S&P Global Ratings has sharply downgraded its forecast for China's property market, now predicting a 10% to 14% decline in sales for 2026. This marks a significant revision from the October estimate of a 5% to 8% drop, reflecting deepening concerns about the sector's prolonged downturn.

Once representing over 25% of China's economy, the real estate market has seen annual sales volume cut in half over just four years. The ratings agency suggests the government may need to purchase more unsold property to create affordable housing, though current efforts have been limited. Persistent oversupply issues are expected to push prices down by another 2% to 4% this year, following similar declines in 2025.

Particularly troubling is the worsening price decline in China's largest cities during the fourth quarter of 2025. Beijing, Guangzhou, and Shenzhen all reported home price drops of at least 3% last year, with Shanghai being the only major city to show growth at 5.7%. Despite the ongoing sales slump, developers have maintained construction activity, resulting in a sixth consecutive year of completed but unsold new housing inventory.