Morgan Stanley: China’s existing-home prices continued to fall in October, while weakness in both housing and stocks eroded the wealth effect

Did existing-home prices weaken further in October compared with September?

National existing-home transaction prices fell 0.61% month over month in October, a slightly larger decline than the 0.60% drop in September; they were down 6.7% year over year and 4.9% year to date. The decline across the ten largest cities widened to 0.66%, from 0.54% in September.
Price pressure remains widespread: asking prices for existing homes fell 0.6% month over month and 7.8% year over year across the 85 cities tracked; prices declined month over month in about 95% of the sample cities. The narrowing in the year-over-year decline was mainly due to the comparison base, while monthly declines have remained in a negative range of about 0.4% to 0.7% since the start of the year.

New listings of existing homes fell 2% month over month, but home viewings at brokerage outlets in 34 cities rose 13% month over month and 3% year over year. Morgan Stanley considers this similar to previous years and a seasonal rebound that has not yet changed the picture of weak price indicators.
New-home sales are also weakening: year-over-year declines in attributable sales by TOP50 and TOP100 developers widened to 19% and 17%, respectively, compared with 13% and 14% in September. The Morgan Stanley team partly attributes this to slower project launches after the completed-home sales policy took effect, as well as the greater price competitiveness of existing homes, which continue to gain market share.

Morgan Stanley estimates that, as of October 2026, housing-market wealth losses since December 2024 amounted to about 50.4 trillion yuan, while the combined market capitalization of Shanghai and Shenzhen A-shares had increased by about 5.2 trillion yuan over the same period, with the stock market previously providing a partial offset.
But looking at 2026 year to date, A-share market capitalization fell by about 14.1 trillion yuan, while housing-wealth losses were about 12.2 trillion yuan. Unlike the first half of 2026, when rising stock prices helped offset property losses, both asset classes were weighing on the wealth effect year to date through October.

Morgan Stanley notes that Chinese demand accounts for more than 30% of total European luxury-goods spending, and that more than 70% of Chinese household wealth is in real estate. The simultaneous decline in property and weakness in the stock market therefore make the Chinese household wealth effect an important macroeconomic headwind for luxury-goods demand.
The bank’s China real estate team expects further cuts in asking prices to keep transaction prices under pressure; slower new-home launches and mortgage subsidies could support existing-home transactions in the fourth quarter. Despite its cautious stance on China’s housing market, the report’s industry view on European brands remains In-Line.