Former finance minister downbeat on property market outlook
The property slump could weigh on China’s economy until 2030.
- That’s according to former finance minister Lou Jiwei, who spoke at the 2025 Caixin Summit on Friday.
FYI: Lou has a reputation for speaking truth to power on China’s structural headwinds and remedies, particularly around fiscal reform.
His verdict: The property sector is no longer at risk of erupting into a full-blown financial crisis, but will remain a long-term drag on the economy. In particular, falling home prices will sap consumer sentiment and exacerbate deflationary pressures.
Lou argues that housing demand won’t stabilize until long-delayed structural reforms take place – a process he estimates will take five years or more. These reforms include:
- Abolishing housing presales to ensure delivery and rebuild homebuyer confidence
- Unlocking latent demand from migrant workers by expanding their access to urban residency and public services
Get smart: The major challenge for policymakers is that every potential remedy for the property slump is fraught with risks and conflicting priorities that delay decisive action.
- Phasing out presales too quickly would plunge developers back into severe cash-flow stress.
- Accelerating urbanization would impose welfare burdens on localities already under fiscal duress.
- Rolling out a nationwide property tax could relieve those fiscal pressures, but only by imposing new financial burdens on households.