China’s housing market has been experiencing significant challenges, with little relief in sight. Despite various government efforts to stimulate the sector, the results have been far from satisfactory. JPMorgan’s chief China economist, Haibin Zhu, has expressed concerns that the housing market crash is far from over and that stability may not be achieved until 2025 at the earliest.
Recent data released by China Index Academy has shown a mere 0.11% increase in the average price for new home sales across 100 Chinese cities. This marks a slowdown from the previous month and reflects the ongoing struggles within the market. Additionally, resale home prices have experienced a decline of 0.71% from the previous month, indicating further difficulties in the sector.
Reports have emerged suggesting that China is contemplating a plan to lower homeowner borrowing costs by allowing refinancing on a substantial amount of mortgages. However, experts remain skeptical about the potential impact of such a measure. Winnie Wu, chief China equity strategist at BofA Securities, warned that lower mortgage rates could lead to banks cutting deposit rates, ultimately affecting household savings.
Outlook
Despite efforts to revive the housing market, analysts, including those at JPMorgan, remain cautious about the effectiveness of proposed measures. The refinancing plan is unlikely to significantly boost new home demand, further prolonging the crisis in the housing sector. With prices continuing to drop and uncertainty looming, the road to recovery for China’s housing market appears to be long and arduous.