China’s secondary housing market weakened further in July, with Morgan Stanley analysts reporting that average listing prices across 85 sampled cities declined 0.5% month-on-month, the same rate of monthly decline recorded in June.
On an annual basis, the July result translated into a 9.6% drop year-on-year, according to a note from Morgan Stanley’s Hong Kong team. The bank’s data indicate that secondary housing prices have fallen by 38% cumulatively since their peak in June 2021.
Price softness was widespread. About 95% of the sampled cities registered month-on-month declines in secondary listing prices. All Tier 1 cities experienced faster monthly falls in July, averaging a 0.4% decline compared with a 0.1% fall in June. Morgan Stanley’s China Property team characterized this pattern as a catch-up effect after Tier 1 cities had outperformed from March through June.
Secondary sales volumes also showed further deterioration. In 25 major cities tracked by the bank, secondary sales volume weakened to roughly 9% year-on-year in July, down from 30% in April, 25% in May and 10% in June. The analysts attributed the slowdown to fragile resident sentiment and a rise in secondary listing volume in Tier 2 and lower-tier cities.
Listings expanded across the sample as well. Total listings across about 50 sampled cities rose 0.5% month-on-month in July, with more than 70% of those cities recording monthly increases. Compared with end-2025 levels, total listings increased in more than half of the sampled cities, and 35% of cities reached record highs in their listing counts.
Foot traffic to agent shops also eased: visits across 45 sampled cities fell 6% month-on-month in July. The analysts noted this decline was driven mainly by seasonal effects.
Looking ahead, Morgan Stanley’s analysts expect month-on-month home price declines to accelerate slightly in August and September, though they allow for the possibility that some Tier 1 cities may experience a mild uptrend because of relatively more favorable demand and supply dynamics.
The housing market weakness has not been fully offset by gains in equity markets this year. Morgan Stanley estimated that the value destruction in the housing market since December 2024 amounted to approximately 41 trillion yuan, while the rise in Chinese A-share markets over the same period was about 24 trillion yuan as of July.
Year-to-date, the cumulative change in A-share market capitalization stood at 2 trillion yuan, after a 17% decline in the Shenzhen index from its June 22 peak. That 2 trillion yuan figure was below the cumulative value destruction in housing asset value, which was down 7 trillion yuan year-to-date.
The note also highlighted the broader economic importance of China’s property market, noting that the Chinese market accounts for more than 30% of total spending in the European luxury goods sector and that over 70% of Chinese household wealth is held in real estate.
Data coverage in the Morgan Stanley note varied by metric: price changes were reported for 85 sampled cities, sales volumes for 25 major cities, total listings for roughly 50 sampled cities, and agent-shop visit activity across 45 sampled cities.