Fitch Ratings stated that in the fourth quarter of 2025, the mainland new housing market further weakened, with sales in the first eleven months declining by 11.2% year-on-year, the sold building area decreasing by 8.1%, and the average price dropping by 3.3%, falling below the agency's previous annual forecast. The weak performance of the real estate market reflects the economic downturn, pressure on the labor market, and expectations of further declines in housing prices, leading to low buyer confidence; while policy support has only temporarily eased market sentiment.
In terms of housing prices, the decline in second-hand housing prices is faster than that of new housing prices, particularly in first-tier cities. The significant difference in price declines may not persist, and to maintain competitiveness relative to second-hand housing, new housing prices may face greater pressure.
Regarding inventory, the area of completed unsold commercial residential properties has decreased for nine consecutive months. However, as of the end of November last year, it was only about 1% lower than at the end of 2024, while the sales area of new homes declined by 8.1% year-on-year, reflecting that the progress of destocking is lagging behind the contraction in sales. High residential inventory may continue to exert downward pressure on housing prices in 2026.
At the same time, land supply is tightening; as of November 25, 2025, the national land transaction volume for the year decreased by 27% year-on-year, but transaction volume in first-tier cities increased by 36%. In November last year, the monthly land transaction area and transaction value decreased by 27% and 28% year-on-year, respectively, but rebounded by 39% and 57% month-on-month.
In the fourth quarter of 2025, Fitch adjusted the outlook for China Jinmao (00817.HK) and BCDC (600376.SH) from "negative" to "stable," reflecting China Jinmao's outstanding sales performance and BCDC's clearer business transformation direction. Fitch downgraded the rating of CHINA VANKE (02202.HK) by several notches to "RD" due to its failure to repay the principal and interest of domestic bonds after the original grace period expired