China’s housing market continues to face challenges, with government stimulus measures falling short of expectations. Despite efforts to prop up the sector, the market remains troubled. According to JPMorgan economist Haibin Zhu, the housing market crash is far from over, and home prices are unlikely to stabilize until at least 2025.
Recent data from China Index Academy shows that new home sales prices in 100 Chinese cities increased by only 0.11% in July, a slower growth rate compared to the previous month. Meanwhile, resale home prices saw a decline of 0.71% from the previous month. Year-on-year, both new and resale houses experienced significant price drops, indicating deep-seated issues within the housing market.
In an effort to stimulate 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 have expressed doubts about the effectiveness of this measure. Winnie Wu, Chief China Equity Strategist at BofA Securities, cautions that lower mortgage rates could lead banks to cut deposit rates, impacting household savings and overall consumption. JPMorgan’s Zhu also believes that the refinancing measure may not significantly boost new home demand.
The challenges facing China’s housing market are complex and multifaceted. While government intervention is necessary, it may not be sufficient to address the underlying issues. Structural reform and long-term planning will be crucial in stabilizing the market and ensuring sustainable growth. As stakeholders navigate the evolving landscape of the housing sector, innovative solutions and comprehensive strategies will be essential to overcome the current challenges and build a more resilient housing market for the future.
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