Mainland China: Challenges Persist in Housing Market Recovery

Mainland China’s housing market shows stabilisation signs, but recovery remains elusive. Limited demand recovery, ongoing oversupply issues, and mixed price trends indicate challenges persist despite eased buying restrictions.

Key View

• We maintain our view that a sustained recovery in Mainland China’s housing market remains elusive despite some signs of stabilisation.
• Continued declines in primary market sales indicate that any demand recovery has been limited to specific market segments.
• While the oversupply situation appears to have improved, it was partly due to developers falling behind on completions.

While signs of stabilisation have emerged in Mainland China’s housing market, we maintain our view that a sustained recovery is not yet in sight. House prices have fallen more gradually in both the primary and secondary markets (see chart below), and have even risen slightly in first-tier cities after authorities relaxed some buying restrictions.

Mainland China’s housing market has been under significant strain, showing signs of sluggish recovery despite government efforts to stimulate growth. The combination of oversupply, rising debt levels among developers, and declining consumer confidence has created a challenging environment for the real estate sector. Many potential buyers remain hesitant to invest in properties due to fears of further price declines and economic instability.

Recent measures from the Chinese government, including interest rate cuts and relaxed borrowing restrictions, aim to rejuvenate the market. However, these initiatives have yet to translate into substantial improvements. Reports indicate that housing prices in major cities continue to stagnate, with many homes remaining unsold. This stagnation is compounded by stricter regulations imposed on developers, leading to a lack of new construction projects.

Overall, while small signs of stabilization exist, the path to recovery for Mainland China’s housing market appears distant. Continued economic uncertainty and consumer wariness suggest that the market may take time to regain its footing, leaving stakeholders cautious and watchful.

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