Limited rescue, lingering correction – Standard Chartered

Long-term priorities are constraining policy space, limiting scope for meaningful housing support. The housing correction is likely to continue in 2026, with a slow path to equilibrium. Fiscal stimulus likely to tilt more towards supporting manufacturing and infrastructure this year, Standard Chartered’s economists Carol Liao and Hunter Chan report.

Still no big moves

“A recent article in the official journal Qiushi advocated decisive and comprehensive policy action to support the housing market, sparking market discussions on additional stimulus. Despite repeated signals to stabilise the property market, China’s policy focus has shifted decisively towards long‑term structural transition – technological competition, manufacturing upgrades, and a consumption boost. With stretched fiscal resources and local governments facing competing priorities, large‑scale measures to support the housing market become less feasible.”

“The housing market saw another year of correction in 2025. Despite various supporting policies since 2021, households continue to hold back. Downward property price momentum, low rent‑to‑price ratios, and muted confidence in jobs and income are dampening housing sentiment. Mortgage outflows show early repayments still outweigh new borrowings, underscoring weak demand despite easier credit.”

“We expect another year of contraction in housing investment and prices, though with a smaller macro drag as property’s share of GDP has declined. Slow progress in the unsold housing buyback programme and limited policy firepower suggest the correction will continue. Structural factors – excess inventory, subdued expectations, and resource prioritisation away from property – mean a more sustainable demand‑supply balance may not be reached by 2028.”