China's Property Market Recovery: Analyzing CICC's 2026 Stabilization Forecast

China’s property market has been a subject of intense scrutiny since entering a downturn phase in 2021. CICC’s recent research report suggesting market stabilization by 2026 warrants careful examination through multiple analytical lenses.

The forecast primarily draws upon the experiences of five countries - the United States, Japan, Russia, Spain, and Thailand. These nations experienced property market corrections lasting 5-10 years with price declines ranging from 20% to 40%. CICC notes that China’s property prices have already declined approximately 15% over three years, suggesting room for another 10-15% correction before stabilization.

However, this comparative analysis requires important context. China’s property market has several unique characteristics that differentiate it from international counterparts. The property sector in China is deeply intertwined with local government finances, features a distinctive pre-sale system, and plays a crucial role in household wealth that exceeds typical patterns seen in other markets.

Current market indicators show early signs of selective recovery. In October, new home sales in 40 key cities increased 5.0% year-on-year, while second-hand home transactions in 13 cities rose 23.8%. First-tier cities, particularly Beijing and Shanghai, are demonstrating stronger resilience. Beijing’s second-hand home prices increased 1.0% month-on-month, while Shanghai saw a 0.2% rise.

The government has implemented multiple supportive policies, including specialized bond programs, monetization of shantytown renovation, and tax adjustments. Local authorities have also relaxed purchase restrictions and down payment requirements in many cities. These measures aim to prevent disorderly market correction while maintaining housing affordability.

Yet structural challenges persist. China’s household leverage ratio remains elevated, with many families carrying 20-30 year mortgages. Population demographics and economic growth patterns differ significantly from the international cases cited. The property sector’s oversized contribution to GDP and its role in local government financing create complex policy trade-offs.

The path to market stabilization likely involves carefully balancing multiple objectives: maintaining financial stability, protecting homeowner interests, supporting reasonable housing demand, and managing systemic risks. Rather than a uniform recovery, different city tiers may follow distinct trajectories, with first-tier cities potentially stabilizing earlier than others.

Looking ahead, the property market’s transformation extends beyond price movements. The sector is gradually shifting from its role as a growth engine toward serving primarily housing needs. This transition requires careful policy calibration to avoid exacerbating financial risks while supporting genuine housing demand.

Understanding these nuances suggests that while CICC’s 2026 stabilization forecast may prove directionally correct for select markets, the recovery pattern could vary significantly across regions and take longer in many areas. The key lies in monitoring both price trends and fundamental demand-supply dynamics across different city tiers while remaining attentive to broader economic conditions and policy developments.