China's real estate has not collapsed in a day; it has been gradually crumbling for four years

The actual residential price index in China, from a peak near 113 in 2021, has fallen to about 86.8 by the end of 2025, returning to the lowest range since 2005. This decline is close to a quarter
The problem is not only in housing prices
In the past twenty years, real estate has been the core gear of China's growth, local finances, household balance sheets, bank collateral, and resident confidence
Real estate-related activities once contributed about 20% to 25% of GDP, with about 70% of household wealth linked to property
Now the gear is jammed
Developers no longer operate at high turnover, residents no longer buy houses blindly, local governments' land sales revenue has continuously declined, and urban investment and local debt can only be sustained through swaps, extensions, and refinancing
Evergrande has already entered liquidation with over 300 billion USD in debt, and Vanke, once a top performer, is also struggling repeatedly on the edge of debt
China's problem is no longer just falling house prices
It is the disappearance of the wealth effect, the collapse of local finances, the shortening of the credit chain, young people refusing to take on the burden, and the entire growth model shifting from high leverage, high debt, high turnover to low confidence, low returns, and low liquidity
This wealth shrinkage has not truly ended yet
Global markets are now more concerned with AI, rate cuts, and US earnings reports, but China's deleveraging second-order impact from real estate is still on the way
Raw materials, banks, local finances, consumption, exchange rates, and capital flows will all be gradually dragged in
This is one of the largest rewrites of the global asset-liability table, and it is not finished yet