A Reuters poll has revised down its forecast for China’s home prices, indicating a sharper decline than previously anticipated for 2024 and 2025, as Beijing’s efforts to stabilize the property sector continue to falter.
The latest poll predicts an 8.5% drop in home prices for 2024, a significant increase from the 5.0% decline forecasted in May. For 2025, prices are expected to fall by 3.9%, matching the earlier forecast.
Ma Hong, senior analyst at GDDCE Research Institution, attributed the downward revision to severe cash flow issues faced by major real estate developers, which are adversely affecting housing demand. “The financial strain on large real estate firms will persist, increasing risk exposure and undermining market confidence,” Ma explained.
The ongoing property crisis, which began in 2021, has led to a glut of unsold apartments, straining developers’ finances and dragging down home prices, consumer confidence, and economic activity. Despite efforts by Chinese policymakers to support the sector—including reducing mortgage rates and lowering home buying costs—the crisis has deepened.
The recent poll of 10 analysts conducted from August 26-29 forecasts a 16.0% contraction in property sales for 2024, a sharper decline than the 10.0% drop projected earlier. Investment in the sector is expected to fall by 10.3%, slightly more than the 10.0% decline previously anticipated.
Wang Xingping, a senior analyst at Fitch Bohua, noted that the economic uncertainty continues to impact homebuying decisions. “The supportive policies in place have not been sufficient to reverse the downward trend,” Wang said.
In response, Chinese authorities have pledged to support the completion of unfinished projects and convert unsold apartments into affordable housing. However, progress has been slow, with only 4% of a 300 billion yuan ($42.30 billion) relending scheme to address residential inventory being utilized, according to central bank data.
UBS Investment Bank has also downgraded its 2024 and 2025 GDP growth forecasts for China to 4.6% and 4.0%, respectively, from earlier predictions of 4.9% and 4.6%, due to the deeper-than-expected downturn in the property market. The bank anticipates additional supportive measures for the remainder of 2024, including increased fiscal spending, government bond issuance, and moderate monetary easing.
