According to a JPMorgan economist, China’s housing market is expected to remain weak despite various government stimulus measures that have not been effective in supporting the sector.
Haibin Zhu, the chief China economist at JPMorgan, stated that the housing market crash is ongoing, with home prices not likely to stabilize until at least 2025.
Recent data from China Index Academy revealed that the average price for new home sales in 100 Chinese cities saw a slight increase of 0.11% from July, indicating a further slowdown compared to June’s 0.13% growth.
Resale home prices witnessed a 0.71% decline from the previous month. Both new and resale houses experienced average price drops of 1.76% and 6.89% respectively from a year ago, reflecting the deep crisis in the country’s housing market.
China is reportedly considering a plan to lower homeowner borrowing costs by allowing refinancing on up to $5.4 trillion in mortgages, as reported by Bloomberg. However, analysts remain doubtful about the effectiveness of this proposed measure in boosting homebuyer sentiment and overall consumption.
BofA Securities’ chief China equity strategist, Winnie Wu, highlighted concerns about potential impacts such as banks cutting deposit rates to maintain stability in the financial system, which could negatively affect interest income on household savings.
JPMorgan’s Zhu also expressed skepticism about the impact of the mortgage refinancing policy on stimulating new home demand, emphasizing that it primarily benefits existing homeowners rather than addressing the overarching issue of market revival.
Wu further emphasized the need for the government to implement policies that create a positive feedback loop to counter the current downward spiral in the housing market, rather than relying solely on rate cuts that could squeeze banks’ margins without significant impact.
