Published: May 3, 2025
The fragile rebound of China’s property market is showing signs of strain as a new wave of US tariffs under former President Donald Trump threatens to derail economic stability. After months of tentative optimism, recent data and buyer sentiment suggest that the bottom of the market may still be elusive.
A Crisis of Confidence in Shanghai and Beyond
For Shanghai journalist Kong Jiongjiong, the dream of property appreciation has turned into prolonged uncertainty. After purchasing a modest flat in 2015, she watched the market surge – only to be blindsided by regulatory crackdowns in 2018 and the pandemic’s aftershocks. Now, renewed trade tensions with the US are reigniting fear among prospective buyers.
“Once you’ve experienced the highs, it’s hard to believe the market will keep falling,” Kong lamented. “But I honestly don’t know where the bottom is.”
Trump’s Tariffs Rattle Fragile Optimism
Economists warn that Trump’s newly announced trade tariffs are casting a shadow over what appeared to be a nascent property recovery. As Moody’s economist Sarah Tan noted in April, “Rising tensions with the US lead to weaker exports and investment. That chaos will keep households nervous.”
Although the Chinese government has introduced measures — including mortgage rate cuts and stimulus packages — to buoy the market, experts believe these efforts may not be sufficient amid global volatility.
Developers and Banks Show Mixed Signals
Despite modest signs of progress, such as strong land auction activity and shrinking home price declines across city tiers, the sector remains volatile. Notably, Hangzhou-based developer Binjiang Real Estate paid a 70% premium on a recent land deal, suggesting pockets of optimism.
Household mortgage lending also improved in Q1 2025, with a 504.7 billion yuan surge in March alone. However, this has not translated into broad-based market recovery, as sales slumped 40% in Shenzhen in early April, according to Centaline Property.
Stimulus May Not Be Enough
Analysts from Nomura and Bank of America anticipate further government intervention, including potential fiscal support worth 1.4 trillion yuan. Yet the overall sentiment remains subdued. Raymond Yeung of ANZ stated, “We are still far away from the bottom.”
Beijing and Shanghai officials are reportedly preparing to loosen homebuying restrictions, including relaxing residency and social insurance requirements. But even with these efforts, consumer confidence remains low.
Outlook: A New Normal for China’s Housing Sector
With more than 20 million unfinished homes and a declining number of developers, China’s real estate sector is unlikely to return to its boom years. Fitch Ratings estimates housing demand could drop 33% from previous averages, and Nomura’s Lu Ting suggests the sector’s GDP contribution may fall to just 10% from its peak of 25%.
“The good old days of the property market are gone,” Lu declared. Buyers like tech worker Evelyn Luo are beginning to agree. After buying a 10 million yuan flat in January, she now regrets her timing. “Maybe there’s no perfect time to buy a home unless you have a real need and a clear outlook. And right now, not many of us do.”
Recent conversations with her property management company confirmed her fears; prices in her complex have slipped slightly since her purchase.
A recovery that once felt within reach now again feels out of sight.
Luo paused, then added: “Maybe there’s no perfect time to buy a home unless you have a real need and a clear outlook. And right now, not many of us do.”
Conclusion: Recovery Faces Headwinds
While Chinese officials work behind the scenes to engineer a rebound, the impact of renewed US tariffs and shaky consumer sentiment could delay recovery. For now, both investors and homebuyers remain wary, waiting to see if this latest economic storm can be weathered — or if more pain lies ahead.
