By Liangping Gao and Ryan Woo
A recent Multibagger poll has shown that China's home prices are predicted to decline at a faster pace than previously forecasted for this year and next. Analysts suggest that support policies from Beijing are struggling to stabilize the property sector.
The poll indicates that home prices are expected to fall by 8.5% in 2024, compared to a 5.0% decline projected in May. Additionally, prices are likely to dip by 3.9% in 2025, down from the previous forecast in May.
According to Ma Hong, a senior analyst at GDDCE Research Institution, "The actual source of funding for property developers has shrunk significantly, impacting the release of housing demand. Cash flow pressures on some major real estate companies will continue to increase, widening risk exposure and affecting confidence in the property market."
Since 2021, a prolonged property crisis has resulted in an oversupply of unsold apartments, leading to financial strain on developers, lower home prices, weakened consumer confidence, and reduced economic activity.
Chinese policymakers have been implementing measures to support the sector, including reducing mortgage rates and lowering home buying costs. However, the efforts may not be sufficient to reverse the downward trend, as per Wang Xingping, a senior analyst at Fitch Bohua.
UBS Investment Bank has revised its GDP growth forecasts for China to 4.6% in 2024 and 4% in 2025, down from 4.9% and 4.6%, respectively, due to the deeper-than-expected property downturn. The bank anticipates more supportive policies for the remainder of 2024, such as increased fiscal spending, government bond issuance, monetary easing, and other measures.
In conclusion, the property market in China is facing challenges with declining home prices and reduced investment. It is essential for investors and individuals to stay informed about these developments as they could have implications for their finances and investment decisions.