman Sachs economists including Hui Shan said.
The downturn began in 2021 following the commencement of a government campaign to reduce debt among developers and was further aggravated by strict Covid-19 lockdowns in 2022.
Despite a modest pickup in early 2025, 'renewed weakness' has emerged with both prices and activity sliding in recent months. New housing starts have fallen by about 75 per cent from their peak, while sales were down by half as of May, Goldman said.
'While China's deflationary environment suggests a smaller peak-to-trough real price correction, low housing affordability argues for a larger one,' the report said.
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