China's real estate market crash is significantly weighing on the nation's economic growth, despite official figures indicating steady expansion. New home sales plummeted to a 15-year low, and existing apartment prices are experiencing sharp declines. This downturn has triggered a ripple effect, with millions of households curtailing spending due to the diminished value of their properties.

The housing market woes are particularly impacting local governments, which heavily rely on real estate revenue. These governments are now struggling to meet their financial obligations, including paying civil servants. While concerns about a trade war with the U.S. initially dominated economic anxieties, China's trade surplus actually climbed last year, reaching a record $1.19 trillion in 2025. However, the persistent housing market crash, which began four years ago, has emerged as a more significant challenge for Beijing.

Despite the real estate crisis, China's National Bureau of Statistics reported a 5% economic growth rate for the past year, mirroring the previous year's figure. This official growth rate aligned with the government's target set in March, marking the second consecutive year of achieving this goal. The reported growth is largely attributed to a boom in exports.

The housing market downturn presents a complex challenge for the Chinese economy. The decline in property values is not only affecting household wealth and spending but also straining local government finances. While exports have provided a buffer, the long-term impact of the real estate crisis on overall economic stability remains a key concern. The government's ability to manage this crisis will be crucial in maintaining sustainable economic growth in the coming years.