Recent government stimulus and support measures in China have not been successful in bolstering the housing market, according to JPMorgan economist Haibin Zhu. Despite efforts to prop up the sector, Zhu predicts that the housing market crash is far from over, forecasting that home prices will not stabilize until at least 2025.
Data from the China Index Academy revealed that the average price for new home sales only increased by 0.11% in 100 Chinese cities, a significant slowdown from the previous month. Resale home prices saw a decrease of 0.71% from the previous month, with both new and resale houses experiencing drops of 1.76% and 6.89% respectively compared to the previous year.
In an attempt to boost homebuyer sentiment and consumption, China is considering a plan to lower homeowner borrowing costs by allowing refinancing on up to $5.4 trillion in mortgages. However, analysts like Winnie Wu from BofA Securities are skeptical of the effectiveness of this measure. Lower mortgage rates may lead banks to reduce deposit rates, impacting interest income on household savings and potentially causing instability in the financial system. Additionally, the proposed mortgage refinancing measure is unlikely to fuel new home demand according to JPMorgan’s Zhu.
With the Chinese housing market deeply entrenched in crisis, the future looks bleak for both homeowners and investors. Despite government efforts and proposed solutions, the ongoing decline in home prices and lack of confidence in the market’s recovery paint a grim picture for the years to come. As the sector continues to struggle, it is clear that a more comprehensive and sustainable approach is needed to address the root causes of the housing market downturn.
The troubled Chinese housing market is facing significant challenges that cannot be easily resolved through short-term stimulus measures. As experts warn of a prolonged downturn and slow recovery, it is crucial for policymakers to reassess their strategies and implement proactive measures to stabilize the market and restore consumer confidence. Only through a concerted and comprehensive effort can the Chinese housing market hope to see a brighter future ahead.