The Future of China’s Troubled Housing Market

Despite numerous government stimulus and support measures aimed at stabilizing China’s housing market, JPMorgan economist Haibin Zhu believes that the sector will continue to face challenges. According to Zhu, the “housing market crash is still not over yet,” and he predicts that home prices will not see stabilization until 2025 at the earliest. Recent data from the China Index Academy shows only a modest 0.11% increase in new home sales prices across 100 cities, indicating a further slowdown compared to the previous month.

Declining Prices and Market Crisis

In addition to the lackluster growth in new home prices, resale home prices have declined by 0.71% from the previous month. Year-over-year comparisons paint an even bleaker picture, with new home prices dropping by 1.76% and resale prices plummeting by 6.89%. These significant declines highlight the deep crisis that China’s housing market is currently facing, with no clear signs of improvement in sight.

Skepticism Towards Proposed Measures

Reports about China considering a plan to lower homeowner borrowing costs through mortgage refinancing have raised doubts among analysts about its effectiveness. Winnie Wu, chief China equity strategist at BofA Securities, warns that lower mortgage rates could lead banks to cut deposit rates to maintain stability, potentially impacting interest income from household savings. Despite hopes that the measure would boost consumption and homebuyer sentiment, it remains unclear whether it would be enough to stimulate new home demand in the face of the ongoing market challenges.

The future of China’s troubled housing market appears uncertain as softness persists despite government efforts to support the sector. With prices continuing to decline and no immediate signs of stabilization, it is evident that the challenges facing the market are complex and multifaceted. As analysts remain skeptical about the effectiveness of proposed measures, the road ahead for China’s housing market remains fraught with uncertainties and potential pitfalls. It is clear that a more comprehensive and sustainable approach will be needed to address the deep-rooted issues plaguing the market and pave the way for long-term stability and growth.