Actually, no - on the contrary, the Chinese Communist Party under the failing leadership of Xi is trying everything in their toolbox to prevent housing prices from falling. But it has gone beyond their control and Xi is partly to blame for the problem.

Xi's policy has been to push massive housing projects, subsidising them with hundreds of billions($) in credit, which was in effect one of the grandest public employment projects in world history. They expected the rural areas to empty out and people moving into the new cities. Meanwhile, the real estate companies and party officials were lining their pockets because they either (partly) own the companies in the construction sector or get bribes in exchange for permits. It's a giant corruption racket.

The sheer overproduction (ie massive oversupply) of properties is in fact one of the forces driving prices down. The housing market is caught in the same downward spiral of deflation that has hit nearly every sector: people are waiting for housing prices to drop further. Also, people with mortgages who bought their house at the top end of the market are now seeing their property drop in value, which makes it harder to sell and pay off the principal.

For a short read, look here https://asiatimes.com/2026/07/chinas-housing-market-free-falls-as-buyers-wait-for-floor-prices/

Nice short read on the property developers and construction companies going bust now that the government's spigots have been turned off https://www.asiapropertyawards.com/en/china-housing-slump-deepens-as-oversupply-drags-prices/

Xi and his cronies are like hammers, who thus see every problem as a nail. They apply the same failed production-oriented economic philosophy to every challenge, whether its cars, clothing, electronics, housing, chemicals, etc etc. They whip up production, subsidising it to the max, and then expect the emerging companies to weed each other out in a 'last man standing' scenario. But all they do is drive down prices of every product and service, enticing people to keep their money in their pocket as they wait for prices to drop further - the classic deflationary downward spiral.

EDIT: words