According to CNBC, S&P Global Ratings analysts said China’s yearslong property slump may be nearing an end, with residential prices potentially bottoming in the third quarter of 2028 and prices in major cities such as Beijing and Shanghai likely to recover as soon as next year. The report said the outlook has improved since February, when S&P said high levels of unsold housing kept a recovery out of reach.

Edward Chan, a credit analyst at S&P Global Ratings, said two policy moves have changed the picture: Beijing’s August restrictions on developers’ ability to sell unfinished properties and a later mortgage rate subsidy for first-time homebuyers of units under 1.5 million yuan and smaller than 120 square meters. He said developers are likely to buy less land and launch fewer new projects, which would help reduce oversupply, and added that continued supply reduction is the main factor supporting home prices over the next one to two years.

The report said China’s residential prices have already fallen 22% from a 2021 peak, compared with a 67% drop in Japan’s housing slump and a 26% decline in the U.S. during the financial crisis. It also said China is working on supply cuts and corporate deleveraging, while mortgage subsidies and wealth effects from the artificial intelligence boom are helping support demand.

Separately, Guotai Junan International Chief Economist Hao Zhou said the fourth quarter could bring the first growth in existing home prices for large tier-one cities since the 2021 to 2023 downturn. He said Shanghai’s year-on-year decline has narrowed, Beijing prices have stabilized and risen 1.4% from a January low, and Hangzhou posted a record high in its new home sales index. Morgan Stanley equity analyst Stephen Cheung said the mortgage subsidy is likely to pull forward planned purchases rather than create substantial new demand.