China’s housing market has been struggling, with government stimulus and support measures failing to provide the necessary boost. According to Haibin Zhu, chief China economist at JPMorgan, the housing market crash is far from over, and home prices are unlikely to stabilize until at least 2025.
Data from China Index Academy shows that the average price for new home sales in 100 Chinese cities saw a modest increase of 0.11% from July, a slowdown from the previous month. The resale home prices, on the other hand, declined by 0.71% from the previous month, and both new and resale houses experienced significant drops from a year ago.
China is considering a plan to lower homeowner borrowing costs by allowing refinancing on up to $5.4 trillion in mortgages. However, analysts, such as Winnie Wu from BofA Securities, are skeptical about the effectiveness of this measure. Wu pointed out that lower mortgage rates could lead to banks cutting deposit rates, impacting interest income on household savings. Additionally, the mortgage refinancing measure might not significantly boost new home demand, as mentioned by JPMorgan’s Zhu.
The Long Road Ahead
With the housing market in China facing numerous challenges, it is evident that a quick recovery is unlikely. The combination of declining home prices, ineffective government measures, and skepticism around proposed solutions paints a bleak picture for the sector. As stakeholders navigate through these troubled waters, it is clear that a sustained and comprehensive approach will be needed to address the underlying issues and restore stability to the housing market in China.
The road ahead for China’s housing market is fraught with challenges, and the path to recovery will be long and arduous. It is essential for all stakeholders to carefully assess the situation, collaborate on effective solutions, and remain prepared for the uncertainties that lie ahead. Only through concerted efforts and strategic interventions can the housing market in China begin to see signs of improvement and eventual stabilization.