China's property sector faced continued pressure in December, with new home prices extending their downward trajectory despite repeated government interventions aimed at market stabilization. The latest official data from the National Bureau of Statistics reveals persistent weakness across the residential market, highlighting ongoing challenges in one of the economy's key sectors.

December Price Performance Shows Accelerating Decline

New home prices in China fell 0.4% month-on-month in December, matching the pace of decline recorded in November. However, the annual comparison painted a more concerning picture, with prices dropping 2.7% year-on-year, representing an acceleration from the 2.4% decline observed in the previous month.

Widespread Price Weakness Across Cities

The National Bureau of Statistics survey of 70 cities revealed the extent of the market downturn. Only six cities posted price gains in December, while 58 cities recorded declines, demonstrating the broad-based nature of the property sector's challenges.

The secondary market showed similar weakness, with existing home prices in tier-one, tier-two, and tier-three cities all falling faster compared to the previous year. This comprehensive decline across both new and existing home segments underscores the depth of the current market adjustment.

Broader Market Indicators Reflect Sector Distress

The property sector's struggles extended beyond pricing to fundamental market activity. According to separate official data, property investment in China dropped 17.2% while home sales by floor area decreased 8.7% in 2025, reflecting reduced confidence and activity across the residential market.

Government Recognition of Sector Transformation Needs

An article published in Qiushi, the Communist Party's official journal, acknowledged the property sector's critical role in the economy while calling for significant policy intervention. The publication described the sector as "undergoing a profound adjustment" and emphasized the need for "strong policy actions" to stabilize market expectations.

The property crisis, which began unfolding in mid-2021 following government campaigns to curb excessive borrowing, has created substantial financial distress among major developers. Companies like Country Garden and Evergrande have faced significant challenges due to heavy debt burdens and backlogs of unfinished projects.

China's financial regulator announced plans to promote the "normal operation" of government programs designed to accelerate financing support for eligible residential projects that have been stalled, indicating continued policy focus on addressing the sector's structural challenges.

China faces an unprecedented demographic crisis as its birth rate plummeted to the lowest level since the establishment of the People's Republic in 1949. The National Statistics Bureau data released on Monday reveals a stark picture of the country's population challenges, despite ongoing government efforts to reverse the declining trend.

Birth Rate Reaches Historic Low

The latest demographic data paints a concerning picture for China's population trajectory:

The birth rate of 5.6 per 1,000 people represents a critical milestone, marking the lowest fertility level recorded since the founding of the People's Republic. This dramatic decline occurred despite various government initiatives aimed at encouraging family formation.

Government Incentives and Policy Measures

President Xi Jinping's administration has implemented comprehensive pro-natalist policies to address the demographic challenge. The government has introduced multiple incentive programs designed to make child-rearing more attractive and accessible for Chinese families.

Key policy initiatives include:

The government has also implemented a 13% value-added tax on contraceptive drugs and devices, including morning-after pills and condoms, marking the first time such products face taxation. This policy shift represents part of broader efforts to influence reproductive choices through economic measures.

Economic Implications and Workforce Challenges

The demographic decline poses significant threats to China's position as the world's second-largest economy. A shrinking workforce combined with a rapidly aging population creates multiple economic pressures that extend beyond immediate productivity concerns.

The changing demographic structure particularly impacts the pension system, which already faces funding challenges. As the elderly population grows while the working-age population shrinks, the worker-to-retiree ratio continues to deteriorate, placing additional strain on social security systems.

Broader Demographic Context

The 3.4 million population decline represents the largest single-year drop in decades, highlighting the accelerating nature of China's demographic transition. This trend occurs despite the relaxation of previous population control policies and the introduction of fertility-promoting measures.

The demographic challenge reflects broader social and economic factors influencing family formation decisions, including urbanization, rising education levels, and changing lifestyle preferences among younger generations. These underlying trends continue to shape reproductive choices despite government incentives and policy adjustments.