Data signal further realty stabilization

The long-running efforts of China's real estate sector to clear excess housing stock might finally be gaining traction, as the value of completed inventory — homes that are fully built and ready for sale — declined on an annual basis for the first time in years, according to analysts.

According to real estate information provider CRIC, 50 major listed property developers reported a combined inventory book value of 7.1 trillion yuan ($1.04 trillion) at the end of 2025, down 14.7 percent from 8.33 trillion yuan a year earlier.

The inventory of real estate developers mainly consists of unbuilt land, homes under construction and completed unsold homes.

The development comes after years of policies aimed at controlling new supply, reducing inventory and optimizing housing supply — a strategy explicitly outlined in this year's Government Work Report.

The reduction was driven by both a sharp pullback in land purchases and accelerated efforts to sell existing projects, according to analysts.

According to the National Bureau of Statistics, unsold commercial housing floor space stood at about 778 million square meters at the end of April, down 0.5 percent from a year earlier. Within that total, inventory of properties completed within the last three years fell 2.6 percent to about 579 million square meters.

"Since the current property downturn began, many developers constrained by tight cash flow have significantly reduced land investment," said Chen Wenjing, director of policy research at the China Index Academy. "Developing existing projects and accelerating the sale of finished projects have become top priorities."

Data from the CRIC also showed that among the 50 major listed property developers, the total book value of completed inventory held by 41 major listed developers stood at 1.57 trillion yuan by the end of 2025, down 9.1 percent from the beginning of the year.

It marked the first annual decline in the indicator, which had previously shown only seasonal fluctuations, according to the institute.

While the absolute volume of completed unsold homes of the 41 major listed developers fell, the CIRC noted that its share of total inventory rose to a record high of 22.1 percent at the end of 2025, up from 20.8 percent at the start of the year.

"The sales velocity remains very slow," Chen said. "Even though the absolute volume of completed homes is shrinking, the share is rising because total inventory is falling even faster. That means developers are still struggling to move finished units off their books."

Rising completed inventory as a share of total stock is more than an accounting detail. It directly affects liquidity and asset quality, Chen said, adding that for a developer, an increasing proportion of finished unsold homes means cash is tied up in product that is not generating revenue, while holding costs continue to accrue.

CITIC Securities expects that if home prices remain stable, the drag from low-quality inventory on corporate profits will become manageable by late 2027, with the clearance of inefficient stock essentially completed by the end of 2028. "The problem is being resolved, but it will likely take another two to three years," the brokerage said.

Soochow Securities noted that while inventory pressures remain significant and will continue to weigh on current profits, they also help release pressure from high-cost land and inefficient assets. As older projects are gradually written down and market prices stabilize, the pressure is expected to ease.

wangkeju@chinadaily.com.cn