Many wonder if China’s property market is in a better place now. Bill Winters is the CEO of Standard Chartered and he believes that there may be more pain to come.
Winters, in an interview with CNBC expressed caution. He noted that, while there have been signs of increased activity on occasion, the Chinese housing market still hasn’t reached its bottom price-wise.
Winters noted that global confidence is low in China, due primarily to its ongoing property market struggles.
The outlook of China’s economy and housing market remains uncertain despite some growth in the first half of this year.
China’s Economy to Grow by Only 4.5%
China’s economy slowed down to just 4.7% growth in Q2 after a 5.3% increase in the first three months of 2024.
This slowdown is causing concern about a long-term economic downturn, particularly as China struggles with the challenges of its real estate industry.
The Chinese government introduced several measures to counteract the declining trend, such as lowering loan rates, and mortgage refinancing for home owners.
These steps are not enough to restore the confidence of investors in the markets.
Bank of America has recently reduced its estimate of China’s growth rate in 2024, from 5,0% to 4,8%.
The investment bank also expects China to only grow at a rate of 4,5% per year over the next 2 years, down significantly from the previous forecast of 4.7%.
Can refinancing mortgages in China boost the housing market?
China, in spite of mounting pressure, has not launched a large stimulus package. This is largely due to its growing debt.
Bill Winters says that, while China’s government may have a measured response in the short term, the fiscal health of the country will be improved in the longer run by avoiding an excessive amount of stimulus.
However, this restraint could extend the recovery of the real estate industry. Standard Chartered’s isn’t the only financial institution to predict further downside for China’s housing market.
Haibin Zhu – JPMorgan China’s Chief Economist – expressed concerns earlier this month about the outlook of the real estate market.
Zhu said that the home price in China is unlikely to stabilise before 2025 on CNBC’s SquawkBox Asia.
According to China Index Academy, the new home price index increased by only 0.11% in August from July’s 0.13%, and resale prices fell 0.71%.
Zhu warned that although mortgage refinancing could help to free up consumer expenditure, it was unlikely to revitalize the housing market. He stated:
This is not to boost demand for new homes, but to help existing home owners.
Investors remain cautious as China faces these challenges. The market could face further uncertainty if there is no clear bottom for housing prices, and the government does not want to implement aggressive stimuli.
Analysts say that although some government policies could increase consumption in China, it may take many years for the real estate market to fully recover.
The post China’s Housing Market: Is there a bottom in sight? This post may change as the updates unfold
