Morgan Stanley reduced its forecasts for China’s property sector on Thursday, citing deeper-than-expected declines in residential real estate prices.
The investment bank lowered its outlook for Chinese property sales growth in 2025 to 5% from 10%, while trimming its price forecast to a 3% drop from a prior 1% decline. The revision reflects accelerating weakness in the sector, which has struggled with oversupply, regulatory constraints and weak buyer sentiment amid a prolonged economic slowdown.
Analysts at Morgan Stanley noted that recent data points to sustained pressure on prices, particularly in tier-one and tier-two cities. The bank also highlighted the impact of policy measures aimed at stabilizing the market, including mortgage rate adjustments and limited purchase restrictions, which have so far failed to reverse the downturn.
The downgrade follows a series of similar adjustments by other financial institutions, underscoring growing concerns over the sector’s role in China’s broader economic challenges. The property market, which accounts for roughly a quarter of China’s GDP, remains a critical barometer of the country’s economic health.
Morgan Stanley’s report did not specify whether the revised forecasts applied to specific developers or the broader sector, but emphasized the systemic risks posed by prolonged weakness in housing prices and transaction volumes.
