China: Property Downturn Deeper Than Previously Anticipated, But Its Growth Drag Should Still Ease Gradually in the Years Ahead

China's property downturn is now in its sixth year. In January-September 2026, land sales revenue fell 28% yoy, new home starts dropped 25% yoy, and property FAI declined 21% yoy, all weaker than anticipated at the start of the year; most activity indicators are now down 60-90% from their 2020-21 peaks. The recently announced shift from presales to completed-home sales implies tighter developer funding and lower property investment over the next few years. Decomposing the property sector's contribution to real GDP growth into five direct channels - construction, real estate services, upstream effects, move-in related consumption and land sales related fiscal channels - we estimate a 1.8pp drag on real GDP growth in 2026, slightly larger than 1.7pp in 2025 and above our previous 1.5pp estimate, narrowing by around 0.5pp to 1.3pp in 2027 and largely fading by 2030. The property sector's share of real GDP should decline from around 15% currently (vs. nearly 30% at its peak) to around 8% f