China’s Real Estate Market Faces Deepening Crisis as Prices Plummet, Experts Say
On February 24, 2024, The Epoch Times reported that the average residential price in 70 large and medium-sized Chinese cities has recorded a sharp decline, signaling a worsening crisis in the country’s real estate market. The Chinese Communist Party released official data revealing the grim situation, with hopes of a market turnaround dwindling.
The Wall Street Journal highlighted the significant drop in property prices, noting a 1.24% year-on-year decrease in new home prices and a 4.4% decline in second-hand home transactions in January, marking the largest plunge in nine years. Reuters estimates further indicated a 0.7% year-on-year decline in property prices, the steepest drop in 10 months.
While new residential prices in Beijing and Shanghai saw slight increases, some major cities like Guangzhou and Shenzhen experienced notable decreases. Second-hand housing prices in all four first-tier cities fell, with declines ranging from 3.7% to 6.1%.
The Chinese government has implemented minor measures to stimulate the market, such as easing home purchase restrictions in Beijing and Shanghai and improving access to loans for real estate projects. However, experts like Hu Weijun, a China economist at Macquarie Group Ltd., remain skeptical about the efficacy of these interventions in reversing the market’s downturn.
Real estate insiders, including Liu Yuan from Centaline Real Estate, have expressed doubts about the market bottoming out in 2024. Zhang Dawei, an analyst at Centaline Group, emphasized that current mortgage loan policies may not be sufficient to boost property sales, as waning consumer confidence complicates homebuying decisions.
The repercussions of the real estate slump extend beyond the housing market, affecting industries like construction and contributing to China’s GDP. Concerns also loom over local governments heavily reliant on land sales for fiscal revenue, with potential risks stemming from hidden debts estimated at trillions of dollars.
Amidst these challenges, China is set to unveil its economic growth target for 2024 at the upcoming Second Session in March, with predictions of a lower growth rate compared to the previous year. Economists question the sustainability of past growth figures and urge for more robust strategies to navigate the deepening crisis in the real estate sector.
The future of China’s real estate market remains uncertain, as stakeholders brace for further turbulence and seek viable solutions to mitigate the escalating crisis.
Editor in charge: Lin Yan #