China Property: Developers and Unfinished Homes — 2026-10-26
China's property market shows signs of stabilization with first-tier cities' second-hand home prices rising for the seventh consecutive month in September, while new home price declines narrowed significantly. Despite this recovery signal, developer distress persists, with major players like Evergrande and Vanke facing debt restructuring hurdles and stalled projects remaining a critical challenge for local governments.
China Property: Developers and Unfinished Homes — 2026-10-26
Top developments
First-Tier Cities Lead Recovery in Second-Hand Market According to National Bureau of Statistics (NBS) data released on October 19, second-hand residential prices in China's first-tier cities rose by 0.2% month-on-month in September, marking the seventh consecutive month of growth. This trend contrasts with the broader market, where new home prices continued to fall in 49 of the 70 monitored cities, though the pace of decline has slowed in second and third-tier cities. The divergence suggests that policy easing and accumulated demand are primarily benefiting major metropolitan areas, while lower-tier cities continue to struggle with inventory overhang.
Evergrande Liquidators Plan First Creditor Payouts In a significant development for the world's most indebted developer, liquidators for China Evergrande Group announced on October 22 that they plan to begin distributing funds to creditors in the first half of 2027. However, the recovery rate remains starkly low; nearly three years into the winding-up process, liquidators have recovered less than 1% of the $46 billion claimed by creditors. This timeline underscores the prolonged nature of resolving the sector's largest debt crisis.
New Home Price Declines Narrow, But Sales Remain Fragile New home prices in September fell at a slower pace than in previous months, fueling hopes that the market is turning a corner as stimulus measures take effect. Despite this easing in price drops, sales volumes during the traditionally busy "Golden September, Silver October" period showed only modest recovery, raising concerns about the durability of the rebound. The NBS data indicates that while the number of cities with rising month-on-month prices increased, the overall market remains in a deep adjustment phase.
Local view
Local Media Highlights Divergence and Policy Impact Chinese financial outlet The Paper (Pengpai) noted that the "policy combination" of easing measures has begun to yield visible results, particularly in first-tier cities where second-hand home prices have seen consistent growth. The outlet highlighted that national new commodity housing inventory continued to decline in September, a positive signal for market health. Meanwhile, 21st Century Business Herald emphasized that the narrowing of price declines in second and third-tier cities suggests the market bottom may be approaching, though they cautioned that the recovery is uneven.
Stalled Projects and Fund Misappropriation in Henan Local scrutiny remains intense regarding unfinished projects. In Henan's Ye County, authorities responded to reports of misappropriated pre-sale funds for the "Beautiful Life Home" project, stating that they had recovered 306 million yuan in assets corresponding to the diverted funds. The incident highlights the ongoing struggle to ensure the delivery of pre-sold homes, a key pillar of the government's "guaranteed delivery" policy.
Context & numbers
- Price Trends: In September, new home prices fell in 49 of China's 70 largest cities. First-tier cities saw a 0.2% month-on-month rise in second-hand home prices.
- Shenzhen Specifics: Existing home prices in Shenzhen fell in October, despite a new loan subsidy policy that boosted sales of lower-priced properties. Listings continued to rise, indicating persistent oversupply in the tech hub.
- Developer Distress: Guangzhou Fangyuan Real Estate Development Co.'s subsidiary, Guangzhou Fangyuan Huijin, faced a bankruptcy liquidation application by creditors, with approximately 336 million yuan in assets frozen. This adds to the list of mid-sized developers facing insolvency proceedings.
On the radar
- Vanke Debt Timeline: Investors are watching China Vanke closely following earlier reports of its bondholders granting a grace period extension to January 28. The developer is preparing a broader restructuring plan, and any further delays in repayment could trigger renewed sector-wide volatility.
- Policy Follow-up: Analysts are awaiting further details on how local governments will deploy the recently announced easing measures to clear unsold inventory, particularly in third and fourth-tier cities where price declines remain steep.
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