The Rise of a Giant
China’s property market has long been a cornerstone of its economic growth. Since the 1980s, when Deng Xiaoping opened up the economy, the real estate sector has surged. In 1998, the government encouraged private homeownership, ending decades of state-run housing.
This shift sparked a property boom. Millions of Chinese families poured their life savings into homes, often buying apartments before construction even began. Urbanisation exploded. Developers raced to build, while homebuyers scrambled to invest.
When the Bubble Burst
As demand soared, prices skyrocketed—especially in major cities. Homes became unaffordable for many. In response, Beijing introduced the “Three Red Lines” policy in 2020. This aimed to curb excessive borrowing by property developers.
Then came the tipping point. In 2021, Evergrande, one of China’s largest developers, defaulted on its debt. The collapse shocked the nation. It triggered a domino effect, with smaller developers also falling into crisis. Across the country, projects were abandoned. Buyers were left in limbo.
To make matters worse, COVID-19 struck. Consumer confidence plummeted. Housing demand dried up. Supply overwhelmed the market. The once-booming sector was in chaos.
Beijing Fights Back
Initially, the government responded with caution. Authorities relaxed some buying restrictions to boost sales. But the piecemeal measures were not enough. By late 2023, new home prices in big cities were falling at the fastest rate in nine years.
In 2024, Beijing changed tack. Policymakers launched coordinated efforts to rescue the sector. A stronger focus emerged on both supporting buyers and helping cash-strapped developers.
One major step was the “Project Whitelist” initiative. Local governments could now recommend projects to banks for fast-tracked lending. This helped developers deliver unfinished homes and eased liquidity pressure.
A Flurry of Reforms
Reforms came fast. In May 2024, the People’s Bank of China (PBOC) created a 300 billion RMB relending facility. Local governments could use this to buy completed but unsold homes. These units would then be converted into affordable housing.
Meanwhile, mortgage rules were eased. First-home down payments dropped from 20% to 15%. Mortgage floor rates were scrapped. Second-home down payments also fell.
By September 2024, Guangzhou became the first top-tier city to fully lift home purchase restrictions. Shanghai and Shenzhen followed by easing curbs for non-local buyers.
The PBOC pledged more relief, cutting mortgage rates and expanding developer credit access. The credit quota for “Project Whitelist” doubled to 4 trillion RMB.
Signs of Stabilisation
In September 2024, China’s top leadership made a clear promise: they would stabilise the housing market and avoid further collapse. Shortly after, the Ministry of Finance allowed local governments to issue special-purpose bonds. These would fund purchases of commercial property and idle land for redevelopment.
At the National People’s Congress in March 2025, no new policies were introduced. Instead, officials focused on enforcing existing measures more effectively. Cities received more autonomy. Urban renovations were promoted.
Importantly, the NPC stressed the need to prevent further developer defaults. The goal was to restore confidence—slowly but surely.
What Lies Ahead?
The road to recovery is far from over. Challenges remain. Oversupply, high developer debt, and cautious consumer sentiment still weigh heavily on the sector.
However, the sweeping reforms of 2024 and early 2025 show a determined pivot. Beijing now sees stabilising real estate not just as an economic issue, but as a political priority.
China’s property market may never return to its dizzying highs. But with consistent policies and stronger governance, it could once again find its footing—on firmer, more sustainable ground.
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