China’s housing market continues to face challenges as government stimulus measures have failed to provide the necessary support. Despite efforts to stabilize the sector, home prices are showing no signs of recovery. According to Haibin Zhu, chief China economist at JPMorgan, the housing market crash is far from over, with no expectation of stabilization until at least 2025.
Recent data released by China Index Academy paints a bleak picture of the housing market. New home sales in 100 Chinese cities saw a marginal increase of 0.11% in prices from the previous month, signaling a significant slowdown from June. Meanwhile, resale home prices plummeted by 0.71%, with both new and resale houses experiencing year-on-year price drops of 1.76% and 6.89% respectively.
In an attempt to boost the market, China is considering a plan to lower borrowing costs for homeowners by allowing refinancing on up to $5.4 trillion in mortgages. However, analysts remain skeptical about the effectiveness of this measure in stimulating homebuyer sentiment and overall consumption. Winnie Wu, chief China equity strategist at BofA Securities, warns that lower mortgage rates could lead banks to cut deposit rates, impacting interest income on household savings.
JPMorgan’s Zhu believes that the proposed mortgage refinancing measure will do little to boost new home demand, highlighting the complexities of the current housing crisis. With prices continuing to decline and government support falling short, the future of China’s housing market remains uncertain. As the sector grapples with ongoing challenges, policymakers will need to rethink their strategies to address the deep-rooted issues plaguing the housing market.
China’s housing market is facing a prolonged period of softness, with no immediate relief in sight. Despite various government initiatives and support measures, the sector remains mired in crisis. As analysts raise doubts about the effectiveness of proposed stimulus plans, it is clear that more comprehensive solutions are needed to address the underlying issues driving the market downturn. With home prices showing no signs of stabilization, stakeholders must prepare for a protracted period of uncertainty in China’s housing market.
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