China’s Real Estate Market in 2025 and Construction industry

 Alright, let’s dive into China’s real estate market in 2025, keeping it clear and engineer-style: precise, practical, and grounded in facts. I’m Hans, an electrical engineer with Aventech, a company deep in the electric industry, and I’ll tie this to how real estate impacts our work with a concrete example. The real estate market in China is a massive beast, tied to economic growth, urban development, and, yes, power systems. Let’s break it down.

China’s Real Estate Market in 2025

China’s real estate market is stabilizing after a rough few years, but it’s not out of the woods. Valued at USD 5.3 trillion in 2024, it’s projected to hit USD 6.98 trillion by 2030, growing at a 3.9% CAGR. The residential segment dominates, expected to reach USD 115.4 trillion in 2025, with a 2.11% CAGR through 2029, hitting USD 125.3 trillion. Despite this, 2025 is a transitional year with mixed signals.

Prices and Sales: As of March 2025, new home prices averaged RMB 16,740 (USD 2,334) per square meter, and second-hand homes were at RMB 13,988 (USD 1,950) across 100 cities. Shanghai saw a 10.1% year-on-year rise in new home prices, but second-hand prices in tier-one cities dropped. Analysts predict a 3.9% to 4.8% decline in home prices for 2025, with stabilization expected in late 2025 or 2026. Sales are down, with a 5% drop forecast for 2025, though October 2024 saw a smaller 4% decline in 22 major cities compared to a 25% plunge in September. New construction starts fell 23% in 2024, and real estate investment dropped 10.6%, the steepest since 1987.

Challenges: The market’s been battered since 2021, when government crackdowns on developer debt (the “three red lines” policy) triggered defaults by giants like Evergrande and Country Garden. Unsold inventory is a problem—391 million square meters of completed homes in April 2024, with total inventory (including under-construction) at 2.9 billion square meters by late 2024. Household wealth, 70% tied to real estate, has taken a hit, with an estimated USD 18 trillion loss. Deflation persists, with consumer prices down 0.1% in March 2025, and consumer confidence is low due to job market weakness and high household debt (over 60% of GDP).

Government Moves: Beijing’s stepping in hard. Since September 2024, policies include lower mortgage rates (down 25 basis points since October 2024), eased purchase restrictions, and a RMB 300 billion fund for state-owned firms to buy unsold homes for affordable housing. They’re also pushing urban village renovations (1 million units last year) and “whitelist” financing for developers. These measures are showing early results—home sales in five major cities rose over 30% year-on-year in early 2025—but analysts say the scale is insufficient, with only 4-6% of inventory addressed. Goldman Sachs estimates USD 1 trillion in fiscal stimulus is needed to fully stabilize the market.

Trends: Urbanization (still growing, though slowing) and demand for sustainable buildings are key drivers. Smart city projects, integrating 5G and AI-powered systems, are boosting urban property values. There’s also a shift to rental and multi-family housing, driven by younger generations and affordability programs. Data centers and mixed-use developments (combining homes, shops, and offices) are hot, reflecting tech and lifestyle shifts.

Risks: Demographic decline (population below 1.39 billion by 2035) and slowing urbanization are cutting housing demand, with Goldman Sachs estimating under 5 million new urban homes needed annually, down from 20 million in 2017. Trade tensions, like potential U.S. tariffs up to 60%, could further strain the economy, indirectly hitting real estate.source aventech , supplier in electi power system

Aventech’s Connection

Real estate and power systems are tightly linked—every new building needs electricity. At Aventech, we saw this firsthand in 2022, working on a mixed-use development in Shenzhen. The project combined high-rise apartments, offices, and retail, aiming for 50 MW of power capacity. Our job was to design a smart grid system with 35 kV transformers and energy-efficient converters to handle variable loads from offices during the day and homes at night. We used real-time monitoring to cut energy waste by 15%, aligning with China’s push for green buildings. The catch? The developer was cash-strapped due to the real estate slump, delaying payments. We adapted by phasing the installation, prioritizing critical infrastructure to keep the project on track. This showed how Aventech navigates market challenges with practical solutions.

The Big Picture

China’s real estate market in 2025 is at a turning point. Prices are still falling, but government support is gaining traction, with stabilization likely by late 2025. Urbanization, sustainability, and rentals are reshaping demand, but oversupply and demographic shifts are hurdles. For companies like Aventech, it’s about adapting to slower construction and focusing on efficient, green power solutions for new projects. If you want specifics on a city or segment, let me know—I’ve got more field data to share.