BEIJING, Aug 28 (Reuters) – New home prices in China are likely to show no growth this year, according to a Reuters survey, highlighting intense pressure on the real estate sector hit by the crisis that has paralyzed the economy. and has left the political leaders. in a fight to restore trust.
The expected 0% year-on-year growth in house prices compared with a 1.4% rise in the previous forecast in May, a Reuters poll of 12 economists conducted from August 16 to 25 showed.
Confidence in the real estate sector, which accounts for a quarter of China’s economy, took a hit last year after many homebuyers threatened to default on mortgage payments because developers were unable to build pre-sold housing projects. due to liquidity shortages and strict COVID-19 restrictions.
“China’s slowing economic recovery and conservative consumption by residents show that the confidence of property market participants has not yet recovered,” said Wang Xingping, senior analyst at Fitch Bohua.
Authorities have introduced several measures over the past year to shore up the sector, including smaller down payments, allowing larger mortgages and cuts to mortgage rates. However, confidence remains low, partly due to persistent liquidity problems among property developers, as well as a broader slowdown in the economy.
Real estate investment this year is expected to fall 7.7% year-on-year, much faster than the 4.2% drop forecast in the May survey, while home sales measured by square footage are expected to decline by 5.0%. 0% in annual terms in 2023 from a profit. of 2.7% in the previous survey.
The world’s second-largest economy has seen a rapid loss of momentum since the second quarter following the initial post-COVID rebound, dragged down by weak domestic and external demand, rising unemployment and real estate sector woes.
“It is estimated that every one percentage point decline in real estate investment can reduce the GDP growth rate by 0.1 percentage point,” said analyst Ma Hong of Zhixin Investment Research Institute.
China watchers are skeptical that the real estate sector can improve any time soon despite Beijing’s support measures.
Three Chinese ministries on Friday issued detailed regulations allowing local governments to eliminate the “no mortgage history” rule for determining the status of “first-time home buyers.”
Larger cities are expected to relax real estate restrictions in some suburbs, “but that will hardly save the entire real estate sector from a downward spiral,” said Gao Yuhong, an analyst at CSCI Pengyuan Credit Rating Limited.
Seven in 12 economists see an improvement in purchasing affordability for first-time homebuyers over the next year.
However, ANZ economist Xing Zhaopeng said youth employment will be a big problem for first home buyers.
The government has suspended publishing data on youth unemployment, which has reached record levels in what analysts say is partly a symptom of regulatory crackdowns on large employers in real estate and other industries.
(For other stories from Reuters quarterly housing market surveys:)
Reporting by Liangping Gao and Ryan Woo; Additional reporting by Shuyan Wang; Edited by Shri Navaratnam
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