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China’s housing slump likely stuck in L-shaped stagnation, says Commerzbank
Commerzbank cites May 2026 absorption of 21 months in Tier-1 and 27 months in Tier-2 cities, versus about 84 months in lower-tier markets.
Commerzbank analyst Dr. Henry Hao says China’s housing downturn, now in its fifth year, is settling into an L-shaped stagnation pattern with a pronounced divide between regions, according to FXStreet.
The note points to localized stabilization in top-tier cities, but argues the broader real estate sector remains a long-term growth drag due to structural headwinds including demographics and policy constraints.
Commerzbank highlights inventory pressure as a clear signal of the K-shaped divergence, with average absorption periods falling to 21 months in Tier-1 cities and 27 months in Tier-2 cities as of May 2026, while lower-tier cities still face roughly seven years of unsold units.
FXStreet also notes that the report links the slow housing outlook to financial strain and weak construction activity, including an 18% year-over-year contraction in funds available to developers in 2026 first-half, and new construction starts dropping to 24% of their July 2021 level.