China’s housing market continues to face challenges despite various government support measures. According to JPMorgan economist Haibin Zhu, the sector is still experiencing a downturn and home prices are not expected to stabilize until at least 2025. The latest data shows that the average price for new home sales in 100 Chinese cities has only increased by 0.11% from the previous month, indicating a slowdown in growth. On the other hand, resale home prices have declined by 0.71% month-on-month, with both new and resale houses experiencing significant drops from a year ago.
Government Intervention
In an effort to revive the housing market, China is considering a plan to lower homeowner borrowing costs by allowing refinancing on up to $5.4 trillion in mortgages. However, analysts are skeptical about the effectiveness of this measure in stimulating homebuyer sentiment and overall consumption. According to Winnie Wu, chief China equity strategist at BofA Securities, lower mortgage rates could lead to banks cutting deposit rates to protect their margins. This could potentially impact interest income on household savings, ultimately limiting the impact of the refinancing scheme on new home demand.
Future Outlook
Despite the government’s efforts to support the housing market, challenges persist and the outlook remains uncertain. The ongoing crisis in the housing sector is a cause for concern, with home prices continuing to fluctuate and demand remaining subdued. JPMorgan’s Zhu believes that the current measures are not sufficient to address the underlying issues in the market, indicating a prolonged period of softness in the housing sector. As the housing market crash lingers on, it is crucial for policymakers to implement more effective strategies to stabilize prices and boost demand in the coming years.
China’s housing market is facing an uphill battle as it grapples with a slowdown in growth and declining home prices. The government’s stimulus measures have so far failed to provide the necessary support to revive the sector, leading to concerns about the future of the market. With uncertainties looming and challenges persisting, it is imperative for policymakers and industry stakeholders to work together towards finding sustainable solutions to stabilize the housing market and drive long-term growth.