China saw its lowest property income growth for over a decade as the real estate sector continued a protracted slump, a phenomenon that has reduced middle-class incomes and made consumption all the more important for the country’s economy.
Per-capita net property income was 3,435 yuan (US$473.5) last year, a year-on-year increase of 2.2 per cent – the lowest growth rate observed since 2014.
Official figures reveal a downward slide in growth since 2019, with 2021 and its 10.2 per cent growth the sole exception.
Net income from property – primarily rent, interest and dividends – is a crucial component of household income in economically developed regions. Negative growth in this metric suggests a considerable portion of the middle class is seeing their assets depreciate.
In Beijing, for example, per-capita net income from properties in 2024 decreased for its third consecutive year. The figure fell by 0.6 per cent from the previous year to 12,205 yuan, more than one-fifth of the city’s per-capita wages.
The decline can be primarily attributed to rent decreases. In December, the average rent in a selection of 50 Chinese cities experienced a 3.3 per cent year-on-year decrease, according to data from real estate research institution China Index Academy. Beijing saw a 5.4 per cent drop.
China’s property sector is continuing to falter under heavy debts and insolvency crises among its largest developers. In 2024, property sales by floor area decreased by 12.9 per cent compared to the previous year, according to the country’s National Bureau of Statistics.
Barclays stated in a note released on Friday that real estate is likely to remain a significant drag on growth in 2025.
“We expect property sales to post a 10 per cent drop in 2025 following a 13 per cent decline in 2024. In a bear case scenario, we would expect adjustment or contraction in the property market to last until 2030.”
However, other analysts have pointed to a January uptick in new home prices as an indication the industry could finally be in recovery.
Whatever the sector’s future, falling property income is at least correlated with lacklustre figures for domestic consumption. China’s consumer confidence index dropped sharply from 121.5 in January 2022 to 86.4 last December. A reading below 100 indicates weak sentiment.
Property income constitutes a relatively small proportion of disposable income in China, averaging 8.5 per cent compared to 15.5 per cent in the United States. This is a contributing factor to the relatively low share of household income in the national income, said the Bank of China Research Institute in a July note.
Without appreciating housing assets, China’s property owners have limited alternatives for investment. The domestic stock market has been in a long period of underperformance, only briefly rebounding following the September introduction of stimulus measures and a more recent tech sector rally after the domestic artificial intelligence start-up DeepSeek released its latest language model.
