2024-01-20 01:21:00
The economic recovery is weak and the real estate market continues to shrink. (Image source: Adobe Stock) Looking at Chinese websites, it is prohibited to create mirror websites. Return to the genuine Chinese website.
[Watch China January 20, 2024](Watch comprehensive report by Chinese reporter Li Zhengxin) Official data released by China show that investment in real estate development fell by 9.6%. The economic recovery is weak, the real estate market continues to shrink, inventory continues to increase, and the outlook for the property market is bleak. It is forbidden to create mirror websites on Chinese websites. Return to the genuine Chinese website.
Property market still shows no sign of bottoming out
The National Bureau of Statistics of China recently released economic data for 2023, in which investment in real estate development fell by 9.6%. The sales area of commercial housing nationwide was 1,117.35 million square meters, down 8.5%; the sales volume of commercial housing was 11,662.2 billion yuan (RMB, the same below), down 6.5%.
In December 2023, China’s real estate sales fell by 17% annually, an increase compared with the 9% annual decline in November 2023. At the same time, real estate sales also deteriorated further in December, falling 13%.
Housing prices have also continued to fall. In December 2023, second-hand housing prices in first-tier cities also fell by 1.1% compared with November.
The data came in below expectations and stocks of Chinese real estate developers listed in mainland China and Hong Kong sold off. The Hang Seng Mainland China Property Index, which tracks Chinese property developers, fell 9.5% this week.
Although China has recently launched a series of measures to stimulate the real estate market, for example, Beijing and Shanghai lowered down payments for home purchases last month. At the same time, the People’s Bank of China has added a net new mortgage supplementary loan of 350 billion yuan, which can be used for the construction of affordable housing and urban village renovation projects.
However, there are still no signs that the fundamentals of the real estate industry have bottomed out, and continued policy support is needed to achieve a soft landing for the real estate market. And it’s increasingly clear that China’s stimulus measures for its struggling real estate sector won’t be enough to provide a boost this year. Disappointing monthly sales figures suggest it will take time for the housing market to recover.
“There are no signs that the fundamentals of the real estate industry have bottomed out,” Nomura analysts Jizhou Dong and Riley Jin said in a research note.
According to the Wall Street Journal report on January 18, Tommy Xie, head of research and strategy for Greater China at OCBC Bank, added: “Despite the relaxation of policies, residential transaction volumes are still at a low level.”
Xie Dongming said that while demand is still weaker than expected, the surge in supply is also dragging down the real estate market. He added that the market outlook for this year is likely to remain bleak due to worsening income expectations and rising home foreclosures due to negative wealth effects in the stock market. The trajectory of the housing market suggests that conditions may not completely improve until the foreclosure cycle peaks.
Analysts at HSBC Global Research wrote in a report that new residential construction area, a key indicator used to measure future real estate investment, fell 21% year-on-year, indicating continued weak demand in the industry.
Looking ahead, HSBC analysts believe that more monetary policy tools may support the transformation of the real estate market. Real estate remains the most challenging industry and requires continued policy support to achieve a soft landing.
World media looks at Chinese real estate
As one property developer after another in China falls into insolvency and bankruptcy, thousands of home buyers are trapped in unfinished properties, and the threat of deflation lingers, the 2023 economic data released by the National Bureau of Statistics also caused a stir. attracted the attention of world media.
The British “Financial Times” reported: “China’s population decline will accelerate in 2023 and economic growth will be one of the lowest in decades, indicating that the world’s second-largest economy will face a real estate slowdown, deflation and population decline. The constant challenge of stress.”
Bloomberg of the United States published a report saying: “At the beginning of the new year, China is still struggling with major challenges brought about by deflationary pressure and the real estate crisis. So far, investors are not satisfied with the policies of the Chinese authorities to maintain economic growth momentum.”
The headline of the report in Le Monde, a major French newspaper, is: “China’s economy will still be weak in 2023.” The subtitle is, “Despite an official growth rate of 5.2%, China’s economic growth disappointed last year, partly due to the ongoing housing crisis, households’ lack of confidence in future economic prospects and falling exports.”
The headline of “Echo”, a French newspaper that reports financial news, is: “China’s economic growth rate is at its lowest level in 30 years.” The subtitle is: “Against the backdrop of an unprecedented crisis in the real estate industry and record unemployment, the world’s attention is focused on China’s slowing economic growth rate.”
Property market stimulus policies are unlikely to be effective
The People’s Bank of China disclosed on its official website on January 2 that the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China had a net new mortgage supplementary loan of 350 billion yuan, and the balance of mortgage supplementary loans at the end of the period was 3,252.2 billion yuan.
PSL (Pledged Supplementary Lending) is one of the central bank’s structural monetary policy tools. The PSL tool was established in April 2014. Its initial purpose was to provide the China Development Bank with a long-term, stable and cost-effective source of funds to support housing reform.
Starting from October 2015, the recipients have been expanded to the China Development Bank, the Agricultural Development Bank of China, and the Export-Import Bank of China, and the purpose has been expanded to provide loans in specific fields such as housing renovations and major water conservancy projects.
Looking at the specific operational process: the central bank releases PSL to policy banks, and the policy banks use the funds to issue special loans to local governments for housing renovation, providing financial support for local government housing renovation. After the local government obtains funds, it provides monetary compensation to the residents of shantytowns through monetary resettlement. Local governments can obtain income from land sales through demolition, which can then be used to repay policy bank borrowings. Policy banks use this amount to repay the PSL issued by the central bank, ultimately forming a closed loop of funds.
It is worth mentioning that the PSL has the dual functions of “quasi-fiscal + broad currency”.
After the financial crisis in 2008, stimulated by the “4 trillion plan”, shanty town reconstruction was fully launched. From 2008 to 2013, due to the funding sources of local governments, housing reform was mainly based on physical resettlement. After 2014, economic growth slowed down and real estate inventory accumulated rapidly. The People’s Bank of China launched PSL loans, allowing the government to obtain sufficient funds to support monetized resettlement of shanty towns and help destock real estate. Since then, monetary resettlement has gradually replaced physical resettlement.
However, a previous report issued by international rating agency S&P believed that the downturn in China’s property market has evolved into a crisis of confidence that only the government can resolve. It is necessary to ensure that the pre-sold housing can be completed and delivered after the developer is in danger. If the decline in sales causes more developers to be in danger, the situation will be more severe. Business risks will lead to the suspension of more pre-sale properties, further damaging consumer confidence. Resolving property market problems is related to the government’s two major goals – economic and social stability. If the housing market continues to decline, it may become a systemic problem that undermines the confidence of consumers and investors across various asset classes and industries.
Source: Look at China
Short URL: All rights reserved. Reprinting in any form requires permission from this website. It is strictly prohibited to create mirror websites.
[Honorary Members Wanted]Streams can merge into the sea, and small kindnesses can achieve great love. We sincerely recruit 10,000 honorary members from Chinese people all over the world: each honorary member only needs to pay a subscription fee per year and become an honorary member of the “Look at China” website, which can help us break through censorship and blockade and provide services to at least 10,000 mainland Chinese compatriots. Provide independent and true key information to warn them in times of crisis and save them from pandemics and other social crises.
#Annual #data #Chinas #real #estate #market #highlights #fact #picture #Investment #Property #Market #Economy #Finance #Real #Estate