China housing prices fall 0.5% in July, sales volume weakens

Investing.com -- China's housing market weakened further in July, with secondary home listing prices declining 0.5% month-over-month across 85 sample cities tracked by Morgan Stanley analysts, matching the decline seen in June.

The July decline brought the year-over-year drop to 9.6%, according to a note from Morgan Stanley's Hong Kong colleagues. Since peaking in June 2021, secondary housing prices have fallen 38% cumulatively.

Price weakness remained widespread, with approximately 95% of sampled cities posting month-over-month declines. All Tier 1 cities recorded a faster monthly decline in July, averaging 0.4%, compared to 0.1% in June. Morgan Stanley's China Property team attributed this to a catch-up effect following these cities' outperformance from March through June.

Secondary sales volume in 25 major cities softened to approximately 9% year-over-year in July, down from 30% in April, 25% in May and 10% in June. The bank's analysts attributed the deceleration to fragile resident sentiment and increased secondary listing volume in Tier 2 and lower-tier cities.

Total listings across approximately 50 sample cities increased 0.5% month-over-month in July, with more than 70% of cities recording monthly increases. Relative to end-2025 levels, total listings increased in more than 50% of sample cities, with 35% reaching record highs.

Visits to agent shops across 45 sample cities dropped 6% month-over-month in July, which analysts attributed mainly to seasonal effects.

Morgan Stanley analysts said they expect slightly faster month-over-month home price declines in August and September, though select Tier 1 cities may see a mild uptrend given more favorable demand and supply dynamics.

The weakness in housing has not been offset by equity market gains this year. Morgan Stanley estimated the value destruction in the housing market since December 2024 at approximately 41 trillion yuan, while the rise in Chinese A-share markets amounted to approximately 24 trillion yuan over the same period as of July.

Year-to-date, the cumulative change in A-share market capitalization stood at 2 trillion yuan, following a 17% decline in the Shenzhen index from its June 22 peak. This fell below the cumulative value destruction in housing asset value, down 7 trillion yuan year-to-date.

The Chinese market represents more than 30% of total spending in the European luxury goods sector, with over 70% of Chinese household wealth held in real estate.

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