China’s housing market continues to face difficulties despite numerous attempts by the government to provide stimulus and support. According to Haibin Zhu, chief China economist at JPMorgan, the housing market crash is far from over, with stabilization not expected until 2025 at the earliest.
Recent data released by China Index Academy shows that new home sales in 100 Chinese cities rose by a mere 0.11% from July, marking a slowdown from the previous month. Additionally, resale home prices experienced a decline of 0.71% from the previous month, highlighting the ongoing struggles in the market. Both new and resale houses witnessed average price drops of 1.76% and 6.89% from a year ago, indicating the deep crisis in the country’s housing sector.
In an effort to address the challenges facing 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 remain doubtful about the effectiveness of this measure in boosting homebuyer sentiment and overall consumption. Winnie Wu, chief China equity strategist at BofA Securities, expressed concerns that lower mortgage rates could lead to banks cutting deposit rates to protect their margins, potentially impacting household savings.
Despite the proposed mortgage refinancing measure, experts at JPMorgan believe that it will do little to stimulate new home demand. The housing sector in China is facing a complex set of challenges that extend beyond just financial considerations. It will require a holistic approach that addresses underlying issues to drive sustainable growth in the market.
China’s housing market is in a prolonged state of crisis, with no immediate signs of recovery. The combination of declining prices, weak demand, and uncertain government interventions has created a challenging environment for both buyers and sellers. Moving forward, it will be essential for policymakers to develop more effective strategies to stabilize the market and restore confidence among investors and consumers alike.