China’s property problem is not going away.
New home prices in 70 major Chinese cities fell another 0.2% in May.
That was worse than April.
Year over year, new home prices dropped 3.5% for the second straight month.
Existing home prices also fell, down 0.3% month over month.
The numbers look small.
The problem is the damage has been building for years.
China’s property downturn has lasted almost five years since Beijing cracked down on heavily indebted developers in 2021.
That crackdown exposed how dependent the economy had become on real estate.
At its peak, property and related industries accounted for roughly 25% of China’s GDP.
Homes were not just homes.
They were a growth engine.
They created jobs.
They powered construction.
They filled local government budgets through land sales.
Now that engine is struggling.
Developers collapsed.
Buyers lost confidence.
Local governments lost revenue.
And the housing market that once helped drive China’s rise became one of its biggest problems.
Some analysts compare this to a “China 2008 moment.”
The comparison is not perfect.
China has much more government control over banks, markets, and policy tools than the US had during the financial crisis.
But the reason people keep making the comparison is simple:
A major economy is dealing with a long-running property collapse, and the usual fixes are not producing a quick recovery.
The scary part is not one month of falling prices.
It is that five years later, the problem is still here.