China's Home Prices Are Still 14% Above 2010 on Paper, but at a Record Low After Inflation

China's Home Prices Are Still 14% Above 2010 on Paper, but at a Record Low After Inflation

China's home prices are still higher than in 2010 on paper, but after adjusting for inflation they are the lowest in 20 years.

The Bank for International Settlements' residential price index for China, with 2010 set at 100, stood at 114 in nominal terms in the first quarter of this year, meaning prices are still 14% above 2010. The inflation-adjusted index, however, is down to about 85, lower than at any point since the data begin in 2005.

The gap is so wide because everything else got more expensive in the meantime. China's consumer prices rose about 30% in total from 2010 to 2025, while nominal home prices rose only 14%, which is a loss in purchasing power. The real index has slid since its 2021 peak and is down by almost a quarter.

For Chinese households, that gap matters more than the nominal decline. Housing is the main asset for most families, and someone who bought in 2010 looks like they made a small gain on paper, yet the home can now buy less than it could back then.

The nominal decline has recently shown signs of slowing. Xinhua reports that new home prices in Beijing, Shanghai, Guangzhou and Shenzhen fell 0.9% from a year earlier in August, a smaller drop than in July, but most smaller cities and existing homes are still falling. As long as consumer inflation stays near zero, real home prices can only recover if nominal prices stop falling on their own.

Source: Bank for International Settlements, Xinhua (Image: @Barchart)