Deutsche Bank: China Property Bottom May Emerge in 1-2 Years
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Deutsche Bank asserts that China's real estate downturn is entering its late stages, with multiple indicators suggesting a durable bottom is approaching rather than another transient policy-driven rebound. The current correction has spanned over five years since home prices peaked in early 2021. In terms of both duration and depth, this cycle closely aligns with the median trajectory of international housing downturns, where typical declines last four to seven years with a median price drop of roughly 20%. Official data shows new home prices have fallen approximately 14% and existing homes 22%.
The report distinguishes the current stabilization from brief recoveries seen in late 2023 and 2024. Unlike those periods, which relied on one-off demand releases from broad macro stimulus, the current improvement stems from underlying supply-demand dynamics. Specifically, tier-one cities are exhibiting rising transaction volumes alongside declining secondary market listings, suggesting that earlier speculative housing inventory is finally being absorbed.
Drawing parallels with Hong Kong's recovery, Deutsche Bank argues that stable rents are a crucial precursor to broader price stabilization. The bank identifies 2025 as a macroeconomic turning point and projects that residential rents in tier-one cities could bottom out and recover in 2026. Recovery will be highly regionalized, led by competitive tier-one and active tier-two cities. Ultimately, stabilization in the property market would help China's economy transition from a K-shaped recovery toward a more balanced expansion.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
