Chinese real estate hasn't collapsed overnight; it has been gradually crumbling for four years.

The actual residential price index in China, which peaked near 113 in 2021, fell to about 86.8 by the end of 2025, returning to the lowest range since 2005.
This decline is nearly a quarter.
The problem isn't just housing prices.
Over the past twenty years, real estate has been the core gear driving China's growth, local finances, household balance sheets, bank collateral, and residents' confidence.
Real estate-related activities once contributed about 20% to 25% of GDP, with roughly 70% of household wealth tied to property.
Now, that gear is jammed.
Developers are no longer operating at high turnover; residents are no longer blindly buying homes; local governments' land sales revenue has continuously declined; urban investment and local debt can only be sustained through swaps, extensions, and refinancing.
Evergrande has already entered liquidation with over $300 billion in debt, and companies like Vanke, once top performers, are struggling repeatedly on the brink of default.
China's problem is no longer just falling house prices.
It’s the disappearance of the wealth effect, the collapse of local finances, the shortening of the credit chain, young people refusing to take on debt, and the entire growth model shifting from high leverage, high debt, and high turnover to low confidence, low returns, and low liquidity.
This wealth shrinkage has not truly ended.
Global markets are now more focused on AI, rate cuts, and U.S. 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 into it.
This is one of the largest rewrites of the global balance sheet, and it’s not finished yet.