Finance

S&P forecast: China property slump deepens in 2026, signaling spillovers

S&P Global Ratings trimmed its 2026 forecast for primary China real estate sales to a 10%–14% drop, deeper than October’s projection. The downgrade signals an entrenched downturn with limited policy relief, hinting at broader spillovers for EM assets, commodities, and credit markets.

📅 February 09, 2026
⏱️ 2 min read
S&P forecast: China property slump deepens in 2026, signaling spillovers

Key Takeaways

  • S&P Global Ratings now forecasts a 2026 drop of 10%–14% in primary China real estate sales, deeper than the 5%–8% outlook issued in October.
  • The downturn is described as entrenched, with government intervention seen as the only potential buffer against excess inventory.
  • In 2025, Shanghai prices rose about 5.7% while Beijing, Guangzhou, and Shenzhen declined roughly 3% in Q4.
  • If 2026–27 sales miss the base case by 10 percentage points, four of the 10 S&P-rated Chinese developers could face downward rating pressure, with China Vanke delaying debt repayments late last year.

People Involved

  • No specific individuals mentioned

Entities Involved

  • S&P Global RatingsCredit rating agency
  • China VankeDeveloper (China’s largest listed property developer)
  • Rhodium GroupEconomic research firm providing property vs high-tech analysis

MarketMoodz Analysis

For investors, the expected prolonged housing downturn could tighten credit conditions, compress developer earnings, and push up default risk, with spillovers to EM equities, commodities, and fixed income spreads.

The piece provides historical context that China’s property cycle has been a swing between overbuilding and debt-fueled growth, a pattern underscored by mixed 2025 price signals (Shanghai up about 5.7%, Beijing/Guangzhou/Shenzhen down around 3%). Policy responses have been incremental so far, prioritizing subsidies for high-tech over broad real estate support, which implies further downside risk unless reform momentum accelerates.

Look ahead to March 2026, when economic goals from top policymakers are due; watch for sharper policy signals, potential bulk purchases of unsold housing for affordable homes, and evolving developer credit metrics to gauge resilience across the sector.

Source: Original Article

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