Despite multiple attempts by the Chinese government to provide stimulus and support measures to the housing market, experts like Haibin Zhu, chief China economist at JPMorgan, believe that these efforts have not been effective in stabilizing the sector. In fact, Zhu predicts that the housing market crash is far from over and that home prices may not see any significant stabilization until 2025 at the earliest.
Recent data released by the China Index Academy paints a grim picture of the current state of the housing market. The average price for new home sales in 100 Chinese cities has only increased by a mere 0.11% from July, showing a slowdown from the previous month. Additionally, resale home prices have actually declined by 0.71% from the previous month, with both new and resale houses experiencing drops of 1.76% and 6.89% from a year ago, respectively. These figures indicate that the housing market in China is deeply troubled and in crisis.
In light of the challenges facing the housing market, China is considering a plan to lower homeowner borrowing costs by enabling refinancing on up to $5.4 trillion in mortgages. However, analysts like Winnie Wu, chief China equity strategist at BofA Securities, are skeptical about the effectiveness of this proposed measure. While some believe that it could stimulate consumption, Wu highlights the potential downside of lower mortgage rates leading to banks cutting deposit rates to protect their margins. This could ultimately impact interest income on household savings and do little to boost new home demand, according to JPMorgan’s Zhu.
Overall, China’s housing market continues to face significant challenges despite various government interventions. The road to recovery seems long and uncertain, with experts expressing doubts about the effectiveness of proposed solutions. It remains to be seen how China will navigate these obstacles and revive its troubled housing sector.
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